262. Sanction of scheme.— (1) The scheme prepared by the company administrator under section
261 shall be placed before the creditors of the sick company in a meeting convened for their approval by
the company administrator within the period of sixty days from his appointment, which may be extended
by the Tribunal up to a period not exceeding one hundred twenty days.
(2) The company administrator shall convene separate meetings of secured and unsecured creditors of
the sick company and if the scheme is approved by the unsecured creditors representing one-fourth in
value of the amount owed by the company to such creditors and the secured creditors, representing three-
fourths in value of the amount outstanding against financial assistance disbursed by such creditors to the
sick company, the company administrator shall submit the scheme before the Tribunal for sanctioning the
scheme:
Provided that where the scheme relates to amalgamation of the sick company with any other
company, such scheme shall, in addition to the approval of the creditors of the sick company under this
sub-section, be laid before the general meeting of both the companies for approval by their respective
shareholders and no such scheme shall be proceeded with unless it has been approved, with or without
modification, by a special resolution passed by the shareholders of that company.
(3) (i) The scheme prepared by the company administrator shall be examined by the Tribunal and a
copy of the scheme with modification, if any, made by the Tribunal shall be sent, in draft, to the sick
company and the company administrator and in the case of amalgamation, also to any other company
concerned, and the Tribunal may publish or cause to be published the draft scheme in brief in such daily
newspapers as the Tribunal may consider necessary, for suggestions and objections, if any, within such
period as the Tribunal may specify.
(ii) The complete draft scheme shall be kept at the place where registered office of the company is
situated or at such places as mentioned in the advertisement.
(iii) The Tribunal may make such modifications, if any, in the draft scheme as it may consider
necessary in the light of the suggestions and objections received from the sick company and the company
administrator and also from the transferee company and any other company concerned in the
amalgamation and from any shareholder or any creditors or employees of such companies.
(4) On the receipt of the scheme under sub-section (3), the Tribunal shall within sixty days therefrom,
after satisfying that the scheme had been validly approved in accordance with this section, pass an order
sanctioning such scheme.
(5) Where a sanctioned scheme provides for the transfer of any property or liability of the sick
company to any other company or person or where such scheme provides for the transfer of any property
or liability of any other company or person in favour of the sick company, then, by virtue of, and to the
extent provided in, the scheme, on and from the date of coming into operation of the sanctioned scheme
or any provision thereof, the property shall be transferred to, and vest in, and the liability shall become the
liability of, such other company or person or, as the case may be, the sick company.
(6) The Tribunal may review any sanctioned scheme and make such modifications, as it may deem
fit, or may by order in writing direct company administrator, to prepare a fresh scheme providing for such
measures as the company administrator may consider necessary.
(7) The sanction accorded by the Tribunal under sub-section (4) shall be conclusive evidence that all
the requirements of the scheme relating to the reconstruction or amalgamation or any other measure
specified therein have been complied with and a copy of the sanctioned scheme certified in writing by an
officer of the Tribunal to be a true copy thereof shall in all legal proceedings be admitted as evidence.
(8) A copy of the sanctioned scheme referred to in sub-section (4) shall be filed with the Registrar by
the sick company within a period of thirty days from the date of receipt of a copy thereof.
