Insolvency and Bankruptcy - Law and Practice · Winding-Up by Tribunal

Avoidance of Transfers, Attachments and Executions in Winding Up

Updated 11 October 2026 · Fact-checked

In a winding up by the Tribunal, section 334 makes any disposition of property, transfer of shares or alteration in members' status after commencement void, unless the Tribunal orders otherwise. Section 335 makes attachments, distress, executions and sales made without Tribunal leave after commencement void. Government tax and dues recovery is excluded from section 335.

Understand Avoidance of Transfers, Attachments and Executions

When a company is wound up, its assets must be kept safe for one purpose: paying creditors fairly. If the company, or a single creditor, could dispose of assets after the process begins, the pool would shrink and some creditors would be favoured over others. Sections 334 and 335 of the Companies Act, 2013 stop this.

Section 334 deals with acts of the company and its members. In a winding up by the Tribunal, any disposition of the company's property (including actionable claims), any transfer of shares in the company, and any alteration in the status of its members, made after the commencement of the winding up, is void. The exception is built into the text: it is void "unless the Tribunal otherwise orders". So the Tribunal can validate a transaction, for example a sale that benefits the estate.

Section 335 deals with actions by outside creditors. Where a company is being wound up by the Tribunal, any attachment, distress or execution put in force against the estate or effects of the company after commencement, without leave of the Tribunal, is void. So is any sale of the company's properties or effects held after commencement without leave. The creditor cannot race ahead of the others. Section 335(2) carves out proceedings for recovery of any tax or impost or any dues payable to the Government.

A simple way to remember the difference: section 334 freezes what the company and its members do; section 335 freezes what creditors do. Both apply to winding up by the Tribunal only, and both protect the Company Liquidator's pool of assets.

Do not confuse these with section 329. Section 329 looks backward. A transfer or delivery of goods made within one year before the presentation of the winding-up petition or the passing of the voluntary winding-up resolution is void against the Company Liquidator, unless it was in the ordinary course of business or in favour of a purchaser or encumbrancer in good faith and for valuable consideration. Sections 334 and 335 look forward from commencement.

Key rules to remember

Section 334: post-commencement dispositions: Winding up by Tribunal + (disposition of property / transfer of shares / alteration in members' status) after commencement → void, unless Tribunal otherwise orders; Property includes actionable claims. Applies only to winding up by the Tribunal.
Section 335(1): attachments, executions and sales: Attachment, distress or execution put in force, or sale held, after commencement without leave of Tribunal → void; Leave must be obtained from the Tribunal. It must relate to the company's estate or effects.
Section 335(2): exclusion: Proceedings for recovery of any tax or impost or any dues payable to the Government → section 335 does not apply; The exclusion is in section 335 only. Section 334 has no such carve-out.
Section 329: look-back transfers: Transfer or delivery of goods within one year before petition or voluntary winding-up resolution, not in ordinary course or to good-faith purchaser for value → void against Company Liquidator; Backward-looking. Use it to contrast with sections 334 and 335.

How to solve Avoidance of Transfers, Attachments and Executions questions

Use this order for any fact-based question on transfers, attachments or executions around winding up.

1Identify the mode of winding up. Sections 334 and 335 are stated for winding up by the Tribunal.
2Fix the date of commencement and compare it with the date of the act in the facts. Only acts after commencement fall under these sections.
3Classify the act: by the company or members (section 334) or by a creditor or court process (section 335).
4For section 334, name the type: disposition of property, share transfer or alteration in members' status.
5Check the exceptions: Tribunal's contrary order under section 334; leave of the Tribunal, or a Government tax or dues recovery, under section 335.
6If the act was before commencement, test section 329 (one-year look-back, ordinary course, good faith and valuable consideration).
7State the conclusion clearly: void or valid, and what the Liquidator or Tribunal can do.

Quickest way: Timeline and actor check

When to use it: Use it for short case questions when time is tight.

Draw a line with commencement in the middle.
Mark the act. Before the line, think section 329. After the line, go on.
Ask who acted. Company or member means section 334. Creditor means section 335.
Look for the escape: Tribunal order, Tribunal leave, or Government dues.
Write: provision, facts, conclusion.

Common mistakes in Avoidance of Transfers, Attachments and Executions

Applying sections 334 and 335 to every mode of winding up
Students remember the rule but not the opening words of the sections.
Fix: Both sections refer to winding up by the Tribunal. Say so in your answer and check the mode in the facts.
Saying the transfer is void with no exception under section 334
The word void feels absolute.
Fix: Always add: unless the Tribunal otherwise orders.
Treating Government tax recovery as void under section 335
Students forget sub-section (2).
Fix: Section 335(2) says nothing in the section applies to proceedings for recovery of any tax or impost or dues payable to the Government.
Mixing up section 334 with section 329
Both make transfers void and both involve the liquidator.
Fix: Section 334 covers acts after commencement. Section 329 covers transfers within one year before the petition or resolution, with its own exceptions.
Leaving out share transfers and change in members' status
Students focus on sale of assets.
Fix: Section 334 expressly covers any transfer of shares in the company and any alteration in the status of its members.
Forgetting that a sale without leave is also void
Students stop at attachment and execution.
Fix: Section 335(1)(b) separately covers a sale of the company's properties or effects held without Tribunal leave after commencement.

Worked examples

Example 1

A winding-up order is passed by the Tribunal against Kaveri Textiles Ltd. After commencement, the company's managing director sells a machine to a friend, and a shareholder transfers 5,000 shares to his brother. Advise the Company Liquidator.

Show the solution

Provision: section 334 applies to a winding up by the Tribunal.
Facts: both acts occurred after commencement. The sale of the machine is a disposition of the company's property. The share transfer is a transfer of shares in the company.
Application: section 334 makes both void.
Exception: the Tribunal may otherwise order. The liquidator may apply if validating either act would help the estate.
Conclusion: without such an order, the machine remains the company's asset and the liquidator can recover it. The share transfer is void.

Answer: Both the sale of the machine and the share transfer are void under section 334, unless the Tribunal otherwise orders. The Liquidator can treat the machine as part of the company's assets.

Example 2

Winding up of Sagar Metals Ltd by the Tribunal has commenced. A bank creditor attaches the company's stock in execution of a decree without leave of the Tribunal. The tax department also starts recovery of dues. Examine the validity of both actions.

Show the solution

Provision: section 335 covers attachment, distress, execution and sale after commencement without leave of the Tribunal.
Bank: the attachment was put in force after commencement and without leave. Under section 335(1)(a) it is void.
Tax department: section 335(2) says the section does not apply to proceedings for recovery of any tax or impost or any dues payable to the Government.
Conclusion: the bank's attachment is void. The tax recovery is not hit by section 335.

Answer: The bank's attachment is void under section 335(1)(a). The tax department's recovery proceedings fall outside section 335 by virtue of section 335(2).

Exam tips

Quote the key words: void, unless the Tribunal otherwise orders, and without leave of the Tribunal.
Always fix the commencement date first and say whether the act was before or after it.
Write the contrast between sections 334 and 335 as actor and act: company and members versus creditors.
Mention section 329 briefly when the facts show a transfer before the petition.
Finish with a firm conclusion and the liquidator's practical step, such as applying to the Tribunal.

Practice questions from Winding-Up by Tribunal

Avoidance of Transfers, Attachments and Executions: frequently asked questions

What is the difference between section 334 and section 335 of the Companies Act, 2013?

Section 334 makes post-commencement dispositions of property, share transfers and changes in members' status void unless the Tribunal orders otherwise. Section 335 makes post-commencement attachments, distress, executions and sales without Tribunal leave void. The first targets acts of the company and members, the second targets creditor action.

Do sections 334 and 335 apply to voluntary winding up?

Both sections are worded for winding up by the Tribunal. In an answer, state that the provisions are tied to that mode.

Can a transfer after commencement of winding up ever be valid?

Yes. Under section 334 the transfer is void unless the Tribunal otherwise orders, so the Tribunal can allow it. Under section 335, acts done with the Tribunal's leave are not void.

Are Government tax recoveries stopped by section 335?

No. Section 335(2) provides that the section does not apply to proceedings for recovery of any tax or impost or any dues payable to the Government.