Section 334 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 334 freezes the company's position once a winding up by the Tribunal has commenced. Any disposition of the company's property, any transfer of its shares and any alteration in the status of its members made after the commencement is void, unless the Tribunal otherwise orders.
In the case of a winding up by the Tribunal, three things made after the commencement of the winding up are void: a disposition of the property, including actionable claims, of the company; a transfer of shares in the company; and an alteration in the status of its members. The only way out is an order of the Tribunal: they are void "unless the Tribunal otherwise orders".
Where section 334 sits
Section 334 is in Chapter XX (winding up), Part I, among the sections that deal with transactions around a winding up. Section 329 looks back from the presentation of the petition; section 334 looks forward from commencement. Section 333 on disclaimer of onerous property and section 335 on attachments void in winding up are its immediate neighbours.
This article reads the section as printed in the Companies Act, 2013 as amended up to 29 July 2022 (the consolidated text consulted). The section stands as substituted by section 255 of, and the Eleventh Schedule to, the Insolvency and Bankruptcy Code, 2016, with effect from 15 November 2016. Winding up on the ground of inability to pay debts and voluntary winding up are now under the Code; see our post on section 255 and the Eleventh Schedule. No later amendment was found in the texts consulted; later amendments should be checked on the official text.
Anyone dealing with a company's assets or shares around the time a winding up petition is pending should check the position first. Our legal due diligence team does this as a matter of course before a purchase or a lending decision.
The sentence, element by element
Where it applies: "in the case of a winding up by the Tribunal". The section is confined to a winding up by the Tribunal. It does not speak of other modes.
The three things.
- "any disposition of the property including actionable claims, of the company". A disposition of any property of the company, and the section expressly includes actionable claims.
- "any transfer of shares in the company". A transfer of the company's shares.
- "alteration in the status of its members". A change in who is, or what is the position of, a member.
The time: "made after the commencement of the winding up". The section turns on the commencement. It does not say when a winding up commences; it is silent on that, so read the Chapter's other provisions and the Tribunal's order to fix the date before relying on the section.
The effect: "void". Each of the three is void.
The escape: "unless the Tribunal otherwise orders". The Tribunal may direct otherwise. The section does not say on what grounds, in what form or by when an application is to be made; those are left to the Tribunal and the Winding Up Rules.
How it compares with the neighbouring sections
| Section | What it covers (by the title of the live post) | Direction in time | How it differs from section 334 |
|---|---|---|---|
| 328 | Fraudulent preference | Back from the winding up, as printed in section 328 | Preferences, not post-commencement dispositions |
| 329 | Transfers not in good faith | One year before presentation of the petition | Looks back from the petition; void against the Company Liquidator |
| 330 and 331 | Void transfers and persons preferred | As printed in those sections | Certain transfers and persons preferred |
| 334 | Dispositions, share transfers and changes of members after commencement | After commencement of the winding up by the Tribunal | Looks forward; void unless the Tribunal orders otherwise |
| 335 | Attachments, executions and similar steps | As printed in section 335 | Attachments and executions rather than dispositions |
Why the section matters
It protects the pool of assets and the register of members from the moment the winding up starts. A company cannot sell its property, a shareholder cannot transfer shares, and the membership cannot be rearranged after commencement, unless the Tribunal permits. For lenders and buyers, a document signed after commencement that deals with the company's property or shares is vulnerable on the face of the section. For shareholders, an instrument of transfer that comes to the company after commencement may not be given effect without the Tribunal's order.
For the point at which the Tribunal's power to appoint a provisional liquidator and make interim orders is exercised, see our post on section 273.
Worked example
A petition for winding up of Redwood Logistics Limited is presented to the Tribunal, and the Tribunal makes a winding up order. After the commencement of the winding up, the following happen: the company's directors sell one of its trucks for cash; a shareholder, Mr Bhatt, sells his shares to a friend and presents the instrument of transfer; and the company is asked to record a change in a corporate shareholder's status.
Under section 334, each of the three is void, because each is a disposition of the company's property, a transfer of shares, or an alteration in the status of a member, made after the commencement of a winding up by the Tribunal. If the buyer of the truck or the transferee of the shares believes the transaction should stand, the section says the route is an order of the Tribunal: the transaction is void "unless the Tribunal otherwise orders". Before the commencement, the same sale and transfer might have been tested under the other sections, such as section 329 for the year before the petition.
Common mistakes
- Treating a post-commencement share transfer as routine. It is void unless the Tribunal orders otherwise.
- Forgetting actionable claims. The section says property "including actionable claims".
- Assuming the section applies to every winding up. It is limited to a winding up by the Tribunal.
- Assuming the date of commencement is in section 334. The section does not say when the winding up commences.
- Relying on a private understanding. Only an order of the Tribunal removes the voidness.
- Mixing it up with section 329. Section 329 looks back to the year before the petition; section 334 looks forward from commencement.
Need help with a transaction near a winding up?
If you are buying assets, taking shares or lending to a company close to or in a winding up, we can fix the commencement date, test each step against sections 329, 334 and 335 and advise on whether to ask the Tribunal for an order. Start with legal due diligence.
Key takeaways
- Section 334 applies to a winding up by the Tribunal.
- After commencement, a disposition of the company's property (including actionable claims), a transfer of its shares and an alteration in the status of its members are void.
- They are void unless the Tribunal otherwise orders.
- The section does not itself say when a winding up commences.
- The section stands as substituted by the Code with effect from 15 November 2016.
Read next
- Section 329: transfers not in good faith void against the Company Liquidator
- Section 272: who may present a petition for winding up
- Section 335: attachments void in winding up
- Sections 278 and 279: effect of winding up order and stay of suits
Disclaimer: Based on the Companies Act, 2013 as amended up to 29 July 2022 (the consolidated text consulted on 4 October 2026). Later amendments to the Act, the rules made under it and the Insolvency and Bankruptcy Code, 2016 should be checked. This article is general information, not legal advice; check the official text before acting.