AAP Tax Law - Indian law and legal information

Sections 369 and 370 of the Companies Act, 2013: Existing Liabilities and Pending Legal Proceedings

Sections 369 and 370 form part of Chapter XXI, Part I of the Companies Act, 2013, which deals with companies authorised to register under the Act. Together, these provisions preserve pre-registration rights and liabilities and allow pending suits and other legal proceedings to continue despite registration.

Updated: 17 September 2026

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Section 369 - Saving of existing liabilities

What Section 369 does: Registration under Part I of Chapter XXI does not wipe out or alter rights and liabilities connected with debts, obligations or contracts that existed before registration.

The statutory provision states that registration of a company under this Part does not affect its rights or liabilities relating to a debt or obligation incurred, or a contract entered into, by, to, with or on behalf of the company before registration.

In practical terms, registration changes the legal status of the entity under the Companies Act, 2013, but does not provide an escape from pre-existing contractual obligations, debts or corresponding rights.

Section 370 - Continuation of pending legal proceedings

What Section 370 does: Suits and other legal proceedings already pending when a company is registered under this Part may continue in the same manner as if registration had not occurred.

The section also protects the property and persons of individual members from execution of a decree or order obtained in such proceedings. Where company property is insufficient to satisfy the decree or order, an order may be obtained for winding up in accordance with the Companies Act, 2013 or the Insolvency and Bankruptcy Code, 2016.

Legislative update: The reference to the Insolvency and Bankruptcy Code, 2016 in the proviso to Section 370 was inserted by Section 255 and the Eleventh Schedule to the Insolvency and Bankruptcy Code, 2016, with effect from 15 November 2016.

Practical meaning of Sections 369 and 370

These provisions support continuity when an eligible entity registers as a company under Chapter XXI. Section 369 preserves substantive rights and liabilities that arose before registration. Section 370 preserves procedural continuity by allowing pending litigation and other legal proceedings to continue.

The provisions should therefore be read together with the surrounding sections of Part I, particularly Sections 366 to 374, which deal with registration, vesting of property, effects of registration, court powers and obligations following registration.

Official legal resources

For the current statutory text and amendments, refer to the official India Code materials:

Note: This article is a general explanation of the statutory provisions. For a particular dispute, the complete Act, applicable rules, amendments, notifications and relevant judicial decisions should be considered.