Section 343 of Companies Act, 2013 – Company Liquidator to exercise certain powers subject to sanction

SECTION 343. COMPANY LIQUIDATOR TO EXERCISE CERTAIN
POWERS SUBJECT TO SANCTION

[Effective from 15th December, 2016]

(1) The Company Liquidator may—

(a)   with the sanction of the Tribunal, when the company is being wound up by the Tribunal; and

(b)   with the sanction of a special resolution of the company and prior approval of the Tribunal, in the case of a voluntary winding up,—

(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.

Applicable Rules

Companies (Winding Up) Rules, 2020

[Effective from 1st April, 2020]

COMPROMISE OR ABANDONMENT OF CLAIMS

Rule 163. No claim to be compromised or abandoned without sanction of Tribunal.—In a winding up by the Tribunal, no claim by the company against any person shall be compromised or abandoned by the Company Liquidator without the sanction of the Tribunal upon notice to such person as the Tribunal may direct.

Rule 164. Application for sanction of compromise.—Every application for sanction of a compromise or arrangement referred to in clauses (ii) and (iii) of sub- section (1) of section 343 shall be accompanied by a copy of the proposed compromise or arrangement and shall be supported by an affidavit of the Company Liquidator, along with final report of the Advisory committee, stating that for the reasons set out in the affidavit he is satisfied that the proposed compromise or arrangement is beneficial to the company.

SALE BY COMPANY LIQUIDATOR

Rule 165. Sale to be subject to sanction and to confirmation by Tribunal.—Unless the Tribunal otherwise orders, no property or asset belonging to company which is being wound up by the Tribunal shall be sold by the Company Liquidator without the previous sanction of the Tribunal, and every sale shall be subject to confirmation by the Tribunal

Rule 166. Procedure at sale.—Every sale shall be held by the Company Liquidator, or, if the Tribunal shall so direct, by an agent or an auctioneer approved by the Tribunal, and subject to such terms and conditions, if any, as may be approved by the Tribunal and all sales shall be made by public auction or by inviting sealed tenders or by electronic bidding or in such manners as the Tribunal may direct.

Rule 167. Expenses of sale.—Where property forming part of a company’s assets is sold by the Company Liquidator through an auctioneer or other agent, the gross proceeds of the sale shall, unless, the Tribunal otherwise orders, be paid over to the liquidator by such auctioneer or agent and the charges and expenses connected with the sale shall afterwards be paid to such auctioneer or agent in accordance with the scales, if any, fixed by the Tribunal.