Section 344: Statement that company is in liquidation

Companies Act • Official Statutory Text & Practice Guide

Statutory Regulation
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Act 2013
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Legal Commentary & Landmark Judgments: Section 344

Section 344 of the Companies Act, 2013 mandates that every invoice, order for goods, or business letter issued by or on behalf of a company being wound up must prominently state that the company is in liquidation.

  • Mandatory Disclosure on Commercial Paperwork: Applies to every invoice, order for goods, business letter, or commercial document issued by or on behalf of the company, liquidator, or receiver.
  • Prominent Statutory Notation: Requires the explicit notation '(in liquidation)' immediately following the corporate name to alert commercial contracting parties of its altered legal capacity.
  • Strict Penal Liability: Default attracts a fine of fifty thousand rupees up to three lakh rupees against the company, liquidator, receiver, and every officer in default.
Key Landmark Precedents:
  • Re: A Company (No. 0013734 of 1991), [1992] BCLC 1152: Held that statutory requirements mandating the statement 'in liquidation' exist to prevent third parties from extending uncollateralized commercial credit on the false assumption of ongoing corporate solvency.
  • Penrose v. Martyr, (1858) EB & E 499: Landmark principle establishing that officers who sign bills or letters on behalf of a company without disclosing statutory corporate status incur strict personal liability and penal censure.
  • Official Liquidator v. R.K. Sawhney, (2002) 111 Comp Cas 602 (Del): The Delhi High Court emphasized that failure of a liquidator to affix 'in liquidation' to commercial notices constitutes a serious statutory dereliction punishable under company law.
Courtroom Practice & Strategic Litigation Guidance:

Immediately upon appointment, the Company Liquidator must issue an administrative circular updating all digital communication templates, letterheads, invoices, and purchase orders to include the suffix '(in liquidation)' after the company's registered name, eliminating exposure to Section 344 fines.