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Section 298 of the Companies Act, 2013: Power to order costs

Updated: Oct 17, 2022







Chapter XX of The Companies Act, 2013 deals with the “Winding up” process of a Company where Part I specifically states the Winding up by the Tribunal. Section 298 of the Companies Act, 2013 deals with the power to order costs.

Winding up by the Tribunal

Proper winding up of a company is definitely more essential than its incorporation. The ghost of a company should not haunt after discarding the objects of the company. Section 270 of the Companies Act, 2013 deals with winding up by the Tribunal. A wrapping-up process can happen without the mediation of the court or council. This mode for the most part can happen when the organisation terminates its prefixed length or, because of the event of specific occasions whereby the organisation must be disintegrated, and if the organisation embraces and passes a normal goal for twisting up. The winding up may also happen if the company passes a special resolution to wind up the company.

Section 298 of the Companies Act, 2013

In the occasion of the assets of a company being insufficient to satisfy its liabilities, the Tribunal may make an order for the payment that has to be done out of the assets, of the costs, charges and expenses incurred in the winding up, in the mentioned order of priority inter se as the Tribunal thinks just and proper. There are certain Rules of the Companies (Winding Up) Rules, 2020, Published vide Notification No. G.S.R. 46(E), dated 24.01.2020 that are applicable to this Section.

Rules Applicable to Section 298

Part IV of the Companies (Winding Up) Rules, 2020 deals with Costs Etc. Rule 183-186 and Rule 188 of the winding up rules, 2020 are applicable to Section 298.

Rule 183: Costs in the discretion of Tribunal

Rule 184: Bill of costs by authorized representative etc. employed by Company Liquidator

Rule 185: Fees in misfeasance proceeding

Rule 186: Fees when proceeding is compromised

Rule 188: Tribunal's power to fix a fee.


The procedure for winding up is very complex, lengthy and time taking. There are several complexities and technicalities in its ambit that needs to be taken care of. The Ministry of Corporate Affairs through several amendments made the process of formation of companies fast and easy through its online platform. The same ministry shall also bring changes and add new formats for winding up so that it will be easy for the companies to wind up. Earlier only the Companies Act represented this but with the Insolvency and Bankruptcy Code, 2016, has gotten more difficult to apply these rules and provisions simultaneously with choosing the priority.

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