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

A petition for winding up of Narmada Agro Ltd was presented on 10 June and the Tribunal passed a winding up order on 20 September. A bank levied attachment on the company's godown stock on 15 July without Tribunal leave, and another creditor sold the company's machinery on 25 September without leave. Ignoring any government dues, which statement is correct under the Companies Act, 2013?

Both are void. Winding up by the Tribunal is deemed to commence on presentation of the petition, 10 June. An attachment or sale of the company's property made without Tribunal leave after that date is void, and both events fall after it.

  1. ABoth the attachment and the sale are void, since winding up is deemed to commence on presentation of the petitionCorrect
  2. BOnly the sale is void, since it occurred after the winding up order
  3. COnly the attachment is void, since sale after the order needs no leave
  4. DNeither is void, as both are valid unless the liquidator challenges them within sixty days

Explanation

Winding up by the Tribunal is deemed to commence when the petition is presented, i.e. 10 June. An attachment or sale without leave after commencement is void. The attachment of 15 July and the sale of 25 September both fall after 10 June, so both are void. Treating 20 September as the start wrongly saves the attachment.

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