Sections 351 and 352 of the Companies Act, 2013: Liquidator Bank Accounts and Undistributed Assets

Sections 351 and 352 form part of the winding-up provisions of the Companies Act, 2013. Section 351 prohibits an Official Liquidator or Company Liquidator from placing liquidation money in a private banking account. Section 352 regulates unpaid liquidation dividends and undistributed assets through a separate special account.

Current-law context: The Companies Act winding-up framework must be read with the Insolvency and Bankruptcy Code, 2016 where that Code applies. The current official text of the Companies Act continues to contain Sections 351 and 352.

Section 351 - Liquidator not to deposit monies into private banking account

Section 352 - Company Liquidation Dividend and Undistributed Assets Account

Section 352 establishes the mechanism for dealing with liquidation dividends that remain unpaid and assets that remain undistributed. Its principal requirements are summarized below.

Unpaid dividends and undistributed assets

Where a company is being wound up, money representing a dividend payable to a creditor that remains unpaid for six months after declaration, or an asset refundable to a contributory that remains undistributed for six months after becoming refundable, must be deposited without delay into the separate special account known as the Company Liquidation Dividend and Undistributed Assets Account, maintained in a scheduled bank.

Money remaining at dissolution

On dissolution of the company, the liquidator must pay into that special account any money then held by the liquidator representing unpaid dividends or undistributed assets.

Statement to the Registrar

When making the prescribed payment, the liquidator must furnish the Registrar with the prescribed statement containing particulars such as the nature of the sums, names and last known addresses of persons entitled, the amount due to each person and the nature of each claim.

Receipt from scheduled bank

The liquidator is entitled to obtain a receipt from the scheduled bank for money deposited under the relevant provisions. The receipt operates as an effective discharge in respect of that money.

Claim by an entitled person

A person claiming entitlement to money deposited in the account may apply to the Registrar. If satisfied about the entitlement, the Registrar may make payment of the sum due. Section 352 further provides a sixty-day period for settlement of the claim, failing which the Registrar is required to report the reasons for failure to the Regional Director.

Money unclaimed for fifteen years

Money remaining unclaimed in the account for fifteen years is transferred to the general revenue account of the Central Government. A later claim may still be made in accordance with Section 352(6), and an allowed payment is treated as a refund of revenue.

Consequences of wrongful retention

A liquidator who retains money that should have been deposited under Section 352 may be required to pay interest at twelve per cent per annum, together with such penalty as may be determined by the Registrar. The liquidator may also be liable for expenses caused by the default. In a winding up by the Tribunal, the Tribunal may additionally disallow remuneration or remove the liquidator from office, as provided by the section.

Practical relationship between Sections 350, 351 and 352

Section 350 governs the scheduled-bank account into which a Company Liquidator ordinarily deposits money received in that capacity. Section 351 prevents liquidation money from being placed in a private banking account. Section 352 separately addresses liquidation dividends and assets that remain unpaid or undistributed for the statutory period. Together, these provisions create controls for custody and transfer of money during winding up.

Official legal resources

For the latest consolidated statutory text and insolvency framework, refer to the official India Code, Ministry of Corporate Affairs and Insolvency and Bankruptcy Board of India resources linked in the sidebar. Users should check current notifications, rules and amendments where a live winding-up or insolvency matter is involved.