Sections 321 and 322 of the Companies Act 2013: Current Status and Earlier Provisions

Sections 321 and 322 formed part of the former voluntary winding-up provisions of the Companies Act, 2013. Both sections have been omitted with effect from 15 November 2016 following the Insolvency and Bankruptcy Code, 2016.

Section 321 - Arrangement when binding on company and creditors

Earlier subject: Section 321 dealt with an arrangement, other than an arrangement referred to in former Section 319, between a company that was about to be wound up or was in the course of being wound up and its creditors.

Before its omission, the provision broadly required the arrangement to be sanctioned by a special resolution of the company and accepted by creditors holding the prescribed three-fourths in value of the total amount due to all creditors. It also provided a limited period in which a creditor or contributory could approach the Tribunal in relation to the arrangement.

Present position: Section 321 was omitted by Section 255 read with the Eleventh Schedule to the Insolvency and Bankruptcy Code, 2016, with effect from 15 November 2016.

Section 322 - Power to apply to Tribunal to have questions determined, etc.

Earlier subject: Section 322 empowered the Company Liquidator, a contributory or a creditor, in the circumstances specified in the former provision, to apply to the Tribunal regarding questions arising in the course of voluntary winding up and certain related matters.

The former section also addressed applications concerning attachments, distress or execution against the estate or effects of the company after commencement of winding up, and empowered the Tribunal to make appropriate orders where the statutory requirements were satisfied.

Present position: Section 322 was likewise omitted by Section 255 read with the Eleventh Schedule to the Insolvency and Bankruptcy Code, 2016, with effect from 15 November 2016.

Why were Sections 321 and 322 omitted?

The Insolvency and Bankruptcy Code, 2016 restructured the legal framework governing insolvency and voluntary liquidation. Through its amendments to the Companies Act, 2013, the heading relating to voluntary winding up and Sections 304 to 323 were omitted. Consequently, Sections 321 and 322 ceased to operate as provisions of the Companies Act from the notified effective date.

Practical legal note

For current matters, readers should first identify whether the issue concerns liquidation under the Insolvency and Bankruptcy Code, 2016, winding up under the provisions of the Companies Act that remain in force, or a proceeding governed by transitional or saving provisions. The omitted text of Sections 321 and 322 remains useful for historical research and for understanding proceedings arising under the earlier statutory framework.