Chapter XV - Compromises, Arrangements and Amalgamations
Section 231
Section 231: power of Tribunal to enforce compromise or arrangement
Once the Tribunal sanctions a compromise or arrangement under section 230, section 231 gives it continuing power to supervise implementation, give directions and modify the scheme, and, if the scheme cannot work and the company cannot pay its debts as per the scheme, to order winding up.
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This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Where the Tribunal makes an order under section 230 sanctioning a compromise or an arrangement in respect of a company, it—(a) shall have power to supervise the implementation of the compromise or arrangement; and (b) may, at the time of making such order or at any time thereafter, give such directions in regard to any matter or make such modifications in the compromise or arrangement as it may consider necessary for the proper implementation of the compromise or arrangement. (2) If the Tribunal is satisfied that the compromise or arrangement sanctioned under section 230 cannot be implemented satisfactorily with or without modifications, and the company is unable to pay its debts as per the scheme, it may make an order for winding up the company and such an order shall be deemed to be an order made under section 273. (3) The provisions of this section shall, so far as may be, also apply to a company in respect of which an order has been made before the commencement of this Act sanctioning a compromise or an arrangement.
Introduction
Section 231 commenced on 15 December 2016 under S.O. 3677(E). The India Code text shows no amendment and matches the 2013 Gazette.
Key takeaways
Supervision
The Tribunal has power to supervise implementation of a compromise or arrangement it sanctions under section 230.
Directions and modifications
When sanctioning, or at any time afterwards, it may give directions or make modifications needed for proper implementation.
Winding up
If the scheme cannot be implemented satisfactorily and the company is unable to pay its debts as per the scheme, the Tribunal may order winding up, deemed to be an order under section 273.
Older schemes
The section also applies, so far as may be, to schemes sanctioned before the Act commenced.
Supervision and modification
Under sub-section (1), where the Tribunal makes an order under section 230 sanctioning a compromise or arrangement, it (a) has power to supervise its implementation, and (b) may, at the time of the order or at any time after, give directions on any matter or make modifications to the compromise or arrangement as it considers necessary for its proper implementation.
Winding up where the scheme fails
Under sub-section (2), if the Tribunal is satisfied that the compromise or arrangement 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 of the company. The order is deemed to be an order made under section 273.
Schemes sanctioned before the Act
Sub-section (3) applies the section, so far as may be, to a company for which an order sanctioning a compromise or arrangement was made before the commencement of the Act.
Practical preparation
Track each obligation in the sanctioned scheme with an owner and a date; report progress to the board; apply to the Tribunal for directions or modifications early if implementation stalls; and keep creditors informed where payments under the scheme are at risk.
Procedure, forms, fees and timelines for applications under this provision are set out in rules made under the Act and in the Tribunal’s procedure; check the current text of those rules, and any exemption notification for your class of company, before relying on this guide.
Practical checklist
Do
- Seek directions from the Tribunal when a practical problem blocks implementation.
- Keep evidence of payments and steps taken under the scheme.
Avoid
- Do not depart from a sanctioned scheme on your own; changes are for the Tribunal.
Illustrative example
Hypothetical: a creditor scheme falls behind
A company misses two instalments due to creditors under a sanctioned scheme because a planned asset sale is delayed.
Directions
The company applies to the Tribunal for directions and a modification of the payment timetable.
Assessment
The Tribunal decides whether the scheme can still be implemented with modifications.
Fallback
If it cannot, and the company cannot pay its debts as per the scheme, the Tribunal may order winding up.
Outcome
- Approaching the Tribunal early keeps the modification route open.
Glossary
- Compromise or arrangement
- A scheme between a company and its creditors or members, sanctioned by the Tribunal under section 230.
- Section 273
- The section under which the Tribunal makes winding up orders.
Frequently asked questions
Can a sanctioned scheme be changed later?
Yes. Under sub-section (1)(b), the Tribunal may make modifications at any time after sanction if necessary for proper implementation.
What if the company cannot pay creditors as the scheme requires?
If the scheme cannot be implemented satisfactorily and the company is unable to pay its debts as per the scheme, the Tribunal may order winding up under sub-section (2).
Need help applying this provision to your situation?
Contact BizeneedLast updated 12 October 2026