Special bank account explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Money coming into a liquidation is handled under tight rules. Rules 81 to 90 require a special bank account in the Company Liquidator's official name, daily deposit of realisations, a separate dividend account for each declaration, a route for expenses when the company has no assets, investment of surplus funds with regular monitoring, and a duty to claim tax refunds. This article reflects the rules as amended up to the date of the MCA e-book text (consulted 3 October 2026): as notified on 24 January 2020, in force from 1 April 2020, with no amendment listed by MCA, per the MCA e-book. Check later amendments before relying on it.
All money is deposited in a special bank account in the liquidator's official name in a scheduled bank (or another bank the Tribunal permits). Each day's realisations are deposited not later than the next working day. Petty cash of five thousand rupees (or more with the Tribunal's permission) is allowed, and payments above two thousand rupees are by cheque. A separate dividend account is opened, with the Tribunal's sanction, for each declaration of dividend. Surplus funds are invested and fixed deposits are not renewed automatically.
Rule 81: the special bank account
81(1): deposits and payments
The Company Liquidator deposits into a special bank account in his official name, opened in a scheduled bank or any other bank the Tribunal permits, all moneys received as liquidator, including cheques and demand drafts. The day's realisations are deposited without deduction not later than the next working day of the bank.
The liquidator may keep petty cash of five thousand rupees, or a higher amount the Tribunal permits, for day-to-day expenses. All payments out of the account above two thousand rupees are made by cheque drawn on the account.
81(2): reports
The Company Liquidator makes quarterly reports to the Tribunal on the funds, filing the bank statements of the special bank account. If you are reviewing a liquidator's financial reports and want a second view, our legal dispute resolution team can help.
Rule 82: bills, cheques and similar instruments
All bills, cheques, hundies, notes and other securities payable to the company or the Company Liquidator are deposited with the bank as soon as they reach the liquidator, to be presented for acceptance and payment, or for payment only. The proceeds, when realised, are credited by the bank to the special bank account.
Rule 83: payments into the bank under a Tribunal order
Where the Tribunal directs a person to pay money due to the company into the special bank account, that person, when paying, produces to the bank either a certified copy of the order or a payment-in challan endorsed by the Company Liquidator under his signature. The person making the payment gives notice to the Company Liquidator and produces the bank receipt before him.
Rule 84: the dividend account
The Company Liquidator opens, with the Tribunal's sanction, a separate dividend account for the company under liquidation in a scheduled bank, named "the Dividend Account of (name of the company) in liquidation". When a dividend is declared, he transfers the total amount payable from the special bank account into it. There is a separate account for each declaration of dividend, and all dividend payments are made from it by cheque or through the Electronic Clearing System drawn on it. Any unpaid balance is transferred to the Company Liquidation Dividend and Undistributed Assets Account referred to in section 352(1). The Act's side is explained in sections 349 to 353: liquidation money and the dividend account.
Rule 85: companies with no available assets
- Expenses (85(1)). Where a company ordered to be wound up has no available assets, the Company Liquidator may, with the Tribunal's leave, incur necessary expenses from any permanent advance or other fund provided by the Central Government. The expenses are recouped from the company's assets in priority to its debts.
- Advance from a petitioner (first proviso). Where a petitioner, creditor or contributory has advanced money for preliminary expenses, the liquidator may incur necessary expenses out of it, and the advance is repaid from the company's assets in priority to its debts.
- Existing funds (second proviso). If the Official Liquidator maintains a Common Pool Fund or Establishment Fund under a court order made before the rules began, he continues to use it for the purpose for which it was created.
- Reimbursement (85(2)). The Official Liquidator reimburses the amount drawn from the Common Pool Fund or Establishment Fund for the expenditure of a company in liquidation from that company's money, on a priority basis, as and when any amount comes to its credit.
Rules 86 to 89: investment of surplus funds
- Where to invest (86(1)). Money at the liquidator's credit not immediately needed for the winding up is invested in Government securities or interest-bearing deposits in any scheduled bank, in the name of the company in liquidation or provisional liquidation represented by the Company Liquidator. The funds are monitored regularly, and returns with the details of fixed deposit receipts go to the Tribunal.
- Renewal (86(2)). A matured fixed deposit is not automatically renewed. The liquidator does due diligence on whether a higher rate is available in another scheduled bank, reports the conclusion to the Tribunal, and if a higher rate is available applies for the Tribunal's leave to invest there.
- Monthly examination (87). At the end of every month, the liquidator examines the liquidation account to see what is available for investment, and records in the record book that he has examined it, the decision taken and, where no investment is made, the reasons.
- Through the bank (88). The bank makes investments on the liquidator's written request, holds the securities in the name and on behalf of the liquidator, and sells them only on his written instructions, crediting the proceeds to his account.
- Dividends and interest (89). Dividends and interest on investments are received by the bank and credited to the liquidator's account, and intimated to him, and he credits them to the company concerned.
Rule 90: tax refunds
The Company Liquidator claims such refunds of income-tax or other taxes as may be due. For tax questions on a liquidation, see our income-tax guides.
Money-handling at a glance
| Point | Rule | As printed |
|---|---|---|
| Special bank account | 81(1) | Official name; scheduled bank or Tribunal-permitted bank |
| Daily realisations | 81(1) | Deposited by the next working day |
| Petty cash | 81(1) | Five thousand rupees, or higher if the Tribunal permits |
| Cheque threshold | 81(1) | Payments above two thousand rupees |
| Bank statements | 81(2) | Quarterly reports to the Tribunal |
| Dividend account | 84 | With the Tribunal's sanction; one per declaration |
| No assets | 85 | Central Government fund, petitioner advance or Common Pool Fund, with the Tribunal's leave |
| Surplus funds | 86 | Government securities or scheduled-bank deposits; no automatic renewal |
| Monthly check | 87 | Entry in the record book |
Example
Greenway Foods Limited's Company Liquidator opens a special account at a scheduled bank and banks each day's collections by the next working day. He keeps petty cash of five thousand rupees and pays a transporter above two thousand rupees by cheque. With surplus funds of a good size, he places a fixed deposit in the company's name. When it matures, he compares rates at other scheduled banks, reports to the Tribunal, and seeks leave to move it to a bank offering more. Once a dividend is declared, he opens a dividend account, transfers the dividend amount and pays creditors from it by cheque.
Need help with liquidation funds?
How money is banked, invested and distributed is often where creditors and the Tribunal look first. Our team can help liquidators and creditors with the reporting and the applications for leave through legal dispute resolution.
Key takeaways
- A special bank account in the liquidator's official name receives all money, banked by the next working day.
- Petty cash is five thousand rupees unless the Tribunal permits more; payments above two thousand rupees are by cheque.
- A separate dividend account is opened for each declaration, with the Tribunal's sanction.
- A company with no assets can draw on a Central Government fund, a petitioner's advance or the Common Pool Fund, with leave, and is recouped in priority.
- Matured fixed deposits are not auto-renewed; the liquidator checks for a better rate and seeks leave to move funds.
Read next
- Rules 76–80: periodical reports, staff and books
- Rules 91–99: accounts and audit
- Sections 349 to 353: liquidation money and the dividend account
- Section 327: preferential payments in winding up
Disclaimer: Based on the Companies Act, 2013 rules named above as consolidated in the MCA e-book (consulted on 3 October 2026), with the later notifications the article names. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.