Companies Act Section 279 — Stay of suits, etc., on winding up order

CHAPTER XX WINDING UP

Commercial / Corporate

Summary

Sub-section (1) states that once a winding up order has been passed against a company, or a provisional liquidator has been appointed, no new suit or other legal proceeding can be started by or against the company. If a suit or proceeding was already pending when the winding up order was made, it cannot be continued further. The only way to start or continue such a proceeding is with the permission of the Tribunal, and the Tribunal can impose whatever conditions it chooses when granting that permission.

The proviso to sub-section (1) adds that any application made to the Tribunal seeking this permission must be decided by the Tribunal within sixty days.

Sub-section (2) clarifies that the restriction in sub-section (1) does not apply to any proceeding that is already pending in appeal before the Supreme Court or a High Court. Such appeals can continue without needing the Tribunal's permission.

Official Text

(1) When a winding up order has been passed or a provisional liquidator has been appointed, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, by or against the company, except with the leave of the Tribunal and subject to such terms as the Tribunal may impose:

Provided that any application to the Tribunal seeking leave under this section shall be disposed of by the Tribunal within sixty days.

(2) Nothing in sub-section (1) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court.