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Cesser of Board's Powers on Appointment of Liquidator

Updated 11 October 2026 · Fact-checked

Section 313 of the Companies Act, 2013 once dealt with the cesser of the Board's powers when a liquidator was appointed. It has been omitted with effect from 15-11-2016. Today, in a winding up by the Tribunal, you work from Sections 275, 277, 290, 291 and 343, with the Company Liquidator acting under Tribunal control.

Understand Cesser of Board's Powers on Appointment of Liquidator

Start with the basic idea. When a company is wound up, someone other than the directors must take charge of its assets, collect what is owed and pay creditors. That person is the liquidator. Once the liquidator is in place, the directors can no longer run the company as before.

The point students miss is this: Section 313 is no longer in force. The official text shows it as 'Omitted by s. 255 and the Eleventh Schedule' with effect from 15-11-2016. The same is true of Section 314, which dealt with the powers and duties of the liquidator in voluntary winding up. So if a question asks you to apply Section 313, say clearly that it has been omitted. Do not quote a rule from it as live law.

So where do you look now? In a winding up by the Tribunal, the Tribunal appoints the Company Liquidator when it passes the winding up order (Section 275). The liquidator must be chosen from insolvency professionals registered under the Insolvency and Bankruptcy Code, 2016. Section 290 lists the liquidator's powers, such as carrying on the business so far as necessary for beneficial winding up, selling property, and instituting or defending suits. These powers are subject to the Tribunal's directions and overall control.

Two other provisions help you show what happens to the old management. Under Section 277(3), the winding up order is deemed to be a notice of discharge to the officers, employees and workmen, except when the business of the company is continued. Under Section 277(5), the liquidator, with the winding up committee, takes over assets and examines the statement of affairs. Some acts need the Tribunal's sanction, such as paying a class of creditors in full or making a compromise with creditors (Section 343).

The supplied text has no replacement section that says in so many words that the Board's powers cease. So in an answer, argue from the liquidator's powers, the Tribunal's control and Section 277. Do not invent a section.

Key rules to remember

Status of Section 313: Section 313 = omitted w.e.f. 15-11-2016; Omitted by s. 255 and the Eleventh Schedule (Act 31 of 2016), w.e.f. 15-11-2016. Section 314 is omitted the same way.
Appointment of Company Liquidator: Tribunal appoints at the time of the winding up order (Section 275); Appointed from insolvency professionals registered under the IBC. Terms and fee are fixed by the Tribunal.
Declaration of independence: Within 7 days of appointment (Section 275(6)); Filed with the Tribunal in the prescribed form, disclosing any conflict of interest. The duty continues throughout the term.
Powers of Company Liquidator: Section 290(1), subject to Tribunal directions and overall control (Section 290(2)); Includes carrying on business as necessary, selling property, selling the undertaking as a going concern, and suing or defending in the company's name.
Effect on officers and employees: Winding up order = notice of discharge (Section 277(3)); Exception: when the business of the company is continued.
Acts needing Tribunal sanction: Section 343(1): paying a class of creditors in full; compromise or arrangement with creditors; compromising calls, debts and claims; A creditor or contributory may apply to the Tribunal about the exercise of these powers (Section 343(3)).
Intimation of the order: Tribunal to send intimation within 7 days to liquidator and Registrar (Section 277(1)); The Registrar endorses his records, notifies in the Official Gazette, and informs the stock exchanges for a listed company.

How to solve Cesser of Board's Powers on Appointment of Liquidator questions

Use this method for any question on the Board's powers once a liquidator is appointed. It keeps you accurate and gives you the provision, analysis and conclusion format.

1Check the type of winding up in the question. If it is a winding up by the Tribunal, use Sections 275 to 290 and 343. If it is voluntary liquidation, note that Section 314 is omitted w.e.f. 15-11-2016 and do not cite it. Do not name a replacement provision unless you are sure of it.
2State the status of Section 313 first: omitted w.e.f. 15-11-2016. Do this in one line so the examiner sees you know the current law.
3Identify the fact that triggers the issue: winding up order, appointment of provisional liquidator or Company Liquidator, or a proposed act by the directors.
4Apply the current provisions: who is appointed (Section 275), the liquidator's powers (Section 290), effect on officers (Section 277(3)) and the winding up committee (Section 277(4) and (5)).
5Check whether the act in question needs Tribunal sanction, for example a compromise with creditors (Section 343) or hiring professionals (Section 291).
6Write a short conclusion: who may act, who must approve, and what the directors should do, such as handing over records and assisting the liquidator.
7Add one practical compliance point, such as the 7-day intimation by the Tribunal and the 7-day declaration by the liquidator.

Quickest way: Three-line answer for the omitted section

When to use it: Use this when the question names Section 313 directly, or asks what happens to the Board's powers on liquidator appointment, and you have little time.

Line 1: Section 313 is omitted w.e.f. 15-11-2016, so it cannot be applied as live law.
Line 2: In a Tribunal winding up, the Company Liquidator is appointed under Section 275 and exercises Section 290 powers under Tribunal control. The winding up order is a notice of discharge to officers and employees unless the business is continued (Section 277(3)).
Line 3: Conclude on the facts. Any act of the old Board that affects assets or creditors must be left to the liquidator or cleared with the Tribunal.

Common mistakes in Cesser of Board's Powers on Appointment of Liquidator

Quoting Section 313 as a section that is still in force.
Older notes and the topic title still carry the heading 'Cesser of Board's powers'.
Fix: Write that it was omitted w.e.f. 15-11-2016 and then use Sections 275, 277, 290 and 343.
Saying directors are automatically removed from office on a winding up order.
Students confuse loss of management power with removal of directors.
Fix: Rely only on what the text says: the order is a notice of discharge to officers, employees and workmen (Section 277(3)), except when the business is continued. Do not add a removal rule that is not in the text.
Stating that the liquidator can do anything without the Tribunal.
Section 290 has a long list of powers, so students overlook the limits.
Fix: Add that powers are subject to the Tribunal's directions and overall control (Section 290(1) and (2)). Mention Section 343 sanction for compromises and paying a class of creditors in full.
Applying Section 314 to a voluntary winding up.
Students remember Section 314 as the voluntary winding up provision.
Fix: Section 314 is also omitted w.e.f. 15-11-2016. Do not cite it as live law, and do not name a replacement unless you are sure of it.
Saying any chartered accountant or professional can be hired by the liquidator at will.
Section 290(1)(l) mentions professional assistance, which looks like free power.
Fix: Section 291 requires the Tribunal's sanction to appoint professionals, and each person must disclose any conflict of interest to the Tribunal.
Mixing up the Official Liquidator and the Company Liquidator.
Section 275(1) names both, and both appear on the winding up committee.
Fix: Remember that the Company Liquidator is the person appointed under Section 275 and is the convener of the winding up committee. The Official Liquidator attached to the Tribunal is one of the committee's three members.

Worked examples

Example 1

The Company Secretary of Sagar Textiles Ltd is asked by a director whether Section 313 of the Companies Act, 2013 still stops the Board from exercising powers once the Tribunal appoints a Company Liquidator. Advise.

Show the solution

Provision: Section 313 once dealt with the cesser of the Board's powers on appointment of a liquidator. The official text shows it as omitted by Section 255 and the Eleventh Schedule (Act 31 of 2016), w.e.f. 15-11-2016.
Analysis: Since the section has been omitted, it cannot be relied on. The current framework is Section 275 (appointment by the Tribunal at the time of the winding up order), Section 290 (powers of the Company Liquidator, subject to Tribunal control) and Section 277(3) (winding up order is notice of discharge to officers, employees and workmen, unless the business is continued).
Application: Taking over assets is a function of the liquidator with the winding up committee (Section 277(5)(i)). So the Board should not deal with company assets on its own.
Conclusion: Advise the director that Section 313 is not available. The Board should hand over records and assets, assist the liquidator, and act only as the Tribunal or liquidator permits.

Answer: Section 313 has been omitted w.e.f. 15-11-2016. The position now rests on Sections 275, 277 and 290: the Company Liquidator takes charge under the Tribunal's control, and the Board should not deal with company assets on its own.

Example 2

After a winding up order against Kaveri Components Ltd, the Company Liquidator proposes to settle a disputed claim of a supplier for less than the amount claimed. The former managing director objects that the Board never approved it. Examine.

Show the solution

Provision: Section 290(1)(g) lets the Company Liquidator invite and settle claims of creditors, employees or any other claimant, and distribute sale proceeds in accordance with priorities under the Act. Section 343(1)(ii) covers a compromise or arrangement with creditors or persons claiming to be creditors, and the Company Liquidator may make it with the Tribunal's sanction. Rules under Section 343(2) may allow some such acts without sanction.
Analysis: The power belongs to the Company Liquidator, not to the Board. The text requires no Board approval. The checks on the liquidator are the Tribunal's overall control (Section 290(2)) and, for a compromise with a person claiming to be a creditor, the sanction requirement of Section 343(1)(ii).
Application: A creditor or contributory may apply to the Tribunal about the proposed exercise of the power, and the Tribunal must give a reasonable opportunity to the applicant and the liquidator before passing orders (Section 343(3)). The former managing director's route is therefore to apply to the Tribunal only if he qualifies as a creditor or contributory. He has no right of Board approval.
Conclusion: The objection based on missing Board approval fails. Because the settlement is a compromise with a person claiming to be a creditor, it falls under Section 343(1)(ii), so the liquidator should seek the Tribunal's sanction unless rules under Section 343(2) allow otherwise.

Answer: The settlement is the Company Liquidator's decision, not the Board's. As a compromise with a person claiming to be a creditor, it falls under Section 343(1)(ii) and needs the Tribunal's sanction, unless rules under Section 343(2) allow otherwise. Board approval is not required, and a creditor or contributory who objects may apply to the Tribunal under Section 343(3).

Exam tips

Open every answer on this topic by saying Section 313 is omitted w.e.f. 15-11-2016. It shows the examiner you know the current law.
Use the case format: provision, analysis of the facts, conclusion. Name the section for each step, and only the sections in your notes.
Keep a list of the 'sanction' items: Section 343 compromises and paying a class of creditors in full, and Section 291 professional assistance. Questions often test whether the liquidator needs the Tribunal.
Remember the numbers that are in the text: 7 days for the Tribunal's intimation, 7 days for the liquidator's declaration, 3 weeks for applying for a winding up committee.
Never write that directors are removed or lose office automatically. Use the wording of Section 277(3) on discharge of officers.

Practice questions from Board Effectiveness and Building Better Boards

Cesser of Board's Powers on Appointment of Liquidator in other exams

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

CS ExecutiveCessation of Board's Powers on Appointment of Liquidator

Cesser of Board's Powers on Appointment of Liquidator: frequently asked questions

Is Section 313 of the Companies Act, 2013 still in force?

No. The official text shows it as omitted by Section 255 and the Eleventh Schedule (Act 31 of 2016), w.e.f. 15-11-2016. You should not cite it as live law.

What replaced Section 313 for the powers of the Board after a liquidator is appointed?

The supplied text gives no one-line replacement. The current position is read from Section 275 on appointment, Section 277 on the effect of the winding up order and Section 290 on the liquidator's powers. These are exercised under the Tribunal's control.

Who appoints the Company Liquidator in a winding up by the Tribunal?

The Tribunal appoints the Company Liquidator at the time of passing the winding up order (Section 275(1)). The appointment is from insolvency professionals registered under the IBC. The Tribunal fixes the terms and the fee.

Does a winding up order end the employment of staff?

Section 277(3) says the winding up order is deemed to be a notice of discharge to the officers, employees and workmen of the company. The exception is when the business of the company is continued.

What is the winding up committee?

It is a committee that assists and monitors the liquidation, constituted on the Company Liquidator's application within three weeks of the winding up order. It has the Official Liquidator attached to the Tribunal, a nominee of secured creditors and a professional nominated by the Tribunal (Section 277(4)).