Section 364 of the Companies Act, 2013
Section 364 of the Companies Act, 2013 deals with:
🔹 Debts of a company to rank equally during winding up.
🔍 Section 364 – Debts to Rank Equally
Key Provision:
In the winding up of a company, all debts due from the company shall be paid equally and ratably, unless otherwise provided by the Act.
✅ Implications:
This section ensures fairness in the distribution of the company's assets during liquidation.
All unsecured creditors are treated equally, meaning no preference is given to one over another unless:
There is a specific provision in the Companies Act or
The debt is a secured debt, preferential payment, or otherwise governed by a different legal obligation.
🧾 Example:
If a company owes ₹10 lakh each to three unsecured creditors, and has ₹15 lakh to distribute, each creditor would get ₹5 lakh (equal distribution), unless some creditors hold preferential claims under other provisions like Section 327 (Preferential Payments).
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