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

Stay of Winding Up and Stay of Suits Under Companies Act, 2013

Updated 11 October 2026 · Fact-checked

Once a winding up order is passed or a provisional liquidator is appointed, Section 279 bars any suit or legal proceeding by or against the company unless the Tribunal grants leave. The Tribunal must decide a leave application within sixty days. Section 289, which allowed a stay of winding up, has been omitted.

Understand Stay of Winding Up and Stay of Suits

A winding up order changes how a company's affairs are handled. The company's assets are now collected and shared among creditors under the Tribunal's control. If every creditor could still sue the company, or the company could chase its own claims freely, the assets would be scattered and the process would fail.

Section 279 solves this. It applies in two situations: when a winding up order has been passed, and when a provisional liquidator has been appointed. From that point, no suit or other legal proceeding can be commenced. A proceeding already pending cannot be proceeded with. This covers proceedings by the company and against it.

The bar is not absolute. The Tribunal can give leave, and it can attach terms. The proviso says an application for leave must be disposed of within sixty days. Sub-section (2) carves out one class: proceedings pending in appeal before the Supreme Court or a High Court are not caught by the bar.

Now the second half of your heading, the power to stay winding up. Section 289 once dealt with the Tribunal's power on an application for stay of winding up. The official text shows it as omitted by the Insolvency and Bankruptcy Code, 2016, with effect from 15 November 2016. So you cannot answer a question on it as a live power. Say it has been omitted and that the IBC now governs such matters.

The Act also has a parallel rule for companies registered under Part XXI (Sections 366 to 378). Section 373 stays suits against the company or any contributory in respect of any debt of the company once a winding up order is made or a provisional liquidator is appointed, except by leave of the Tribunal. Section 372 extends the pre-order restraint rules to suits against contributories when a creditor applies.

Key rules to remember

Section 279(1): the bar: Winding up order passed OR provisional liquidator appointed → no suit or legal proceeding commenced or continued, by or against the company, without leave of the Tribunal; Leave can be granted subject to terms the Tribunal imposes.
Section 279(1) proviso: time limit: Application for leave → disposed of by the Tribunal within 60 days; The limit binds the Tribunal, not the applicant.
Section 279(2): exception: Proceedings pending in appeal before the Supreme Court or a High Court → not covered by the bar; Applies only to appeals pending in those courts.
Section 289: status: Power of Tribunal on application for stay of winding up → omitted by IBC, 2016 (w.e.f. 15-11-2016); Do not present it as a working power.
Section 373: Part XXI companies: Winding up order or provisional liquidator → no suit or proceeding against the company or any contributory for a debt of the company, except by leave of the Tribunal and on its terms; Applies to companies registered under Part XXI.

How to solve Stay of Winding Up and Stay of Suits questions

Use this order for any case question on stay of suits or stay of winding up.

1Identify the trigger: has a winding up order been passed, or a provisional liquidator appointed? If neither, Section 279 does not yet apply.
2Identify the proceeding: is it a suit or other legal proceeding, and is it by or against the company? Note whether it is new or pending.
3Check the exception: is it an appeal pending before the Supreme Court or a High Court? If yes, Section 279(1) does not bar it.
4If barred, state that leave of the Tribunal is needed, and that the Tribunal may impose terms.
5Add the sixty-day rule: the Tribunal must dispose of the leave application within sixty days.
6If the question mentions a stay of winding up or Section 289, state that it is omitted by the IBC with effect from 15 November 2016.
7Check whether the company is registered under Part XXI; if so, add Section 373 and its reach to contributories.
8Conclude clearly: proceeding barred or allowed, and the route to take.

Quickest way: Trigger, proceeding, exception, leave

When to use it: Use when you have few minutes for a short-note or a one-paragraph case.

Write the trigger: winding up order or provisional liquidator.
Write the bar: no suit or proceeding by or against the company without Tribunal leave, on its terms.
Write the exception: appeals pending in the Supreme Court or a High Court.
Write the time limit: leave applications disposed of within 60 days.
Add one line: Section 289 is omitted by the IBC, 2016.

Common mistakes in Stay of Winding Up and Stay of Suits

Treating Section 289 as a current power to stay winding up.
Older books and the topic heading still mention it.
Fix: State that Section 289 is omitted by the IBC, 2016 with effect from 15 November 2016.
Applying the bar before any winding up order or provisional liquidator.
Students assume a petition alone freezes suits.
Fix: Section 279 needs a winding up order or a provisional liquidator. Do not apply it earlier.
Saying the bar covers only suits against the company.
The creditor's view dominates the thinking.
Fix: The text says 'by or against the company'. Both directions are covered.
Forgetting that pending proceedings are also stopped.
Focus stays on new suits.
Fix: Write that new proceedings cannot be commenced and pending ones cannot be proceeded with.
Applying the appeal exception to all appeals.
The word 'appeal' is read loosely.
Fix: Only proceedings pending in appeal before the Supreme Court or a High Court are excepted.
Writing that the sixty-day limit applies to the applicant.
Time limits usually bind the filer.
Fix: The proviso requires the Tribunal to dispose of the application within sixty days.

Worked examples

Example 1

Bharat Textiles Ltd has been ordered to be wound up by the Tribunal. A supplier had filed a suit against it for ₹8,50,000 before the order, and the suit is pending in a civil court. Can the supplier continue the suit?

Show the solution

Trigger: a winding up order has been passed, so Section 279(1) applies.
Proceeding: a suit against the company, pending at the date of the order.
Exception: the suit is pending in a civil court, not as an appeal before the Supreme Court or a High Court, so Section 279(2) does not help.
Result: the suit cannot be proceeded with except with the leave of the Tribunal and subject to its terms.
Route: the supplier applies to the Tribunal for leave, and the Tribunal must dispose of the application within sixty days.

Answer: No. The supplier cannot continue the suit without the Tribunal's leave under Section 279(1). It should apply for leave, which the Tribunal must decide within sixty days.

Example 2

A winding up order was passed against Sagar Pharma Ltd. The company's appeal against a High Court decree in a contract dispute is pending before the Supreme Court. The company's directors ask whether they need the Tribunal's leave to continue it, and whether the company can apply to stay the winding up under Section 289.

Show the solution

Trigger: a winding up order has been passed, so Section 279 is relevant.
Proceeding: an appeal pending before the Supreme Court.
Exception: Section 279(2) says nothing in sub-section (1) applies to a proceeding pending in appeal before the Supreme Court or a High Court.
Result: the leave requirement does not apply, and the appeal can continue.
Stay of winding up: Section 289 has been omitted by the IBC, 2016 with effect from 15 November 2016, so no application can be made under it.

Answer: Leave of the Tribunal is not needed for the pending Supreme Court appeal because of Section 279(2). The company cannot apply under Section 289 as it is omitted.

Exam tips

Open every answer with the trigger: winding up order or provisional liquidator. Examiners look for it first.
If a question uses the words 'power to stay winding up', mention the omission of Section 289 and then explain what Section 279 does.
Quote the sixty-day limit and the Supreme Court or High Court appeal exception. These are the easy marks.
In a case question, follow provision, analysis of the facts, conclusion. Name the proceeding and who it is by or against.
Mention Section 373 only when the facts say the company is registered under Part XXI.

Practice questions from Winding-Up by Tribunal

Stay of Winding Up and Stay of Suits: frequently asked questions

What does Section 279 of the Companies Act, 2013 say?

Once a winding up order is passed or a provisional liquidator is appointed, no suit or legal proceeding can be started or continued by or against the company without leave of the Tribunal. The Tribunal may impose terms. Proceedings pending in appeal before the Supreme Court or a High Court are excepted.

Can the Tribunal stay a winding up under Section 289?

No. Section 289 is omitted by the Insolvency and Bankruptcy Code, 2016, with effect from 15 November 2016. Write this in your answer instead of describing a stay power.

How long does the Tribunal have to decide a leave application?

The proviso to Section 279(1) requires the Tribunal to dispose of an application for leave within sixty days.

Does the stay apply to suits filed by the company?

Yes. Section 279(1) covers suits and proceedings by or against the company. The company also needs leave to start or continue its own suits.

What is the difference between Section 279 and Section 373?

Section 279 is the general rule for companies in winding up. Section 373 applies to companies registered under Part XXI and also bars proceedings against any contributory in respect of the company's debt, except by leave of the Tribunal.