Section 363: Settlement of Claims of Creditors by Official Liquidator

This article explains the concept of credibility in a way of the claims of the creditors under section 363 of the companies act, 2013 and its effective application.
Estimated Reading Time: 2 minutes

Introduction

Section 363 of Companies Act, 2013 is part of chapter XX-Part III and lays down the provision for settlement of claims of creditors by official liquidator. The purpose of this section is to determine the credibility in a way of the claims of the creditors. The liquidator here makes a note of the claim and rejects or accepts them accordingly. This also provides a prompt method of settlement of claims by giving a time period of thirty days to the liquidator and thus this makes sure that that liquidation process works in a timely manner. This analysis will give a brief idea of the section.

Purpose of this Section

Section 363 is a very important section and briefly lays down the following:

  • This is a new section, which seeks to provide settlement of the claims to creditors of the company. The official liquidator is mandated with responsibility to call upon the creditors of the company within 30 days of his appointment to prove their claims within 30 days of receipt of such call.
  • The official liquidator shall prepare a list of the claims of the creditors. Each creditor shall be communicated the claims accepted or rejected with the reasons in writing.

Situation Before Enactment of Section 363

There is no similar section under the Act of 1956. It is a new provision inserted by way of amendment.

Application of the Section

This section comes into application when a company goes under winding up under the act of 2013. This section provides an opportunity for the creditors to put forth their claims for consideration. If the claim is rejected at this stage, then that creditor will not get any settlement.

Concluding Summary

This section is important, as it lays down the requirement of settlement of claims by liquidators in a timely fashion. This section is very brief and self-explanatory and forms part of the procedure involved in the process of winding up a company under companies act and thus does not have any new development on it. As the analysis above shows it’s quite simple but forms an important part of the companies act.

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