Companies Act Section 377

Companies Act, Section 377: Cumulative Application of Winding Up Provisions to Unregistered Companies 

Section 377 of the Companies Act, 2013, emphasizes that the provisions applicable to the winding up of unregistered companies are supplementary and cumulative to the general provisions related to the winding up of companies contained elsewhere in the Act. This means that the provisions under Part II of Chapter XXI, which deals specifically with unregistered companies, are to be read alongside the general winding-up provisions of the Act, not as substitutes or limitations.

Furthermore, the section clarifies the extent to which unregistered companies are treated as companies under the Act, particularly in relation to winding-up proceedings.

Sub-section (1): Provisions Are in Addition to General Winding Up Provisions

The provisions of this specific Part of the Companies Act (i.e., Part II of Chapter XXI) that relate to the winding up of unregistered companies are not meant to override or negate the earlier provisions in the Act regarding the winding up of companies by the Tribunal.
Instead, these provisions are in addition to the general powers and procedures available under the Act for winding up companies.
This ensures that comprehensive remedies and procedures are available when dealing with the winding up of unregistered companies, and that the special provisions of this Part do not narrow the scope of the Tribunal’s general powers.
In other words, the law ensures that no contradiction or exclusion arises between the provisions for registered and unregistered companies both sets of rules operate concurrently wherever applicable.

Sub-section (2): Powers of Tribunal and Official Liquidator over Unregistered Companies

The Tribunal (National Company Law Tribunal) or the Official Liquidator has the same powers and may perform the same functions in relation to an unregistered company undergoing winding up as they would in the case of a company that is formed and registered under the Companies Act.
This means that unregistered companies, once brought under winding-up proceedings, are subject to the same procedural framework, authority, and supervisory mechanisms as registered companies.
However, this authority applies only when the unregistered company is actually being wound up under the provisions of this Part.

Proviso: Limited Recognition of Unregistered Companies under the Act

The proviso to sub-section (2) introduces an important limitation:

An unregistered company shall not be considered as a "company" under the Companies Act for general purposes.
It shall be treated as a company under this Act only during the course of its winding up, and only to the limited extent specified in the provisions of this Part of the Act.This implies that:

Outside of winding-up proceedings, unregistered companies do not enjoy the status, privileges, or responsibilities that are applicable to registered companies under the Companies Act.
The recognition of an unregistered company as a company under the Act is therefore conditional and temporary, meant only to facilitate the legal processes involved in its winding up.
Purpose and Interpretation

Clarify that the winding-up regime for unregistered companies does not operate in isolation but is part of a broader legal framework under the Companies Act, 2013.
Empower the Tribunal and Official Liquidator with full authority in winding-up matters involving unregistered companies, treating them similarly to registered companies during such proceedings.
Establish boundaries around the legal status of unregistered companies by stating that their treatment as “companies” is only for winding-up purposes, and not for general application under the Act.