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

A winding-up petition against Sagar Pharma Ltd was presented before the Tribunal on 1 September 2026. On 12 September 2026, the Income-tax authorities began recovery proceedings by attaching the company's bank balance for unpaid tax, without the Tribunal's leave. What is the effect under the Companies Act, 2013?

The attachment is not void under the section. The provision voiding post-commencement attachments and executions without leave does not apply to proceedings for recovery of any tax or impost or dues payable to the Government.

  1. AThe attachment is void because the Tribunal's leave was not taken
  2. BThe attachment is void because tax claims rank after secured creditors
  3. CThe attachment stands, as the provision voiding attachments does not apply to recovery of tax or dues payable to the GovernmentCorrect
  4. DThe attachment stands only if the Company Liquidator consents

Explanation

Section 335(1) voids attachments made without leave after commencement, but section 335(2) states that this does not apply to proceedings for recovery of any tax or impost or dues payable to the Government. The tax recovery is therefore not void on this ground.

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