Sections 375 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 375 allows an "unregistered company", which can include a partnership firm, LLP, society, cooperative society or association, to be wound up under the Companies Act, 2013 by the Tribunal. It cannot be wound up voluntarily under the Act. Section 376 reaches foreign bodies that stopped doing business in India, and section 377 makes these provisions additional to the ordinary winding-up provisions.
An unregistered company may be wound up under the Act only by the Tribunal, on three grounds: it is dissolved, has ceased business or carries on business only to wind up its affairs; it is unable to pay its debts; or the Tribunal thinks it just and equitable. No voluntary winding up is allowed. A creditor owed more than ₹1 lakh can prove inability to pay with a written demand left unpaid for three weeks. Section 375 also defines what is not an unregistered company.
How this fits with the IBC
Since the Insolvency and Bankruptcy Code, 2016, inability to pay debts of a company is largely handled under the IBC, and voluntary winding up moved to it. Section 375 still reads as above in the consolidated text, and it stays the Companies Act route for unregistered bodies and for the "just and equitable" and "dissolved or ceased business" grounds. Winding up by the Tribunal for registered companies continues on the grounds left in section 271 (see grounds for winding up by the Tribunal). The text of section 375(3)(b) and (4) has not been amended by footnote in the consolidated text, so check current notifications on how the IBC and this section interact in a given case.
Section 375(1) and (2): the basic rule
Subject to the Part, any unregistered company may be wound up under the Act in the prescribed manner, and all the Act's winding-up provisions apply to it, with the exceptions and additions in sub-sections (2) to (4). Sub-section (2) is short: no unregistered company shall be wound up under this Act voluntarily.
Section 375(3): the three grounds
| Clause | Ground |
|---|---|
| (a) | The company is dissolved, or has ceased to carry on business, or is carrying on business only for winding up its affairs |
| (b) | The company is unable to pay its debts |
| (c) | The Tribunal is of opinion that it is just and equitable that the company be wound up |
Section 375(4): when is it "unable to pay its debts"?
The unregistered company is deemed unable to pay its debts in any of four cases.
| Clause | Test |
|---|---|
| (a) | A creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding ₹1 lakh then due has served a demand under his hand requiring payment, by leaving it at the principal place of business, delivering it to the secretary, a director, manager or principal officer, or otherwise as the Tribunal approves or directs, and the company has for three weeks neglected to pay, secure or compound for the sum to the creditor's satisfaction |
| (b) | A suit or legal proceeding has been started against a member for a debt or demand due or claimed from the company (or from him as a member), written notice has been served on the company, and within ten days the company has not paid, secured or compounded the debt, procured a stay, or indemnified the defendant |
| (c) | Execution or other process on a decree or order in favour of a creditor against the company, a member as such, or a person authorised to be sued as nominal defendant, is returned unsatisfied in whole or in part |
| (d) | It is otherwise proved to the Tribunal's satisfaction that the company cannot pay its debts |
Example: a creditor of a society with more than seven members is owed ₹3 lakh, serves a written demand at the society's principal place of business, and nothing is paid, secured or compounded for three weeks. The deeming rule in clause (a) is met and the creditor can approach the Tribunal. Creditors and members in this position can get advice from our legal dispute resolution team.
What is an "unregistered company"? The Explanation
| Included or excluded | Text |
|---|---|
| Excluded | A railway company incorporated under an Act of Parliament or other Indian law or an Act of the United Kingdom Parliament |
| Excluded | A company registered under this Act |
| Excluded | A company registered under any previous companies law, unless its registered office was in Burma, Aden or Pakistan immediately before separation from India |
| Included | Save as aforesaid, any partnership firm, LLP, society, cooperative society, association or company consisting of more than seven members at the time the winding-up petition is presented |
Two cautions follow. The inclusion clause speaks of "more than seven members", while section 366 (registration) allows two or more, so the two Parts use different thresholds. And an entity may have its own statute for dissolution; section 378 saves enactments that allow such bodies to be wound up as companies under the 1956 Act or earlier laws, with references read as references to the corresponding provisions of this Act.
Section 376: foreign bodies that have left India
Where a body corporate incorporated outside India, which has been carrying on business in India, ceases to carry on business in India, it may be wound up as an unregistered company under this Part, even if it has been dissolved or has otherwise ceased to exist under the law of its country. This is the route for Indian creditors of a foreign company whose home-country existence has ended. See closure of foreign company operations in India.
Section 377: cumulative provisions
- The Part is in addition to and not in derogation of the provisions elsewhere in the Act on winding up by the Tribunal (sub-section (1)).
- The Tribunal or Official Liquidator may exercise in unregistered company cases any power or act that they could exercise in winding up a company registered under the Act (sub-section (2)).
- The proviso says an unregistered company is not deemed a company under the Act, except when being wound up, and then only to the extent provided by this Part.
Need help with an unregistered entity that is in trouble?
Whether you are a creditor weighing a demand under section 375(4) or a partner or office-bearer facing one, the steps, evidence and timing matter. Our legal dispute resolution team can help you check the facts against the text and plan the approach.
Key takeaways
- Unregistered companies can be wound up only by the Tribunal, never voluntarily.
- Grounds: dissolved or ceased business, unable to pay debts, or just and equitable.
- A demand above ₹1 lakh unpaid for three weeks is one deemed inability test.
- Companies registered under this Act, and railway companies, are excluded.
- Section 376 reaches foreign bodies that ceased doing business in India, even if dissolved abroad.
Read next
- Registration of existing entities: sections 366–374
- Documents a foreign company must deliver: section 380
- Winding up by the Tribunal: grounds and process
- Winding up and dissolution of an LLP
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.