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

Meridian Textiles Ltd is being wound up by the Tribunal. After the winding-up petition was presented, a decree-holder, Kapoor Traders, put an attachment in force against the company's stock, without obtaining the leave of the Tribunal. What is the legal position of the attachment?

The attachment is void. Where a company is being wound up by the Tribunal, any attachment, distress or execution put in force against its estate after commencement of winding up without the Tribunal's leave is void under section 335. Director consent or an earlier decree does not change this.

  1. AIt is valid because the decree was passed before the petition
  2. BIt is void because it was put in force without the Tribunal's leave after commencement of winding upCorrect
  3. CIt is valid if the company's directors consent to it
  4. DIt is voidable only at the option of the Company Liquidator

Explanation

Under section 335, any attachment, distress or execution put in force against the company's estate or effects after commencement of winding up, without leave of the Tribunal, is void. The date of the decree is irrelevant, and the provision makes the attachment void, not merely voidable.

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