Section 324 — Debts of all descriptions to be admitted to proof
In every winding up (subject, in the case of
insolvent companies, to th e application in accordance with the provisions of this Act or of the law of
insolvency), all debts payable on a contingency, and all claims against the company, present or future,
certain or contingent, ascertained or sounding only in damages, shall be ad missible to proof against the
company, a just estimate being made, so far as possible, of the value of such debts or claims as may be
subject to any contingency, or may sound only in damages, or for some other reason may not bear a certain
value.
325.[Application of insolvency rules in winding up of insolvent companies.] Omitted by the Insolvency
and Bankruptcy Code, 2016 (31 of 2016) s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016).
1[326. Overriding preferential payments.—(1) In the winding up of a company under this Act, the
following debts shall be paid in priority to all other debts:—
(a) workmen’s dues; and
(b) where a secured creditor has realised a secured asset, so much of the debts due to such secured
creditor as could not be realised by him or the amount of the workmen's portion in his security (if
payable under the law), whichever is less, pari passu with the workmen's dues:
1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 326 (w.e.f. 15-11-2016).
Provided that in case of the winding up of a company, the sums referred to in sub -clauses (i) and
(ii) of clause (b) of the Explanation, which are payable for a period of two years preceding the winding
up order or such other period as may be prescribed, shall be paid in priority to all other debts (including
debts due to secured creditors), within a period of thirty days of sale of assets and shall be subject to
such charge over the security of secured creditors as may be prescribed.
(2) The debts payable under the proviso to sub -section (1) shall be paid in full before any payment is
made to secured creditors and thereaf ter debts payable under that sub -section shall be paid in full, unless
the assets are insufficient to meet them, in which case they shall abate in equal proportions.
Explanation.—For the purposes of this section, and section 327—
(a) “workmen”, in relation to a company, means the employees of the company, being workmen
within the meaning of clause (s) of section 2 of the Industrial Disputes Act, 1947 (14 of 1947);
(b) “workmen's dues”, in relation to a company, means the aggregate of the following sums due
from the company to its workmen, namely:—
(i) all wages or salary including wages payable for time or piece work and salary earned wholly
or in part by way of commission of any workman in respect of services rendered to the company
and any compensation pa yable to any workman under any of the provisions of the Industrial
Disputes Act, 1947 (14 of 1947);
(ii) all accrued holiday remuneration becoming payable to any workman or, in the case of his
death, to any other person in his right on the termination of his employment before or by the effect
of the winding up order or resolution;
(iii) unless the company is being wound up voluntarily merely for the purposes of
reconstruction or amalgamation with another company or unless the company has, at the
commencement of the winding up, under such a contract with insurers as is mentioned in section
14 of the Workmen's Compensation Act, 1923 (19 of 1923), rights capable of being transferred to
and vested in the workmen, all amount due in respect of any compensation or liability for
compensation under the said Act in respect of the death or disablement of any workman of the
company;
(iv) all sums due to any workman from the provident fund, the pension fund, the gratuity fund
or any other fund for the welfare of the workmen, maintained by the company;
(c) “workmen's portion”, in relation to the security of any secured creditor of a company, means
the amount which bears to the value of the security the same proportion as the amount of the workmen's
dues bears to the aggreg ate of the amount of workmen's dues and the amount of the debts due to the
secured creditors.
Related sections
- Section 273 — Powers of Tribunal
- Section 274 — Directions for filing statement of affairs
- Section 275 — Company Liquidators and their appointments
- Section 276 — Removal and replacement of liquidator
- Section 277 — Intimation to Company Liquidator, provisional liquidator and Registrar
- Section 278 — Effect of winding up order
- Section 279 — Stay of suits, etc., on winding up order
- Section 281 — Submission of report by Company Liquidator
- Section 282 — Directions of Tribunal on report of Company Liquidator
- Section 283 — Custody of company’s properties
- Section 284 — Promoters , directors, etc., to cooperate with Company Liquidator
- Section 285 — Settlement of list of contributories and application of assets
- Section 286 — Obligations of directors and managers
- Section 287 — Advisory committee
- Section 288 — Submission of periodical reports to Tribunal
- Section 289 — [Power of Tribunal on application for stay of winding up .] Omitted by the Insolvency and
- Section 290 — Powers and duties of Company Liquidator
- Section 291 — Provision for professional assistance to Company Liquidator
- Section 292 — Exercise and control of Company Liquidator’s powers
- Section 293 — Books to be kept by Company Liquidator
- Section 294 — Audit of Company Liquidator’s accounts
- Section 295 — Payment of debts by contributory and extent of set -off
- Section 296 — Power of Tribunal to make calls
- Section 297 — Adjustment of rights of contributories
- Section 298 — Power to order costs
- Section 299 — Power to summon persons suspected of having property of company, etc
- Section 300 — Power to order examination of promoters, directors, etc
- Section 301 — Arrest of person trying to leave India or abscond
- Section 302 — Dissolution of company by Tribunal
- Section 303 — Appeals from orders made before commencement of Act
- Section 320 — [Distribution of property of company .] Omitted by s . 255 and the Eleventh Schedule, ibid
- Section 321 — [ Arrangement when binding on company and creditors .] Omitted by the Insolvency and
- Section 322 — [Power to apply to Tribunal to have questions determined, etc.] Omitted by s. 255 and the Eleventh
- Section 327 — Preferential payments
- Section 328 — Fraudulent preference
- Section 330 — Certain transfers to be void
- Section 331 — Liabilities and rights of certain persons fraudulently preferred
- Section 332 — Effect of floating charge
- Section 333 — Disclaimer of onerous property
- Section 335 — Certain attachments, executions, etc., in winding up by Tribunal to be void
- Section 336 — Offences by officers of companies in liquidation
- Section 337 — Penalty for frauds by officers
- Section 338 — Liability where proper accounts not kept
- Section 339 — Liability for fraudulent conduct of business
- Section 340 — Power of Tribunal to assess damages against delinquent directors, etc
- Section 341 — Liability under sections 339 and 340 to extend to partners or directors in firms or
- Section 342 — Prosecution of delinquent officers and members of company
- Section 343 — Company Liquidator to exercise certain powers subject to sanction
- Section 344 — Statement that company is in liquidation
- Section 345 — Books and papers of company to be evidence
- Section 346 — Inspection of bo oks and papers by creditors and contributories
- Section 347 — Disposal of books and papers of company
- Section 348 — Information as to pending liquidations
- Section 349 — Official Liquidator to make payments into public account of India
- Section 350 — Company Liquidator to deposit monies into scheduled bank
- Section 351 — Liquidator not to deposit monies into private banking account
- Section 352 — Company Liquidation Dividend and Undistributed Assets Account
- Section 353 — Liquidator to make returns, etc
- Section 354 — Meetings to ascertain wishes of creditors or contributories
- Section 355 — Court, tribunal or person, etc., before whom affidavit may be sworn
- Section 356 — Powers of Tribunal to declare dissolution of company void
- Section 358 — Exclusion of certain time in computing period of limitation
- Section 359 — Appointment of Official Liquidator
- Section 360 — Powers and functions of Official Liquidator
- Section 361 — Summary procedure for liquidation
- Section 362 — Sale of assets and recovery of debts due to company
- Section 363 — Settlement of claims of creditors by Official Liquidator
- Section 364 — Appeal by creditor
- Section 365 — Order of dissolution of company