Companies Act Section 343 — Company Liquidator to exercise certain powers subject to sanction
CHAPTER XX WINDING UP
Commercial / Corporate
Summary
Sub-section (1) states that when a company is being wound up by the Tribunal, the Company Liquidator may take certain actions, but only with the Tribunal's approval. These actions include paying any class of creditors in full, making a compromise or arrangement with creditors or people claiming to be creditors, or with anyone who has or claims to have a claim against the company (whether the claim is present or future, certain or contingent), or making a compromise that could make the company liable. The Liquidator may also compromise any call or liability to call, any debt, any liability that could result in a debt, and any claim (present or future, certain or contingent, or even one that is only for damages) that exists or is alleged to exist between the company and a contributory, alleged contributory, or other debtor or person who fears liability to the company. This includes settling all questions related to the company's assets, liabilities, or the winding up itself, on whatever terms are agreed, and the Liquidator may take security for the discharge of any such call, debt, liability, or claim, and give a complete discharge for it.
Sub-section (2) says that despite what is stated in sub-section (1), when the winding up is by the Tribunal, the Central Government may make rules to allow the Company Liquidator to exercise the powers mentioned in sub-clause (ii) or sub-clause (iii) of clause (b) of sub-section (1) without the Tribunal's sanction. This is only allowed under such circumstances and subject to such conditions, restrictions, and limitations as may be prescribed in those rules.
Sub-section (3) provides that any creditor or contributory may apply to the Tribunal in the prescribed manner regarding any exercise or proposed exercise of powers by the Company Liquidator under this section. The Tribunal, after giving a reasonable opportunity to the applicant and the Company Liquidator, shall pass such orders as it thinks fit.
Official Text
3[
(1) The Company Liquidator may, with the sanction of the Tribunal, when the company is being wound up by the Tribunal,—
(i) pay any class of creditors in full;
(ii) make any compromise or arrangement with creditors or persons claiming to be creditors, or having or alleging themselves to have any claim, present or future, certain or contingent, against the company, or whereby the company may be rendered liable; or
(iii) compromise any call or liability to call, debt, and liability capable of resulting in a debt, and any claim, present or future, certain or contingent, ascertained or sounding only in damages, subsisting or alleged to subsist between the company and a contributory or alleged contributory or other debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the assets or liabilities or the winding up of the company, on such terms as may be agreed, and take any security for the discharge of any such call, debt, liability or claim, and give a complete discharge in respect thereof.]
(2) Notwithstanding anything contained in sub-section (1), in the case of a winding up by the Tribunal, the Central Government may make rules to provide that the Company Liquidator may, under such circumstances, if any, and subject to such conditions, restrictions and limitations, if any, as may be prescribed, exercise any of the powers referred to in sub-clause (ii) or sub-clause (iii) of clause (b) of sub-section (1) without the sanction of the Tribunal.
(3) Any creditor or contributory may apply in the manner prescribed to the Tribunal with respect to any exercise or proposed exercise of powers by the Company Liquidator under this section, and the Tribunal shall after giving a reasonable opportunity to such applicant and the Company Liquidator, pass such orders as it may think fit.