Corporate Restructuring, Valuation and Insolvency · Regulatory Approvals of Scheme

Implementation of Scheme under Section 264 and Sections 231-232

Updated 11 October 2026 · Fact-checked

Section 264 of the Companies Act, 2013 (implementation of scheme) was omitted with effect from 15 November 2016. Today, implementation of a sanctioned scheme is governed by Sections 231 and 232. The Tribunal supervises, gives directions, and may order winding up if the scheme cannot be implemented. The order must be filed with the Registrar within thirty days.

Understand Implementation of Scheme (Section 264)

Start with the key fact. The syllabus lists this topic as Section 264, but the official text shows that Section 264 is omitted (w.e.f. 15-11-2016). It no longer contains any rule. Section 262 (sanction of scheme) is omitted in the same way. If an exam question asks about Section 264, do not quote old rules from it. Say it is omitted and answer from the current provisions.

The live rules sit in Sections 231 and 232. Once the Tribunal sanctions a compromise or arrangement under Section 230, the scheme is not left to run on its own. Under Section 231(1), the Tribunal has power to supervise the implementation of the scheme. It may, when it passes the order or at any time later, give directions on any matter or make modifications that it considers necessary for proper implementation.

For mergers, amalgamations and divisions, Section 232 adds more. The scheme must state an appointed date, and it is effective from that date and not a later one (Section 232(6)). The company must file a certified copy of the order with the Registrar within thirty days of receiving it (Section 232(5)). Until the scheme is complete, the company must file a yearly statement with the Registrar, certified by a chartered accountant, cost accountant or company secretary in practice. It must say whether the scheme is being complied with as per the Tribunal's orders (Section 232(7)).

What if the scheme fails? Under Section 231(2), if the Tribunal is satisfied that the scheme cannot be implemented satisfactorily, with or without modifications, and the company is unable to pay its debts as per the scheme, it may order winding up. That order is deemed to be made under Section 273. Both conditions must be met.

Failure to file the order is penalised. Under Section 232(8), the company and every officer in default are liable to a penalty of ₹20,000, plus ₹1,000 for each day after the first during which the failure continues, subject to a maximum of ₹3,00,000.

Key rules to remember

Status of Section 264: Section 264 = omitted w.e.f. 15-11-2016; Section 262 is also omitted. Do not apply old rules from either section.
Tribunal's supervisory power: Section 231(1): supervise implementation + give directions + make modifications; Directions can be given when the order is made or at any time afterwards.
Winding up on failure: Section 231(2): scheme cannot be implemented satisfactorily AND company unable to pay debts as per scheme → Tribunal may order winding up (deemed under Section 273); Both conditions are needed. The power is discretionary ('may').
Filing of order: Section 232(5): certified copy of order to Registrar within 30 days of receipt; The period runs from receipt of the certified copy of the order.
Appointed date: Section 232(6): scheme effective from the appointed date, not a later date; The scheme must clearly indicate the appointed date.
Annual compliance statement: Section 232(7): yearly statement to Registrar until scheme completes, certified by CA / CMA / CS in practice; It states whether the scheme is being complied with as per Tribunal orders.
Penalty for non-filing: ₹20,000 + ₹1,000 per day after the first, maximum ₹3,00,000; Applies to the company and every officer in default (Section 232(8)).

How to solve Implementation of Scheme (Section 264) questions

Use this method for any question on implementation of a sanctioned scheme. Written answers should follow provision, analysis, conclusion.

1Check the section named in the question. If it is Section 264 (or 262), state that it is omitted w.e.f. 15-11-2016 and move to the current law.
2Identify the type of scheme: a plain compromise or arrangement (Section 231 applies) or a merger or division (Sections 231 and 232 both apply).
3State the Tribunal's power under Section 231(1): supervision, directions and modifications for proper implementation.
4List the compliance duties from the facts: filing the certified order within 30 days, the appointed date, and the yearly certified statement until completion.
5Test the facts against the time limit and the penalty: count days from receipt of the certified copy and compute any penalty.
6If the scheme is failing, check both conditions of Section 231(2): cannot be implemented satisfactorily, and company unable to pay debts as per scheme.
7Write a clear conclusion in one or two lines, then add a drafting or compliance point, such as the form of the yearly statement or the filing.

Quickest way: Three-check method for implementation questions

When to use it: Use it when time is short and the question gives a short fact pattern about a sanctioned scheme.

Check 1: Is the cited section omitted? If yes, say so in the first line.
Check 2: Which duty is breached or tested: filing within 30 days, appointed date, or yearly statement?
Check 3: Is winding up asked? Confirm both limbs of Section 231(2) before concluding.
Close with the penalty or the Tribunal's power in one sentence.

Common mistakes in Implementation of Scheme (Section 264)

Quoting rules under Section 264 as if it were in force.
Older books and the syllabus heading still carry the section number.
Fix: State that Section 264 is omitted w.e.f. 15-11-2016 and cite Sections 231 and 232 instead.
Saying the Tribunal must wind up the company whenever the scheme fails.
Students miss the word 'may' and the second condition.
Fix: Write that the Tribunal may order winding up only if the scheme cannot be implemented satisfactorily and the company cannot pay its debts as per the scheme.
Counting the 30 days from the date of the hearing or the sanction date.
Students assume the order date starts the clock.
Fix: The 30 days run from receipt of the certified copy of the order.
Forgetting the yearly statement under Section 232(7).
Students stop at filing the order and treat the scheme as finished.
Fix: Add that the company files a certified statement every year until the scheme is complete.
Stating the penalty as a flat ₹20,000 or missing the cap.
The per-day component and maximum are easy to forget.
Fix: Write ₹20,000 plus ₹1,000 per day after the first day, maximum ₹3,00,000, on the company and every officer in default.
Applying Section 232 provisions to every Section 230 scheme.
Both sections look alike.
Fix: Section 232 applies to mergers, amalgamations and divisions. Section 231 applies to all sanctioned compromises and arrangements.

Worked examples

Example 1

Arjun Textiles Ltd and Bharat Fabrics Ltd merged under a scheme sanctioned by the NCLT. Arjun Textiles received the certified copy of the order on 1 March. It filed the order with the Registrar on 15 April of the same year (a non-leap year). Examine the position.

Show the solution

Provision: Section 232(5) requires filing of a certified copy of the order with the Registrar within thirty days of receipt.
Time limit: 30 days from 1 March ends on 31 March. March has 31 days, so the 30th day after 1 March is 31 March.
Filing was on 15 April, which is 15 days after 31 March. The company is late.
Penalty: Section 232(8) gives ₹20,000 for the default, plus ₹1,000 for each day after the first during which the failure continues, subject to a maximum of ₹3,00,000.
Continuing failure: the first day of default is 1 April. The default continues until the filing on 15 April. Counting 1 April as the first day, the days after the first are 2 to 14 April, which is 13 days (taking the failure as ending when the filing is made on 15 April).
Computation: ₹20,000 + 13 × ₹1,000 = ₹33,000. This is far below the ₹3,00,000 cap.

Answer: Arjun Textiles failed to file within 30 days. The company and every officer in default are liable to a penalty of ₹20,000 plus ₹1,000 per day after the first day of default. On the counting above, it is about ₹33,000, well within the maximum of ₹3,00,000.

Example 2

A scheme of arrangement of Kaveri Industries Ltd was sanctioned by the NCLT. Two years later, Kaveri has not been able to carry out the scheme and cannot pay its debts as per the scheme. A creditor asks whether the Tribunal can wind up the company, and whether Section 264 applies.

Show the solution

Provision on Section 264: it is omitted w.e.f. 15-11-2016, so it gives no rule. The current law is Section 231.
Supervision: under Section 231(1), the Tribunal can supervise implementation and give directions or make modifications that it considers necessary.
Winding up test: Section 231(2) needs two conditions. First, the Tribunal must be satisfied that the scheme cannot be implemented satisfactorily, with or without modifications. Second, the company must be unable to pay its debts as per the scheme.
Facts: Kaveri cannot carry out the scheme and cannot pay its debts as per the scheme. Both conditions can be met, subject to the Tribunal being satisfied after considering modifications.
Effect: the winding up order is deemed to be made under Section 273. The power is discretionary ('may').

Answer: Section 264 does not apply because it is omitted. Under Section 231, the Tribunal may first give directions or modify the scheme. If it is satisfied that the scheme cannot be implemented satisfactorily even with modifications, and the company cannot pay its debts as per the scheme, it may order winding up, deemed an order under Section 273.

Exam tips

Open every answer on this topic by noting that Section 264 is omitted. It shows the examiner you know the current law.
Memorise Section 231(2) as two conditions joined by 'and'. Examiners test whether you notice both.
For merger questions, add the Section 232 compliance points: 30-day filing, appointed date, yearly certified statement.
Quote the penalty with all three parts: ₹20,000, ₹1,000 per day after the first, ₹3,00,000 cap.
Give a practical drafting point where relevant, such as the form of the yearly compliance certificate by a practising CA, CMA or CS.

Practice questions from Regulatory Approvals of Scheme

Implementation of Scheme (Section 264): frequently asked questions

Is Section 264 of the Companies Act, 2013 still in force?

No. Section 264 (implementation of scheme) is omitted w.e.f. 15-11-2016. Implementation is now dealt with under Sections 231 and 232.

What can the Tribunal do to ensure a scheme is implemented?

Under Section 231(1), the Tribunal can supervise implementation. It may give directions and make modifications at the time of the order or any time later, as it considers necessary for proper implementation.

What happens if a sanctioned scheme cannot be implemented?

If the Tribunal is satisfied that the scheme cannot be implemented satisfactorily, with or without modifications, and the company cannot pay its debts as per the scheme, it may order winding up. That order is deemed to be under Section 273.

Within how many days must the NCLT order be filed with the Registrar?

For mergers and divisions under Section 232, the certified copy must be filed within thirty days of receipt of the certified copy of the order. Failure attracts a penalty on the company and every officer in default.

Must the company report on the scheme after filing the order?

Yes, for schemes under Section 232. Until the scheme is complete, the company files a yearly statement with the Registrar, certified by a chartered accountant, cost accountant or company secretary in practice, stating whether the scheme is being complied with.