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

Under a sanctioned arrangement, Himalaya Foods Ltd was to pay its creditors in instalments. The Tribunal is satisfied that the arrangement cannot be implemented satisfactorily, with or without modifications, and the company is unable to pay its debts as per the scheme. What may the Tribunal do under section 231?

The Tribunal may order winding up of the company, and that order is deemed to be made under section 273. This applies when the sanctioned scheme cannot be implemented satisfactorily, with or without modifications, and the company cannot pay its debts as per the scheme.

  1. AOrder winding up of the company, deemed to be an order under section 273Correct
  2. BOnly cancel the scheme and restore the earlier position without any winding up
  3. CDirect the creditors to accept shares in lieu of dues
  4. DRefer the matter to the Registrar for striking off the company

Explanation

Section 231(2) provides that where both conditions exist (cannot be implemented satisfactorily, and company unable to pay debts as per the scheme), the Tribunal may order winding up, deemed made under section 273. The other options are not powers given by this section.

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