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CS Professional · Corporate Restructuring, Valuation and Insolvency · Regulatory Approvals of Scheme

Sagar Textiles Ltd's management proposes a scheme of revival and rehabilitation and says it will seek Tribunal sanction under Section 262 of the Companies Act, 2013. Under the official text of the Act, what is the position of Section 262?

Section 262 on sanction of scheme stands omitted with effect from 15 November 2016 by Section 255 and the Eleventh Schedule. It is no longer operative, so Sagar Textiles cannot seek sanction under it.

  1. AIt is omitted, with effect from 15 November 2016Correct
  2. BIt is in force and governs sanction of revival schemes
  3. CIt applies only to sick companies with public deposits
  4. DIt was substituted by a new Section 262 with wider powers

Explanation

The official text records Section 262 (Sanction of scheme) as omitted by Section 255 and the Eleventh Schedule with effect from 15-11-2016. The company therefore cannot rely on it. The idea that it still governs revival schemes ignores this omission.

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