Sections 349 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 349 to 353 control what a liquidator does with the money he receives. The Official Liquidator pays into the public account of India, a Company Liquidator uses a special account in a scheduled bank, unpaid dividends and undistributed assets go to the Company Liquidation Dividend and Undistributed Assets Account, and defaults in returns can be forced by the Tribunal.
A Company Liquidator must bank all receipts in a special account in a scheduled bank, and must not keep more than ₹5,000 for more than ten days without explanation, or he pays 12% interest, a penalty and risks losing remuneration or his office. Dividends unpaid for six months, and assets refundable to contributories and undistributed for six months, go into the Company Liquidation Dividend and Undistributed Assets Account. Unclaimed money there moves to the Central Government's general revenue account after fifteen years, but can still be claimed.
Context: where these sections apply
Winding up by the Tribunal continues under the Companies Act on the grounds left in section 271 (see grounds for winding up by the Tribunal). Inability to pay debts and voluntary winding up moved to the IBC, but section 352(5) still has a rule for voluntary winding up, so read the sub-sections as they stand.
Sections 349 to 351: where the money must go
| Section | Who | Rule |
|---|---|---|
| 349 | Official Liquidator | Pay monies received as Official Liquidator into the public account of India in the Reserve Bank of India, in the prescribed manner and at the prescribed times |
| 350(1) | Company Liquidator | Deposit monies received in a scheduled bank, to the credit of a special bank account opened by him for that purpose, in the prescribed manner and at the prescribed times. If the Tribunal thinks it advantageous for creditors, contributories or the company, it may permit another bank |
| 351 | Both | Must not deposit any monies received in that capacity into any private banking account |
Section 350(2) is the discipline clause. If a Company Liquidator at any time retains for more than ten days a sum exceeding ₹5,000 (or another amount the Tribunal authorises on his application), and does not explain it to the Tribunal's satisfaction, he must:
- pay interest on the excess at 12% per annum, plus such penalty as the Tribunal determines;
- bear any expenses caused by his default; and
- be liable to have all or part of his remuneration disallowed, or to be removed from office.
For creditors, this is a useful lever. If a liquidator is sitting on realised cash, an application to the Tribunal is the remedy. Our legal dispute resolution team can advise on how to frame it.
Section 352: the Dividend and Undistributed Assets Account
What goes in. When a company is being wound up and the liquidator holds money representing:
- dividends payable to a creditor that remained unpaid for six months after the date they were declared; or
- assets refundable to a contributory that remained undistributed for six months after the date they became refundable,
he must forthwith deposit it in a separate special account, the Company Liquidation Dividend and Undistributed Assets Account, maintained in a scheduled bank. On dissolution, any unpaid dividends or undistributed assets in his hands must also be paid into this account (sub-section (2)).
Statement to the Registrar. With each such payment the liquidator must give the Registrar a statement in the prescribed form showing the nature of the sums, the names and last known addresses of the persons entitled, the amount each is entitled to, the nature of each claim and other prescribed particulars (sub-section (3)). The bank's receipt is an effectual discharge to the liquidator (sub-section (4)).
Voluntary winding up. When filing the statement under section 348(1), the liquidator must show the sum payable into the account during the six months before the statement was prepared and pay it in within fourteen days of filing (sub-section (5)).
Claiming the money
| Step | What the text says |
|---|---|
| Who may claim | Any person claiming entitlement to money paid into the account, including money paid under a previous company law |
| Where | Application to the Registrar |
| Timeline | The Registrar, if satisfied, may pay. He must settle the claim within sixty days of receipt; if he fails, he reports the reasons to the Regional Director |
| After fifteen years | Unclaimed money is transferred to the general revenue account of the Central Government, but a claim can still be made under sub-section (6) and is treated as if no transfer had occurred; an order for payment is treated as an order for refund of revenue |
If the liquidator keeps the money
A liquidator who retains money that should have gone into the account must (sub-section (8)):
- pay 12% per annum interest plus a penalty determined by the Registrar (the Central Government may remit interest in whole or part in a proper case);
- pay any expenses occasioned by his default; and
- where the winding up is by the Tribunal, be liable to have his remuneration disallowed in whole or part, and to be removed by the Tribunal.
Section 353: forcing a liquidator to make good a default
If a Company Liquidator has defaulted in filing, delivering or making any return, account or document, or giving any notice required by law, and does not make good the default within fourteen days after service of a notice requiring him to do so, the Tribunal may, on application by a contributory, a creditor or the Registrar, order him to make good the default within a specified time. The order may make the liquidator bear the costs (sub-section (2)). Section 353 does not displace any law imposing penalties for the same default (sub-section (3)).
A practical example
A liquidator in a winding up by the Tribunal declares a dividend and, months later, a creditor cannot be traced. After six months the amount must move to the dividend account, with a statement to the Registrar naming the creditor and last known address. The creditor, if he later surfaces, applies to the Registrar rather than to the liquidator, and the Registrar should decide within sixty days. Related reading on priority of payment is in distribution of assets in winding up.
Need help with liquidation money and claims?
If you are a creditor or contributory trying to trace a dividend, or a liquidator arranging accounts and statements, getting the account and Registrar filings right avoids applications to the Tribunal later. Our legal dispute resolution team can help you map what is due, to whom and by when.
Key takeaways
- Official Liquidator pays into the public account of India; a Company Liquidator uses a special account in a scheduled bank, never a private account.
- More than ₹5,000 held beyond ten days without explanation brings 12% interest, penalty and possible removal.
- Dividends and refundable assets unclaimed for six months go into the Dividend and Undistributed Assets Account.
- Claims go to the Registrar, who should settle within sixty days; after fifteen years the money moves to central revenue but remains claimable.
- The Tribunal can compel a liquidator to file overdue returns after a fourteen-day notice.
Read next
- Liquidator's sanction, books and records: sections 343–348
- Meetings, void dissolution and limitation: sections 354–358
- Dissolution after winding up: the final step
- Liquidator appointment, powers and duties
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.