Sections 301 to 340 of the Companies Act 2013
Sections 301 to 340 form part of the statutory framework dealing principally with winding up of companies. The present legal position must be read with the Insolvency and Bankruptcy Code, 2016, which omitted the former voluntary winding-up provisions in Sections 304 to 323 and Section 325 with effect from 15 November 2016.
Current status of Sections 301 to 340
Sections 301 to 303 - Tribunal winding-up provisions
Section 301 - Arrest of person trying to leave India or abscond: This provision empowers the Tribunal, in the circumstances stated in the section, to order detention of a contributory and seizure and safe custody of books, papers and movable property where the person is about to leave India, abscond, remove property or conceal property for the purpose of evading calls or avoiding examination concerning the affairs of the company.
Section 302 - Dissolution of company by Tribunal: After the affairs of a company have been completely wound up, the Company Liquidator may apply to the Tribunal for dissolution. The Tribunal may make a dissolution order in accordance with the section.
Section 303 - Appeals from orders made before commencement of Act: This transitional provision preserves the operation and enforcement of winding-up orders made before commencement of the relevant provisions of the 2013 Act and addresses the forum for appeals against such orders.
Section-wise guides and retained internal links
- Sections 301 and 302 - Arrest to prevent absconding and dissolution of company by Tribunal
- Sections 303 and 304 - Appeals from earlier winding-up orders and former Section 304 Section 304 omitted
- Sections 305 and 306 - Former declaration of solvency and meeting of creditors provisions Omitted
- Sections 307 to 309 - Former voluntary winding-up provisions Omitted
- Sections 310 and 311 - Former appointment, removal and vacancy provisions for Company Liquidator Omitted
- Sections 312 and 313 - Former notice of liquidator appointment and cesser of Board powers Omitted
- Sections 314 and 315 - Former powers and duties of liquidator and appointment of committees Omitted
- Sections 316 and 317 - Former liquidator reports and examination provisions Omitted
- Section 318 - Former final meeting and dissolution provision Omitted
- Sections 319 and 320 - Former property sale consideration and distribution provisions Omitted
- Sections 321 and 322 - Former arrangements and Tribunal determination provisions Omitted
- Sections 323 and 324 - Former costs provision and debts admitted to proof Section 323 omitted
- Sections 325 and 326 - Omitted insolvency-rules provision and overriding preferential payments Section 325 omitted
- Sections 327 and 328 - Preferential payments and fraudulent preference
- Sections 329 and 330 - Transfers not in good faith and certain transfers to be void
- Sections 331 and 332 - Fraudulently preferred persons and effect of floating charge
- Sections 333 and 334 - Disclaimer of onerous property and transfers after commencement of winding up
- Sections 335 and 336 - Attachments and executions in winding up and offences by officers
- Sections 337 and 338 - Fraud by officers and liability where proper accounts are not kept
- Sections 339 and 340 - Fraudulent conduct of business and Tribunal power to assess damages
Key operative provisions from Section 324 onward
Section 324 deals with debts and claims admissible to proof in winding up. Section 326 provides for overriding preferential payments, including the statutory priority addressed in that section. Section 327 deals with preferential payments. Sections 328 to 335 address transactions and property consequences that may affect the winding-up estate, including fraudulent preference, transfers not in good faith, floating charges, onerous property and certain post-commencement transfers or executions.
Sections 336 to 340 focus on misconduct and accountability in liquidation. They address offences and fraud by officers, liability where proper accounts have not been kept, fraudulent conduct of business and the Tribunal's power to assess damages against delinquent directors and other specified persons.
Effect of the Insolvency and Bankruptcy Code, 2016
The Insolvency and Bankruptcy Code, 2016 substantially reorganised India's corporate insolvency and liquidation framework. Section 255 and the Eleventh Schedule to the Code amended the Companies Act, 2013. In this range, the former Part II dealing with voluntary winding up and Sections 304 to 323 were omitted, and Section 325 was also omitted, with effect from 15 November 2016. Current questions involving corporate insolvency or voluntary liquidation should therefore be checked against the Companies Act, 2013 together with the applicable provisions of the Insolvency and Bankruptcy Code, 2016 and rules or regulations made under them.
This page is a general legal information guide. For a live proceeding, verify the current statutory text, notifications, rules and applicable judicial decisions.