Sections 363 and 364 of Companies Act 2013: Settlement of Creditors Claims and Appeal

Section 363 - Settlement of Claims of Creditors by Official Liquidator

Section 363 regulates the process for proving and settling creditors' claims where the Official Liquidator is acting under the applicable summary liquidation provisions of the Companies Act, 2013.

Section 363(1): Calling upon creditors to prove claims

The Official Liquidator is required, within thirty days of appointment, to call upon the creditors of the company to prove their claims in the prescribed manner. The creditors are required to prove their claims within thirty days from receipt of the call.

Section 363(2): Preparation and communication of list of claims

The Official Liquidator must prepare a list of the claims of creditors in the prescribed manner. Each creditor must be informed whether the claim has been accepted or rejected. Where a decision is made on the claim, reasons are required to be recorded in writing.

Meaning and effect of Section 363

In practical terms, Section 363 creates a structured claims verification process. Creditors are required to establish their claims before the Official Liquidator, while the Official Liquidator must examine those claims, prepare the prescribed list and communicate the decision.

• The Official Liquidator must initiate the claims process within thirty days of appointment.
• A creditor must prove the claim in the prescribed manner.
• The statutory period given to the creditor is thirty days from receipt of the call.
• The Official Liquidator must prepare a list of creditors' claims.
• The creditor must be informed whether the claim is accepted or rejected.
• Reasons for the decision are required to be recorded in writing.

Section 364 - Appeal by Creditor

Section 364 provides the appellate mechanism where a creditor is aggrieved by a decision taken by the Official Liquidator under Section 363.

Section 364(1): Appeal to Central Government

A creditor aggrieved by a decision of the Official Liquidator under Section 363 may file an appeal before the Central Government within thirty days of that decision.

Section 364(2): Decision on appeal

The Central Government may call for a report from the Official Liquidator. After considering the matter, it may dismiss the appeal or modify the decision of the Official Liquidator.

Section 364(3): Payment of accepted claims

The Official Liquidator is required to make payment to creditors whose claims have been accepted.

Section 364(4): Reference to Tribunal

At any stage during settlement of the claims, the Central Government may, where it considers such action necessary, refer the matter to the Tribunal for necessary orders.