Corporate Restructuring, Valuation and Insolvency · Winding-up by Tribunal under the Companies Act, 2013

Offences, Dissolution and Closure of Winding Up by Tribunal

Updated 11 October 2026 · Fact-checked

When a company is wound up by the Tribunal, officers who hide assets, falsify books or defraud creditors commit offences under section 336, punishable with 3 to 5 years' imprisonment and fine. Transactions giving fraudulent preference can be undone under section 328. After the final report, the Tribunal orders dissolution and the Registrar strikes off the name.

Understand Offences, Dissolution and Closure of Winding Up

Winding up by the Tribunal ends in two ways. First, wrongdoing by people who ran the company is policed. Second, the company is formally closed and removed from the register.

Offences by officers (section 336). The section applies to a person who is or has been an officer of a company being wound up by the Tribunal, or later ordered to be wound up by the Tribunal. "Officer" includes anyone on whose directions the directors are accustomed to act. So a shadow director can be caught.

The offences fall in groups: not disclosing or delivering up property, books and papers to the Company Liquidator; concealing or fraudulently removing property of ₹1,000 or more, or concealing a debt; destroying or falsifying books, or making false entries; obtaining goods on credit by fraud or false pretence and not paying; making material omissions in statements; failing to tell the liquidator within one month of a known false debt; preventing production of books; showing fictitious losses or expenses; and making false representations to win creditors' consent. Many of these look back twelve months before the winding up began.

The punishment is imprisonment of not less than three years and up to five years, and fine of not less than ₹1,00,000 and up to ₹3,00,000. There is a defence: the accused proves he had no intent to defraud, conceal the true state of affairs or defeat the law. Note that the accused must prove this. A person who knowingly takes in pawn or pledge the property disposed of in breach of clause (d)(viii) faces three to five years and a fine of ₹3,00,000 to ₹5,00,000.

Fraudulent preference (section 328). If the company favoured a creditor, surety or guarantor so that the person is better placed in liquidation than otherwise, within the period of six months before the winding up application, the Tribunal can order the position restored. It can also declare a preferential transfer, delivery, payment or execution made within that six months invalid.

Closure. The Company Liquidator prepares a draft final report for the winding up committee. After the committee approves it, he submits it to the Tribunal for a dissolution order (section 277). Section 365 covers the Official Liquidator's final report to the Central Government or the Tribunal. On the order, the Registrar strikes off the company's name and publishes a notification.

Key rules to remember

Section 336 punishment: Imprisonment: 3 years to 5 years; Fine: ₹1,00,000 to ₹3,00,000; Both imprisonment and fine apply. The accused may plead absence of intent to defraud, conceal the true state of affairs or defeat the law, and must prove it.
Receiver of pledged property (section 336(2)): Imprisonment: 3 years to 5 years; Fine: ₹3,00,000 to ₹5,00,000; Applies to one who takes the property knowing it was pawned, pledged or disposed of in offending circumstances.
Fraudulent preference window (section 328): Preference within 6 months before making the winding up application; The Tribunal may order restoration of the position or declare the transaction invalid.
Look-back for concealment offences: 12 months before commencement of winding up, or at any time after; Applies to clause (d) acts such as concealing property of ₹1,000 or more or falsifying books.
Failure to report false debt: Failure to inform the Company Liquidator for 1 month; Offence under section 336(1)(f).
Winding up committee (section 277): Application within 3 weeks of winding up order; members: Official Liquidator, nominee of secured creditors, professional nominated by Tribunal; The Company Liquidator is the convener. He places a monthly report with minutes before the Tribunal.
Intimation of order (section 277): Tribunal intimates Company Liquidator and Registrar within 7 days; Registrar endorses records and notifies in the Official Gazette; for listed companies he intimates the stock exchanges.

How to solve Offences, Dissolution and Closure of Winding Up questions

Use this order for any case-based question on offences, preference or closure.

1Identify the stage: before the order, after the order, or at closure.
2Check the company is being wound up by the Tribunal, or is later ordered to be, for section 336.
3Pick out each act in the facts and match it to a clause of section 336(1), or to section 328 for a preferred creditor.
4Check the time limits: twelve months for concealment acts, six months for preference, one month for false debts, and the ₹1,000 value threshold.
5Test whether the person is an officer, including someone whose directions directors follow.
6Consider the defence of no intent to defraud, conceal or defeat the law, and who must prove it.
7State the consequence: punishment with the range, or the Tribunal's power to restore the position.
8For closure, trace the sequence: draft final report, committee approval, Tribunal order, Registrar strike off and notification.

Quickest way: Four-line answer frame

When to use it: Use it when the time is short and the facts describe one or two wrongful acts.

Name the section: 336 for officer offences, 328 for preference, 277 or 365 for closure.
Quote the matching act in a few words from the text.
Apply the time or value test from the facts.
Conclude with the penalty or the order, and mention the defence.

Common mistakes in Offences, Dissolution and Closure of Winding Up

Stating the imprisonment as up to five years only.
Students remember the maximum and forget the floor.
Fix: Write: not less than three years, up to five years, with fine of ₹1,00,000 to ₹3,00,000.
Saying the prosecution must prove intent to defraud.
Criminal law usually puts the burden on the prosecution.
Fix: Under the proviso, it is a good defence if the accused proves no intent to defraud, conceal or defeat the law.
Confusing the six-month preference period with the twelve-month look-back.
Both periods appear in winding up law.
Fix: Preference under section 328 is six months before the winding up application. Concealment acts under section 336 use twelve months before commencement.
Limiting 'officer' to directors and key managerial personnel.
The usual meaning of officer is applied.
Fix: The Explanation to section 336 includes anyone whose directions directors have been accustomed to follow.
Saying the Registrar strikes off the name on the liquidator's report.
Steps in the closure sequence get merged.
Fix: The Tribunal must first order dissolution. Then the Registrar strikes off the name and publishes a notification.
Ignoring the penalty on the person receiving pledged property.
Focus stays on officers.
Fix: Section 336(2) penalises the knowing taker, with fine of ₹3,00,000 to ₹5,00,000.

Worked examples

Example 1

Arvind Textiles Ltd is being wound up by the Tribunal. Its director, Mr Rao, sold machinery worth ₹4,00,000 to a relative six months before the winding up and hid the sale proceeds. He also removed a ledger from the office. Advise on his liability.

Show the solution

Mr Rao is an officer of a company being wound up by the Tribunal, so section 336 applies.
Concealing property worth ₹1,000 or more within twelve months before commencement is an offence. The ₹4,00,000 proceeds exceed that value.
Removing or concealing a book relating to the company's affairs is also an offence under clause (d)(iii).
Punishment is imprisonment of three to five years and fine of ₹1,00,000 to ₹3,00,000.
His only defence is to prove he had no intent to defraud, conceal the true state of affairs or defeat the law, which is unlikely on these facts.

Answer: Mr Rao is liable under section 336 for concealing property and a book. He faces three to five years' imprisonment and a fine of ₹1,00,000 to ₹3,00,000, unless he proves absence of intent.

Example 2

Four months before a winding up application was made, Meera Pharma Ltd repaid in full a loan of ₹10,00,000 owed to its director's friend, a creditor, while other creditors were unpaid. What can the Tribunal do?

Show the solution

The payment favoured one creditor, which may be a preference under section 328.
It was made within six months before the winding up application, so it falls within the period.
If the payment puts the creditor in a better position in liquidation than otherwise, the Tribunal, if satisfied that it is a fraudulent preference, may order as it thinks fit to restore the position.
It may also declare the payment invalid as a preferential payment within the six months.
The creditor would then have to restore the amount so that it can be shared according to the order of priority.

Answer: The Tribunal may treat the repayment as a fraudulent preference, declare it invalid and order the position restored as if the preference had not been given.

Exam tips

Learn the section 336 punishment numbers cold, including both lower limits.
Always mention the defence and that the accused must prove it.
Draw a short closure flow: final report, committee approval, Tribunal order, Registrar strike off.
In case questions, quote the time window and the ₹1,000 threshold against the facts.

Practice questions from Winding-up by Tribunal under the Companies Act, 2013

Offences, Dissolution and Closure of Winding Up in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Offences, Dissolution and Closure of Winding Up: frequently asked questions

Who is an officer under section 336?

Any person who is or has been an officer of the company being wound up. The Explanation includes anyone in accordance with whose directions or instructions the directors have been accustomed to act.

What is the punishment for offences by officers in liquidation?

Imprisonment of not less than three years and up to five years, and fine of not less than ₹1,00,000 and up to ₹3,00,000. A person who knowingly takes pledged property in offending circumstances faces fine of ₹3,00,000 to ₹5,00,000.

What is fraudulent preference?

It is when a company favours a creditor, surety or guarantor so that he is better placed in liquidation. Under section 328 the Tribunal can restore the position for preference within six months before the winding up application.

How is a company dissolved after winding up by the Tribunal?

The liquidator's final report is approved by the winding up committee and submitted to the Tribunal, which passes the dissolution order. The Registrar then strikes off the company's name and publishes a notification.