Section 335 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 335 stops individual creditors from racing to seize a company's assets once a winding up by the Tribunal has begun. Any attachment, distress or execution put in force, and any sale held, after the commencement of the winding up and without the leave of the Tribunal, is void. Proceedings for recovery of tax, impost or dues payable to the Government are kept outside the rule.
Where a company is being wound up by the Tribunal, any attachment, distress or execution against its estate or effects, put in force after the commencement of the winding up without the Tribunal's leave, is void. So is any sale of its properties or effects held after that date without leave. Nothing in the section applies to proceedings for recovery of any tax or impost or any dues payable to the Government.
What the section says
Section 335(1) applies "where any company is being wound up by the Tribunal". It then voids two things.
| Clause | What is void | Condition |
|---|---|---|
| (1)(a) | Any attachment, distress or execution put in force against the estate or effects of the company | After the commencement of the winding up, without leave of the Tribunal |
| (1)(b) | Any sale held of any of the properties or effects of the company | After the commencement of the winding up, without leave of the Tribunal |
Sub-section (2) adds: "Nothing in this section shall apply to any proceedings for the recovery of any tax or impost or any dues payable to the Government."
Why the rule exists
Winding up is a collective process. The liquidator collects the assets and distributes them in the statutory order (see preferential payments under section 327). If any creditor holding a decree could attach or sell the assets on his own, he would jump the queue and the rest would be left with less. Section 335 puts the decision into the hands of the Tribunal: a creditor who wants to proceed against the company's property needs the Tribunal's leave first.
It sits beside two related provisions. Section 334 voids dispositions of property and transfers of shares after the commencement of a winding up by the Tribunal, unless the Tribunal orders otherwise. Section 278 and the provisions on suits and proceedings also deal with what happens to actions against the company once a winding-up order is made (see effect of winding-up order and stay of suits). If you are a decree-holder or a company in this position, our legal dispute resolution team can help you plan the next step.
Key terms
"Being wound up by the Tribunal". The section applies to winding up by the Tribunal under the Companies Act. Since the Insolvency and Bankruptcy Code, 2016, company liquidation for insolvency is handled under the Code, and winding up by the Tribunal under the Act continues on the grounds left in section 271 (see grounds for winding up by the Tribunal). Attachments in an IBC process are governed by the Code's own provisions, not section 335.
"Commencement of the winding up". The section turns on this date. Check the Act's provisions and the orders in the particular case to fix it. An attachment made before commencement is not hit by the words of this section.
"Attachment, distress or execution". These cover the usual methods by which a creditor seizes or enforces against property of the debtor. The section refers to the "estate or effects" of the company.
"Leave of the Tribunal". With leave, the attachment or sale is not void on this ground. The Tribunal decides whether the step is fair to all creditors.
The Government dues exception
Sub-section (2) excludes proceedings for recovery of "any tax or impost or any dues payable to the Government". The words show that such proceedings are not voided by section 335. The text does not say what else may limit those proceedings, and the Government's position in the order of payment is a separate question dealt with in the priority provisions.
What a creditor should do
- Do not start or continue an attachment or sale of a company's property after a winding-up by the Tribunal has commenced without first applying for leave.
- If a step was taken earlier, examine the dates of the winding-up order and commencement of the winding up.
- If you are a third party who bought at a sale held after commencement without leave, be aware that the sale itself is void under clause (b).
- A liquidator who finds such a step may rely on section 335 and approach the Tribunal for directions.
Practical examples
Example 1: decree-holder. A supplier holds a money decree. After the Tribunal's winding-up order takes effect, the supplier obtains attachment of the company's stock without seeking leave. The attachment is void under clause (a).
Example 2: auction sale. A sale of the company's machinery is held after the commencement of winding up, under an earlier execution, and without the Tribunal's leave. The sale is void under clause (b).
Example 3: tax recovery. A tax authority continues recovery proceedings against the company for tax dues. Sub-section (2) means section 335 does not apply to those proceedings.
Example 4: leave granted. A secured creditor applies and the Tribunal gives leave to enforce its security. The enforcement is not void for want of leave.
Proposed change (Corporate Laws (Amendment) Bill, 2026)
No clause of the Bill amends section 335. The Bill is pending and not law as on 30 September 2026.
Need help with an attachment against a company in liquidation?
Whether a particular attachment, execution or sale is void usually depends on the commencement date and whether leave was sought. We can look at the orders and explain your options as a creditor, buyer or officer of the company. Talk to us about legal dispute resolution.
Key takeaways
- In a winding up by the Tribunal, attachments, distress and executions put in force after commencement without leave are void.
- Sales of company property held after commencement without leave are also void.
- Tax, impost and Government dues recovery proceedings are outside the section.
- The rule protects collective distribution and stops creditors jumping the queue.
- Creditors needing to proceed should apply to the Tribunal for leave.
- The Bill, 2026 does not amend section 335.
Read next
- Section 333: Disclaimer of onerous property
- Sections 336–337: Offences and frauds by officers in liquidation
- Sections 278–279: Effect of winding-up order and stay of suits
- Winding up by the Tribunal: grounds and process
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.