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CS Executive · Company Law and Practice · Compromise, Arrangement and Amalgamations - Concepts

Mehta Steels Ltd's sanctioned scheme requires payment of creditors in instalments. The Tribunal finds the scheme cannot be implemented satisfactorily, even with modifications, and the company cannot pay its debts as per the scheme. What may the Tribunal do under section 231(2)?

The Tribunal may order winding up of the company, and that order is deemed to be made under section 273. This applies when the scheme cannot be implemented satisfactorily even with modifications and the company cannot pay its debts as per the scheme.

  1. AOrder winding up of the company, deemed to be an order made under section 273Correct
  2. BOrder winding up only if the creditors apply within thirty days
  3. COrder the company to be dissolved without winding up
  4. DDirect the promoters to pay the debts personally

Explanation

Section 231(2) permits a winding up order where the scheme cannot be implemented satisfactorily with or without modifications and the company is unable to pay its debts as per the scheme. Such order is deemed made under section 273. No thirty-day application condition appears in the text.

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