Section 274: Directions for filing statement of affairs

Companies Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 2013
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Legal Commentary & Landmark Judgments: Section 274

Section 274 of the Companies Act, 2013 mandates that when a winding up petition is presented by any person other than the company and a prima facie case is established, the Tribunal shall direct the company to file its objections along with a comprehensive statement of affairs within thirty days, attaching strict procedural forfeitures and penal consequences for non-compliance.

  • Prima Facie Judicial Satisfaction and Order: The Tribunal must record its satisfaction that a prima facie case for winding up is disclosed before issuing mandatory directions calling upon the respondent company to lodge its objections and verified statement of affairs within thirty days of the order.
  • Discretionary Extension and Forfeiture of Right to Oppose: The Tribunal may, on sufficient cause shown, extend the thirty-day filing window by a further period not exceeding thirty days; failure to file within the prescribed or extended period automatically forfeits the company's statutory right to oppose the winding-up petition.
  • Verification, Books of Account, and Penal Liability: The statement must be verified by an affidavit affirmed by the directors and key managerial personnel, accompanied by completed and audited books of accounts up to the date of the order; willful omission or non-compliance exposes delinquent directors to imprisonment extending up to six months, monetary fines between twenty-five thousand and five lakh rupees, or both.
Key Landmark Precedents:
  • Official Liquidator v. Supreme Bank of India Ltd., (1969) 1 SCC 601: The Supreme Court held that the obligation of directors to submit the statement of affairs is statutory and absolute, and an officer cannot escape liability by merely pleading that the company's books were unavailable without demonstrating bona fide impossibility.
  • State of Karnataka v. K.G. Somaiya, (1998) 93 Comp Cas 112 (Kar): The High Court affirmed that default in submitting the verified statement of affairs is a continuing default under corporate insolvency jurisprudence, subsisting every day until full disclosure is submitted to the liquidator or Tribunal.
Courtroom Practice & Strategic Litigation Guidance:

In winding-up defence practice before the NCLT, respondents must treat the thirty-day timeline under Section 274 as strictly jurisdictional. If books of accounts cannot be audited immediately due to seized records or pending tax audits, an interlocutory application for extension supported by an affidavit explaining extraordinary circumstances must be moved prior to the expiry of the initial thirty days to avoid the fatal forfeiture of the right to oppose.