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

Sharma Steels Ltd's secretary says that once the Tribunal sanctions a scheme, it becomes binding on all members and creditors under Section 263 of the Act. Checking the official text of the Act, which statement is correct?

Section 263, headed Scheme to be binding, has been omitted from the Companies Act, 2013 with effect from 15 November 2016. The secretary cannot cite it as a live provision. It was neither substituted nor limited to liquidation schemes.

  1. ASection 263 (Scheme to be binding) is in force and the statement is correct as per that section
  2. BSection 263 was omitted w.e.f. 15-11-2016, so the statement cannot be supported by that section of the ActCorrect
  3. CSection 263 was substituted in 2016 with a new sub-section on binding effect
  4. DSection 263 applies only to schemes of liquidation

Explanation

The official text records Section 263 (Scheme to be binding) as omitted by s. 255 and the Eleventh Schedule w.e.f. 15-11-2016. It was not substituted or restricted. So the reference to it as a live provision is incorrect.

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