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  • Writer's pictureMERWIN RICHARD

Transfers, etc., after commencement of winding up to be void.

Updated: Jun 24, 2022

#companiesact2013,#windingup,#transfers,#law, #business, #rules, #sections,

This article is concerned with Section 334 of the companies act 2013, CHAPTER XX, which deals with the Company winding up. Before we analyze the section, we need to understand the meaning of winding up to get a general idea of it and understand the section better in its true sense.


It was winding up essential means the situation of a business where the Company ceases to do business as usual. The business gets dissolved, and the dissolution of a company is brought about, and its assets are realized and applied to paying its debts. The remaining money, if available, will be distributed to the Company members accordingly depending on how much money is put forward by them in the form of capital to the Company.

As understood by the explanation mentioned above of winding up, we get a general idea of it and move forward to section 334 of the companies act 2013, which states that :

In the case of winding up of a company, any disposition of the Company's property after the commencement of the winding-up shall be void unless the Court orders otherwise.

(1) In the case of a voluntary winding up, any transfer of shares in the Company, not being a transfer made to or with the sanction of the Company Liquidator, and any alteration in the status of the members of the Company, made after the commencement of the winding-up, shall be void.

(2) In the case of a winding-up by the Tribunal, any disposition of the property, including actionable claims, of the Company, and any transfer of shares in the Company or alteration in the status of its members, made after the commencement of the winding-up, shall unless the Tribunal otherwise orders, be void.


In instances of temporary assignments or allotment of immovable property, the property does not go to the hands of the organization until the sale deed is executed and enlisted. Thus, before that stage, the right, title, possession, and interest in the property vests exclusively in the actual proprietor in whose favor the title deeds exist and with whom the Company has executed under the Agreement, which is the agreement of sale. Such proprietor or owner is allowed to manage the property till the execution and enlistment of the deal deed. The proprietor might try to offer the property to an outsider if the organization fails to meet any of the material terms of the understanding available under the sale agreement. Termination of such knowledge of an agreement for sale and subsequent deal to an outsider/third party in the event of breach by the organization can't be tested under Sections 334 and 335 of the Act on the ground that such transfer has been completed without getting the leave of the Court. The leave of the Court is just to be gotten in instances of disposition and offer of sale of 'property of the organization,' which a provisional allotment is not.

Provisional allocations made for the benefit organization, as per execution of an arrangement/contract available for sale, would be represented and controlled by the arrangements and standards or provisions revered under the conditions of the Transfer of Property Act, 1882 and the law set somewhere near the Hon'ble Supreme Court. Consequently, the bar on the disposition and offer of sale of 'property of the organization' with regards to immovable property should be perceived as including just such properties of the Company where a registered conveyance deed has been executed, which depends on the sale consideration. Provisional allocations of steady properties where the Company needs to transmit the equilibrium thought sum, get ownership, and have the sale deed executed and enrolled can't be brought inside the extent of the articulation 'property of the organization' under Sections 334 and 335 of the Act. In this manner, there can't be any limitation on the legal proprietor of such property to manage it (by getting rid of/disposing/selling it). On occasion, the organization commits a break/default of the agreements of the proposed deal. In the case of the legal proprietor's disposition or sale of the property, such actions can't be tested under Sections 334 and 335 of the Act, as having been made without getting the permission of the Court, as such leave is just required were a 'property of the organization' is being disposed or put to sale.

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