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Section 363: Settlement of claims of creditors by Official Liquidator

Companies Act • Official Statutory Text & Practice Guide

Statutory Regulation
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Act 2013
Section 362 All 470 Sections of Companies Act Section 364
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Company Sec 2(20) Director Sec 2(34) Tribunal Sec 2(90)

Legal Commentary & Landmark Judgments: Section 363

Section 363 of the Companies Act, 2013 governs the summary adjudication of creditor claims, mandating a thirty-day public call for proofs of debt, followed by quasi-judicial verification and preparation of the final list of admitted debts.

  • Thirty-Day Proof Notice: The Official Liquidator must, within thirty days of appointment, serve public and direct notice calling upon creditors to submit proofs of their claims within thirty days of the notice.
  • Quasi-Judicial Claim Adjudication: The Official Liquidator must investigate books, verify supporting contracts and accounts, and formally admit or reject each claim in whole or in part within thirty days of receipt.
  • Settlement List Compilation: The Official Liquidator prepares a formal list of admitted creditors, specifying debt values and priorities, serving written notices communicating the admission or rejection of claims.
Key Landmark Precedents:
  • Andhra Bank v. Official Liquidator, (2005) 5 SCC 75: The Supreme Court held that the liquidator must adjudicate claims strictly in accordance with statutory priority and rules of proof, affording reasoned decisions when claims are rejected in whole or in part.
  • Industrial Finance Corporation of India v. Official Liquidator, High Court of Calcutta, (2003) 4 SCC 305: The Supreme Court affirmed that claim adjudication by a liquidator is a quasi-judicial function requiring compliance with natural justice and objective scrutiny of loan documentation.
  • Canara Bank v. Official Liquidator, (1991) 71 Comp Cas 589 (Kar): The High Court held that the liquidator's order admitting or rejecting proof of debt is a formal adjudication that binds the claimant unless appealed under statutory provisions.
Courtroom Practice & Strategic Litigation Guidance:

When filing proofs of debt before the Official Liquidator under Section 363, submit sworn affidavits of proof accompanied by ledger statements, invoices, and statutory tax returns. If the claim is rejected, insist on written reasons from the liquidator immediately to compute the thirty-day limitation window for filing an appeal under Section 364.

Section 362 All 470 Sections of Companies Act Section 364