Section 324 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.
Section 324 is about who can claim in a winding up. It says that in every winding up, all debts and claims against the company, whether present or future, certain or contingent, ascertained or sounding only in damages, are admissible to proof. Where the value is uncertain, a just estimate is to be made so far as possible.
In every winding up, all debts payable on a contingency and all claims against the company, present or future, certain or contingent, ascertained or sounding only in damages, are admissible to proof against the company. Where a debt or claim is subject to a contingency, sounds only in damages or for another reason has no certain value, a just estimate must be made of its value, so far as possible. For insolvent companies, the provision is subject to the Act or the law of insolvency.
What "admissible to proof" means
"Proof" in a winding up means establishing your claim with the liquidator so that you rank as a creditor and can share in distribution. Section 324 widens the net. It is not limited to debts that are due and certain in amount. Three kinds of claim that might otherwise be left out are brought in:
| Kind of claim | Example |
|---|---|
| Debts payable on a contingency | A payment that falls due only if a stated event occurs |
| Claims present or future, certain or contingent | A liability that arises only on a later date or event |
| Claims ascertained or sounding only in damages | A claim for compensation for breach of contract, where the amount is not fixed |
The second half of the section deals with the practical problem this creates. If the amount depends on an uncertain event, or the claim is for damages, or its value cannot be stated with certainty for some other reason, "a just estimate being made, so far as possible, of the value". The estimate must be "just" and is made "so far as possible". The section does not say who makes the estimate. In practice it is part of the process of inviting and settling claims by the liquidator, under section 290(1)(g), with the Tribunal's control over the liquidator (see powers of the Company Liquidator).
If you are a creditor with a contingent or damages claim and want to know how to lodge it, or a company facing such claims, our legal dispute resolution team can help you frame and support the claim.
The post-IBC setting
Section 324 opens with a bracketed qualification: "(subject, in the case of insolvent companies, to the application in accordance with the provisions of this Act or of the law of insolvency)". That qualification sits beside section 325, which used to apply insolvency rules in winding up of insolvent companies. The consolidated text shows section 325 as omitted by the Insolvency and Bankruptcy Code, 2016 with effect from 15 November 2016.
What does this mean for the reader?
- Inability to pay debts is now handled under the IBC, where claims are submitted to and verified by the resolution professional or liquidator under the Code and its regulations. Those rules are separate from section 324.
- Winding up by the Tribunal under the Companies Act continues on the grounds left in section 271 (see grounds for winding up by the Tribunal). A company wound up on, say, the ground of default in filing for five consecutive years can still have creditors, and those creditors' claims are admitted under section 324.
- Where a company is actually insolvent, the opening words leave room for the law of insolvency to apply.
Check which law governs the winding up before lodging a claim, because the forum, forms and timelines differ. For a comparison, see IBC vs Companies Act winding up.
What section 324 does not say
The section deals with admissibility, not priority. It does not say whom to pay first. Priority is dealt with in sections 326 and 327 (see preferential payments in winding up). Nor does it say how to file a claim: the procedure is for the liquidator and the Tribunal, which under section 290(1)(g) invites and settles claims. It also does not guarantee payment. A claim that is admitted to proof is entitled to share in what is available, in its rank, and if assets are short, an admitted claim may receive little.
It also does not specify a time limit for lodging claims. The Act leaves the detail to the Tribunal's directions and the rules, so follow the liquidator's public notice and the Tribunal's orders, and do not assume that a claim stays open indefinitely.
Who benefits
| Person | How section 324 helps |
|---|---|
| Trade creditors | Their debts, even if not yet due, can be proved |
| Customers with damages claims | Claims for breach that sound only in damages are admitted, with a just estimate |
| Persons holding contingent guarantees or indemnities | A claim that depends on a future event is not excluded |
| Employees and others | Claims against the company, in whatever form, can be put forward (their priority is a separate matter) |
Practical examples
Example 1: a debt due next year. A supplier has delivered goods on twelve months' credit. The company is wound up by the Tribunal before the due date. The debt is a future debt, and section 324 makes it admissible to proof.
Example 2: a contingent liability. A bank holds a guarantee from the company which will be called only if the borrower defaults. The company is wound up before any default. The claim is contingent, and section 324 admits it, with a just estimate of its value.
Example 3: a damages claim. A customer claims compensation for a breach of contract and the amount has not been fixed. The claim sounds only in damages. It is admissible, and the liquidator makes a just estimate as far as possible.
Proposed change
No clause of the Corporate Laws (Amendment) Bill, 2026 amends section 324. The Bill is pending and is not law as on 30 September 2026.
Need help lodging or contesting a claim?
A contingent or damages claim needs careful documents and a clear basis for its value. Whether you are claiming or defending, we can review the papers and explain the route. Get in touch about legal dispute resolution.
Key takeaways
- Section 324 admits to proof all debts and claims against the company in a winding up, present or future, certain or contingent.
- Claims sounding only in damages are included.
- Where value is uncertain, a just estimate is to be made so far as possible.
- The section is subject, for insolvent companies, to the Act or the law of insolvency; section 325 is omitted.
- Inability to pay debts is now dealt with under the IBC, with its own claims process.
- Admissibility is not priority: sections 326 and 327 deal with priority.
- The Bill, 2026 does not amend section 324 and is not law.
Read next
- Sections 302–303: Dissolution of a company by the Tribunal
- Section 327: Preferential payments in winding up
- Distribution of assets in winding up: priority of payments
- Liquidation process under the IBC: the waterfall mechanism in section 53
Disclaimer: Based on the Companies Act, 2013 as amended up to 1 April 2021 (official consolidated text), read with later developments noted in the article; proposals in the Corporate Laws (Amendment) Bill, 2026 are pending and not law as on 30 September 2026. Verify current notifications and rules before acting.