1. The Company Liquidator may—
a. with the sanction of the Tribunal, when the company is being wound up by the Tribunal; and
b. with the sanction of a special resolution of the company and prior approval of the Tribunal, in the case of a voluntary winding up,
i. pay any class of creditors in full;
ii. make any compromise or arrangement with creditors or persons claiming to be creditors, or having or alleging themselves to have any claim, present or future, certain or contingent, against the company, or whereby the company may be rendered liable; or
iii. compromise any call or liability to call, debt, and liability capable of resulting in a debt, and any claim, present or future, certain or contingent, ascertained or sounding only in damages, subsisting or alleged to subsist between the company and a contributory or alleged contributory or other debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the assets or liabilities or the winding up of the company, on such terms as may be agreed, and take any security for the discharge of any such call, debt, liability or claim, and give a complete discharge in respect thereof.
2. Notwithstanding anything contained in sub-section (1 ), in the case of a winding up by the Tribunal, the Central Government may make rules to provide that the Company Liquidator may, under such circumstances, if any, and subject to such conditions, restrictions and limitations, if any, as may be prescribed, exercise any of the powers referred to in sub clause (ii ) or sub-clause (iii ) of clause (b ) of sub-section (1 ) without the sanction of the Tribunal.
3. Any creditor or contributory may apply in the manner prescribed to the Tribunal with respect to any exercise or proposed exercise of powers by the Company Liquidator under this section, and the Tribunal shall after giving a reasonable opportunity to such applicant and the Company Liquidator, pass such orders as it may think fit.
Legal Commentary & Landmark Judgments: Section 343
Section 343 of the Companies Act, 2013 restricts the Company Liquidator's authority, mandating that key powers—such as paying any class of creditors in full, compromising claims, and settling debts—can be exercised only with the prior sanction of the Tribunal or creditors' committee.
Any settlement agreement executed with a company in liquidation is contingent and voidable until formally approved by the Tribunal under Section 343. Counterparties entering into settlement must incorporate a condition precedent requiring the Liquidator to obtain Tribunal sanction within a specified deadline.