Sections 343 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.
Sections 343 to 348 set the ground rules for how a liquidator (see liquidator appointment, powers and duties) works once a company is being wound up. They say which settlements need the Tribunal's sanction, that business papers must say the company is in liquidation, how the company's books are treated and kept, and when the liquidator must file a statement on a liquidation that drags on.
In a winding up by the Tribunal, the Company Liquidator can pay a class of creditors in full, compromise with creditors, or settle calls and debts only with the sanction of the Tribunal (section 343). Every invoice, order and business letter of a company in liquidation must state that the company is being wound up, failing which the fine is ₹50,000 to ₹3 lakh (section 344). If the winding up is not over in one year, the liquidator must file an audited statement within two months of the year's expiry, and then at intervals of not more than one year (section 348).
Why these sections still matter
Since the Insolvency and Bankruptcy Code, 2016, inability to pay debts and voluntary winding up are handled under the IBC. Winding up by the Tribunal under the Companies Act continues on the grounds that remain in section 271 (see grounds for winding up by the Tribunal). Several of these sections were rewritten by the IBC with effect from 15 November 2016, and section 348 and some penalties were adjusted by the Companies (Amendment) Act, 2020 with effect from 21 December 2020. The text below is the amended text.
Section 343: powers that need the Tribunal's sanction
Section 343(1), as substituted in 2016, says the Company Liquidator may, with the sanction of the Tribunal, when the company is being wound up by the Tribunal:
- pay any class of creditors in full;
- make a compromise or arrangement with creditors, or with persons claiming to be creditors, whether the claim is present or future, certain or contingent, or whereby the company may be rendered liable; or
- compromise any call, debt or claim, present or future, certain or contingent, ascertained or sounding only in damages, between the company and a contributory, alleged contributory or other debtor, and take security for it and give a complete discharge.
Section 343(2) lets the Central Government make rules under which the liquidator may exercise some of these powers without the Tribunal's sanction, in prescribed circumstances and subject to conditions. (The sub-section still refers to "sub-clause (ii) or sub-clause (iii) of clause (b) of sub-section (1)", wording that predates the 2016 substitution of sub-section (1); read it as pointing to the compromise powers in items 2 and 3 above.) Under section 343(3), any creditor or contributory may apply to the Tribunal about an exercise or proposed exercise of these powers. The Tribunal must give the applicant and the liquidator a reasonable opportunity and then pass such orders as it thinks fit.
If you are a creditor who has been offered a settlement, or a contributory facing a call, our legal dispute resolution team can help you decide whether to support or challenge it before the Tribunal.
Section 344: "Company is being wound up" on every letter
Where a company is being wound up, whether by the Tribunal or voluntarily, every invoice, order for goods or business letter issued by or for the company, its Company Liquidator, or a receiver or manager of its property, on which the company's name appears, must contain a statement that the company is being wound up.
| Point | What the text says |
|---|---|
| Who issues the document | The company, the Company Liquidator, or a receiver or manager of the company's property |
| Documents covered | Invoices, orders for goods and business letters bearing the company's name |
| Who is liable for a default | The company, and every officer, the liquidator and any receiver or manager who wilfully authorises or permits it |
| Punishment | Fine of not less than ₹50,000, which may extend to ₹3 lakh |
The practical advice is simple: change the invoice template and e-mail signature the day liquidation starts.
Section 345: books as prima facie evidence
Where a company is being wound up, all books and papers of the company and of the Company Liquidator are, as between the contributories, prima facie evidence of the truth of matters recorded in them. It is a rule of evidence between shareholders; it does not make the entries binding on outsiders such as creditors or tax authorities.
Section 346: who may inspect
After a winding-up order by the Tribunal, a creditor or contributory may inspect the company's books and papers only in accordance with, and subject to, the prescribed rules. Sub-section (2) protects rights given by any law to the Central or a State Government, their authorities or officers, or persons acting under their authority. So a tax or regulatory inspection is not cut down by sub-section (1).
Section 347: disposal of books and papers
- When the affairs are completely wound up and the company is about to be dissolved, the books and papers of the company and its liquidator may be disposed of as the Tribunal directs (sub-section (1), as substituted in 2016).
- Five years after dissolution, no responsibility falls on the company, the liquidator or the custodian of the records because a book or paper is not forthcoming (sub-section (2)).
- The Central Government may make rules preventing destruction of records for a period it thinks proper, and allowing creditors and contributories to make representations and appeal to the Tribunal (sub-section (3)).
- Breach of such a rule or order is punishable with fine up to ₹50,000. The 2020 amendment removed the earlier imprisonment of up to six months (sub-section (4)).
Section 348: information on pending liquidations
If the winding up is not concluded within one year of its commencement, the Company Liquidator must, unless exempted wholly or in part by the Central Government, file with the Tribunal a statement in the prescribed form with the prescribed particulars, duly audited by a person qualified to act as the company's auditor. The first statement is due within two months of the expiry of that year, and then at intervals of not more than one year (or shorter prescribed intervals). No audit is needed where section 294 applies.
| Sub-section | Rule |
|---|---|
| (2) | A copy goes to the Registrar at the same time and is kept with the company's records |
| (3) | For a Government company, a copy goes to the Central and/or State Government that is a member |
| (4) | Anyone stating himself in writing to be a creditor or contributory may inspect the statement and get a copy or extract on paying the prescribed fee |
| (5) | A person fraudulently claiming to be a creditor or contributory is deemed guilty of an offence under section 182 of the Indian Penal Code |
| (6) | Substituted in 2020: if the liquidator is an insolvency professional registered under the IBC and defaults, it is deemed a contravention of the IBC and proceeded against under Chapter VI of Part IV of that Code |
Sub-section (7) was omitted by the 2020 Act. Since 1 July 2024 the Indian Penal Code has been replaced by the Bharatiya Nyaya Sanhita, 2023, so the reference in sub-section (5) is now read as a reference to the corresponding provision of the new law.
Need help with a winding up under the Companies Act?
Whether you are the liquidator preparing a statement, a director unsure how letters must read, or a creditor wanting to oppose a compromise, the paperwork is easier when someone reads the Tribunal's order with you. Our team at legal dispute resolution can walk through the steps and the records you need.
Key takeaways
- Payment in full to a class of creditors, compromises and settlements of calls and debts need the Tribunal's sanction in a winding up by the Tribunal, subject to any rules allowing exceptions.
- Every invoice, order and business letter must carry a "being wound up" statement; the fine is ₹50,000 to ₹3 lakh.
- Books and papers are prima facie evidence between contributories only.
- Government inspection rights are untouched by section 346.
- A liquidation running beyond one year needs an audited statement to the Tribunal, with a copy to the Registrar.
Read next
- Damages and prosecution of delinquent officers: sections 340–342
- Liquidation money and the dividend account: sections 349–353
- Liquidator: appointment, powers and duties under the IBC
- 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.