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

A winding-up petition against Sagar Agro Ltd was presented on 10 March. On 25 March, the company sold a godown to a buyer for cash without any order of the Tribunal. The winding-up order was passed on 20 April. What is the status of the sale under the Companies Act, 2013?

The sale is void unless the Tribunal otherwise orders. Winding up by the Tribunal is deemed to commence when the petition is presented, and a disposition of company property after that commencement is void under section 334. The later date of the winding-up order does not validate it.

  1. AValid, because the sale was made before the winding-up order was passed
  2. BVoid, because the winding up is deemed to commence on presentation of the petition, unless the Tribunal otherwise ordersCorrect
  3. CValid, because the buyer paid in cash
  4. DVoid only if the sale was made within one year before the petition

Explanation

Winding up by the Tribunal is deemed to commence when the petition is presented (section 357). A disposition of property made after that commencement is void unless the Tribunal otherwise orders (section 334). The sale on 25 March falls after 10 March, so the date of the order is irrelevant. The one-year look-back belongs to section 329 and applies to pre-petition transfers.

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