Compliance Management, Audit and Due Diligence · Compliance Framework

Statement of Liquidation under Section 344 of the Companies Act, 2013

Updated 11 October 2026 · Fact-checked

Under Section 344 of the Companies Act, 2013, when a company is being wound up by the Tribunal or voluntarily, every invoice, order for goods and business letter showing its name must state that it is being wound up. Default attracts a fine of ₹50,000 to ₹3 lakh on the company and on officers who wilfully authorise or permit it.

Understand Statement of Liquidation under Section 344

A company in liquidation still exists in law until it is dissolved. It may still deal with suppliers, customers and creditors while its affairs are closed. Those outsiders need a warning that the company is on its way out.

Section 344 gives that warning. It applies where a company is being wound up, whether by the Tribunal or voluntarily. Every invoice, order for goods or business letter issued by or on behalf of the company must carry a statement that the company is being wound up. The rule covers documents issued by the company, by a Company Liquidator, or by a receiver or manager of the company's property.

The document must be one on or in which the name of the company appears. The usual practice is to add the words "in liquidation" after the name, but the section only requires a statement that the company is being wound up.

The rule is a compliance duty, so it comes with a penalty. The company is liable. So is every officer of the company, the Company Liquidator, and any receiver or manager, but only if that person wilfully authorises or permits the non-compliance. The fine is not less than ₹50,000 and may extend to ₹3 lakh.

Do not confuse this with Section 60. That section requires a company that states its authorised capital in business letters or billheads to also state subscribed and paid-up capital. It is about capital, not liquidation.

Key rules to remember

Duty to state liquidation (s. 344(1)): Company being wound up (Tribunal or voluntary) → every invoice, order for goods and business letter bearing the company's name must state that the company is being wound up; Applies to documents issued by or on behalf of the company, the Company Liquidator, or a receiver or manager of the company's property.
Penalty (s. 344(2)): Fine: minimum ₹50,000; maximum ₹3,00,000; Falls on the company and on every officer, Company Liquidator, receiver or manager who wilfully authorises or permits the non-compliance.
Who is liable: Company (always) + persons who wilfully authorise or permit; Wilfulness is the test for individuals. The section does not make every officer liable automatically.
Contrast: Section 60 default: Penalty ₹10,000 on company + ₹5,000 on each officer in default, for each default; Section 60 concerns subscribed and paid-up capital statements. It is a penalty, not a fine range like s. 344.

How to solve Statement of Liquidation under Section 344 questions

Use this order for any fact-based question on Section 344. Keep the answer in provision, facts, conclusion form.

1Check whether the company is being wound up, by the Tribunal or voluntarily. If it is not in winding up, Section 344 does not apply.
2Identify the document: invoice, order for goods, or business letter. Check that the company's name appears on it.
3Identify the issuer: the company, the Company Liquidator, or a receiver or manager of the company's property. All are covered.
4Check whether the document carries a statement that the company is being wound up.
5If the statement is missing, state the contravention of Section 344(1).
6Name the persons liable: the company, and any officer, Company Liquidator, receiver or manager who wilfully authorised or permitted it. Test the facts for wilfulness.
7State the penalty: fine of not less than ₹50,000, extending to ₹3 lakh.
8Add a practical point: advise correcting stationery and templates, such as adding "in liquidation" after the company name.

Quickest way: Four-point check for Section 344

When to use it: Use when time is short, such as a short-note question or a brief fact scenario.

Trigger: company being wound up, by Tribunal or voluntarily.
Documents: invoice, order for goods, business letter showing the company's name.
Duty: state that the company is being wound up.
Penalty: fine ₹50,000 to ₹3 lakh on the company and on those who wilfully authorise or permit the default.

Common mistakes in Statement of Liquidation under Section 344

Applying Section 344 only to Tribunal winding up.
Students link liquidation with court orders and forget voluntary winding up.
Fix: Write "whether by the Tribunal or voluntarily" in every answer.
Saying only the company is liable.
Students stop at the company as the main offender.
Fix: Add the officers, the Company Liquidator and any receiver or manager who wilfully authorise or permit the default.
Holding every officer liable regardless of knowledge.
Students read "every officer" and ignore the word "wilfully".
Fix: Test the facts: did the person authorise or permit the non-compliance knowingly? If not, individual liability is doubtful.
Quoting the penalty as a fixed amount or as a ₹10,000 penalty.
Mixing up Section 344 with Section 60.
Fix: Section 344 is a fine from ₹50,000 up to ₹3 lakh. The ₹10,000 and ₹5,000 figures belong to Section 60.
Limiting the rule to documents issued by the company itself.
Students overlook the words "or on behalf of the company".
Fix: State that documents issued by the Company Liquidator or a receiver or manager are also covered.
Applying the rule to every document, such as board minutes.
Students over-generalise.
Fix: The section names invoices, orders for goods and business letters. Stick to those three.

Worked examples

Example 1

Meridian Textiles Ltd is being wound up voluntarily. Its liquidator, Mr Rao, sends a business letter on the company's letterhead to a supplier asking for a delivery schedule. The letter does not say the company is being wound up. Mr Rao says the supplier already knew. Advise on compliance.

Show the solution

Provision: Under Section 344(1), where a company is being wound up, whether by the Tribunal or voluntarily, every business letter issued by or on behalf of the company or a Company Liquidator, bearing the company's name, must state that the company is being wound up.
Facts: Meridian is in voluntary winding up. The letter is a business letter issued by the Company Liquidator and carries the company's name.
Analysis: The statement is missing. The supplier's prior knowledge is not an exception in the section.
Liability: Under Section 344(2), the company is liable. Mr Rao is liable if he wilfully authorised or permitted the omission. He issued the letter himself, so wilfulness is likely.
Conclusion and penalty: There is a contravention. The fine is not less than ₹50,000 and may extend to ₹3 lakh.

Answer: Section 344(1) is contravened because the letter lacks the statement that the company is being wound up. The company, and Mr Rao if he wilfully authorised the omission, are liable to a fine of ₹50,000 to ₹3 lakh. Stationery should be corrected at once.

Example 2

Distinguish the duty under Section 344 from the duty under Section 60 of the Companies Act, 2013, with the consequences of default under each.

Show the solution

Section 344 applies to a company being wound up. Invoices, orders for goods and business letters bearing its name must state that it is being wound up.
Section 60 applies where a notice, advertisement, official publication, business letter, billhead or letter paper states the authorised capital. It must also state the subscribed and paid-up capital, in an equally prominent position and in equally conspicuous characters.
Section 344 default: fine of ₹50,000 to ₹3 lakh on the company and on officers, the Company Liquidator, receiver or manager who wilfully authorise or permit it.
Section 60 default: penalty of ₹10,000 on the company and ₹5,000 on every officer in default, for each default.

Answer: Section 344 warns outsiders that a company is in liquidation, with a fine of ₹50,000 to ₹3 lakh. Section 60 requires paid-up and subscribed capital to be shown wherever authorised capital is stated, with a penalty of ₹10,000 on the company and ₹5,000 on each officer in default, for each default.

Exam tips

Write the trigger first: company being wound up by the Tribunal or voluntarily. Marks are often lost by skipping it.
List all three documents and all three issuers. Examiners look for the Company Liquidator and the receiver or manager.
Use the word "wilfully" when naming liable individuals, and apply it to the facts given.
Learn the amounts exactly: minimum ₹50,000, maximum ₹3 lakh. Do not mix them with Section 60 figures.
Close case answers with a practical step, such as updating letterheads, invoice formats and purchase order templates.

Practice questions from Compliance Framework

Statement of Liquidation under Section 344: frequently asked questions

What does Section 344 of the Companies Act, 2013 require?

It requires every invoice, order for goods and business letter bearing the company's name to state that the company is being wound up. This applies when winding up is by the Tribunal or voluntary. The documents may be issued by the company, the Company Liquidator, or a receiver or manager.

What is the penalty for not stating that a company is in liquidation?

The fine is not less than ₹50,000 and may extend to ₹3 lakh. It falls on the company. It also falls on officers, the Company Liquidator and any receiver or manager who wilfully authorise or permit the non-compliance.

Does Section 344 apply to voluntary winding up?

Yes. The section covers a company being wound up, whether by the Tribunal or voluntarily. Both routes require the statement on invoices, orders for goods and business letters.

Is Section 344 the same as Section 348?

No. Section 344 is about the statement on business documents. Section 348 requires the Company Liquidator to file an audited statement of the liquidation with the Tribunal if winding up is not concluded within one year. Keep the two separate in your answers.