Compromise Schemes Apply Only to Specific Groups, Not Everyone, Rules NCLT Hyderabad

The NCLT Hyderabad Bench clarified that compromise schemes under Section 230 of the Companies Act cannot be used to extinguish all liabilities of a company.

It held that such schemes are binding only on specific classes of creditors or members who are part of the scheme and consent to it.

The Tribunal observed that these schemes do not operate like insolvency resolution plans under the IBC, which can bind all stakeholders.

It also stated that approvals must be obtained separately for each class, and votes of different classes cannot be combined for approval.