1) Corporate Rescue Under Companies Act 1956 : The Chapter V of the Companies Act 1956 S. 391,394,394-A and 395 deals with compromises, arrangements and reconstructions.
i) S.391 provides the Court with the widest discretion to approve any sort of arrangement in between the company and its shareholders. The scheme of compromise or arrangement takes effect from the date when it is arrived at subject to the sanction of the Court. Under
ii) S.392 of the Companies Act the court has the power to supervise the carrying out of the revival scheme and also in the course of implementation of the scheme. When a scheme is workable whether with or without modification the court has no power to pass a winding up order. The court must attempt to find out what modifications, if any, are necessary to make a scheme workable and if necessary, may proceed suo motu in this regard. The court in making an order under this section, has the power to substitute one sponsor for another, and, strictly speaking omission of the original sponsorer and substituting another in his place would not change the basic fabric of the scheme. The Gujarat HC has held in Tungabhadra Industries Ltd. V. National Dairy Board, 1983 Tax LR 2527(Guj) that to construe this section and section 391 narrowly would defeat the purpose for which they were enacted. However the power of the court under this section does not go beyond the implementation of a scheme already sanctioned under S.391 with or without modifications.
iii) Section 393 talks about information as to compromises or arrangements with creditors and members.
I) Where a meeting of creditors or any class of creditors, or of members or any class of members, is called under section 391,-
a) With every notice calling the meeting which is sent to a creditor or member, there shall be sent also a statement setting forth the terms of the compromise or arrangement and explaining its effect; and in particular, stating any material interests of the directors, managing director, managing agent, secretaries and treasurers or manager of the company, whether in their capacity as such or as members or creditors of the company or otherwise, and the effect on those interests, of the compromise or arrangement, if, and in so far as, it is different from the effect on the like interests of other persons; and
b) In every notice calling the meeting which is given by advertisement, there shall be included either such a statement as aforesaid or a notification of the place at which and the manner in which creditors or members entitled to attend the meeting may obtain copies of such a statement as aforesaid.
II) Where the compromise or arrangement affects the rights of debenture holders of the company, the said statement shall give the like information and explanation as respects the trustees of any deed for securing the issue of the debentures as it is required to give as respects the company's directors.
III) Where a notice given by advertisement includes a notification that copies of a statement setting forth the terms of the compromise or arrangement proposed and explaining its effect can be obtained by creditors or members entitled to attend the meeting, every creditor or member so entitled shall, on making an application in the manner indicated by the notice, be furnished by the company, free of charge, with a copy of the statement.
IV) Where default is made in complying with any of the requirements of this section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees; and for the purpose of this sub- section any liquidator of the company and any trustee of a deed for securing the issue of debentures of the company shall be deemed to be an officer of the company: Provided that a person shall not be punishable under this sub- section if he shows that the default was due to the refusal of any other person, being a director, managing director, managing agent, secretaries and treasurers, manager or trustee for debenture holders, to supply the necessary particulars as to his material interests.
V) Every director, managing director, managing agent, secre- taries and treasurers or manager of the company, and every trustee for debenture holders of the company, shall give notice to the company of such matters relating to himself as may be necessary for the purposes of this section; and if he falls to do so, he shall be punishable with fine which may extend to five hundred rupees.
iv) S. 394 speaks of provision for facilitating the reconstruction and amalgamation of companies. An amalgamation should not only be beneficial to the companies, but should also be in the interest of creditors and members of both the transferor and transferee companies and should be in the public interest. And the court in exercise of its discretion under S. 391 and 394 of the Act has to see that the scheme as a whole having regard to the general conditions and background and object of the scheme is reasonable and fair. If the court finds that the scheme of amalgamation is beneficial to the members of both the companies and the affairs of the company which is going to be dissolved, the transferor company has not been conducted in any manner prejudicial to the interest of its members or merits or demerits of the scheme. The court shall not dwell upon or interfere with the collective wisdom of the shareholders of the company. Even though the creditors or other affected persons are not entailed to vote on scheme of amalgamation, the court is bound to consider their interests also. If the amalgamation would prejudicially affect the public interest, and that of the amalgamated company and various other interests affected by the scheme, the court should evolve the best way in which their interests could be protected. The role and purpose of the Official Liquidator (OL) is laid out in Kirti Plastics P. Ltd, Re (1993) 78 Com Cases 138 (MP) where the court said that the OL functions as an agent of the court and his report is needed to satisfy the court that the affairs of the company which is going to be dissolved were not conducted in a manner prejudicial to the public or members’ interest.
v) Section 394A talks about notices to be given to Central Government for applications under sections 391 and 394. The Court shall give notice of every application made to it under section 391 or 394 to the Central Government, and shall take into consideration the representations, if any, made to it by that Government before passing any order under any of these sections.
vi) Section 395 talks about Power and duty to acquire shares of shareholders dissenting from scheme or contract approved by majority.
Where a scheme or contract involving the transfer of shares or any class of shares in a company (in this section referred to as" the transferor company") to another company (in this section referred to as" the transferee company"), has, within four months after the making of the offer in that behalf by the transferee company, been approved by the holders of not less than nine- tenths in value of the shares whose transfer is involved (other than shares already held at the date of the offer by, or by a nominee for, the transferee company or its subsidiary), the transferee company may, at any time within two months after the expiry of the said four months, give notice in the prescribed manner to any dissenting shareholder, that it desires to acquire his shares; and when such a notice is given, the transferee company shall, unless, on an application made by the dissenting shareholder within one month from the date on which the notice was given, the Court thinks fit to order otherwise, be entitled and bound to acquire those shares on the terms on which, under the scheme or contract, the shares of the approving shareholders are to be transferred to the transferee company: Provided that where shares in the transferor company of the same class as the shares whose transfer is involved are already held as aforesaid to a value greater than one- tenth of the aggregate of the values of all the shares in the company of such class, the foregoing provisions of this sub- section shall not apply, unless-
a) the transferee company offers the same terms to all holders of the shares of that class (other than those already held as aforesaid) whose transfer is involved; and
b) the holders who approve the scheme or contract, besides holding not less than nine- tenths in value of the shares (other than those already held as aforesaid) whose transfer is involved, are not less than three- fourths in number of the holders of those shares;
2) Corporate Rescue under SICA and SARFASI
i) Besides these provisions statutory rescue provisions can be found both under SICA and under SARFAESI acts. Under the incorporated provisions S.424A imposes a responsibility for preparation of revival &rehabilitation scheme, such a reference has to be made within 60 days of final adoption of the accounts. Such a reference has to be made even when banks and financial institutions take over the assets under the SARFAESI Act.
ii) S. 424C empowers the NCLT to decide on its own if the company is capable of reviving of its own within a reasonable time, if not it will direct any operating agency to prepare a scheme for revival. It is only on a confirming itself that winding up is the last available option will the Tribunal under
iii) S.424F will give the order of winding up and can appoint any officer of the OA to act as the liquidator. The Tribunal can also sell off assets of the sick company and distribute the proceeds in accordance with S.529A. The significant improvement is in the S.424G which directs that the winding up should be completed within one year from the order of winding up.
iv) Under the SARFAESI S.13 an Asset manager may be appointed with the sole functioning of managing the assets and not selling or transferring it. The other rescue modes mentioned are rescheduling of the repayment of the debts owed by the borrower. Enforcement of security interests in accordance with the provisions of the act, settlement of amounts due from the borrower.
v) Section 15 of the SARFASI Act provides that any security interest created maybe enforced without the intervention of any Court or Tribunal. This provision over-rides the existing property law regarding the same. Thus the ARCs may, under this provision, take possession of the secured assets without delay. This is clearly a laudable provision since it creates a viable bypass to the hitherto existing weak foreclosure laws in India. One of the main aspects within this provision which highlights an ARC's role in informal restructuring, is the ability to change the management of the company. Such a power is granted more for the purpose of debt collection than company revival.
There is hardly any data available about how many cases are filed, the length of the proceedings and about the procedure of discharge and the practical effects of discharge. As the proceedings of an insolvency suits are not published it is difficult to deduce reliable information about filing rates. A notable case in this regard is from the State of Andhra Pradesh Mohammed Abbas v. Massod Bin Mohammed Al-Khaili, 2007 A.L.D 1(A.P.) 60. The reason why it is so notable is because the high court demanded that the district court clerks from every district of the State report on the insolvency petitions pending. The framework for Pre-insolvency rescue schemes are laid down under the Companies Act, 2002 (Ss. 391-396), the Sick Industrial Companies provisions under the Companies Act (Ss. 424A-424L), Corporate Debt Restructuring Scheme, the Asset Reconstruction under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest, 2002 and the guidelines laid down by the Reserve Bank of India.
3) Corporate Rescue Under Company Court Rules 1959:-
i) Rule 67. Summons for directions to convene a meeting - An application under section 391(1) for an order convening a meeting of creditors and/or members or any class of them shall be by a Judge's summons supported by an affidavit. A copy of the proposed compromise or arrangement shall be annexed to the affidavit as an exhibit thereto. Save as provided in rule 68 hereunder, the summons shall be moved ex parte. The summons shall be in Form No. 33, and the affidavit in support thereof in Form No. 34.
ii) Rule 68. Service on company -Where the company is not the applicant, a copy of the summons and of the affidavit shall be served on the company, or, where the company is being wound up on its liquidator, not less than 14 days before the date fixed for the hearing of the summons.
iii) Rule 69 Directions at hearing of summons - Upon the hearing of the summons or any adjourned hearing thereof, the Judge shall, unless he thinks fit for any reason to dismiss the summons, give such directions as he may think necessary in respect of the following matters :-
(a) Determining the class or classes of creditors and/or of members whose meeting or meetings have to be held for considering the proposed compromise or arrangement;
(b) Fixing the time and place of such meeting or meetings;
(c) Appointing a chairman or chairmen for the meeting or meetings to be held, as the case may be;
(d) Fixing the quorum and the procedure to be followed at the meeting or meetings, including voting by proxy;
(e) Determining the values of the creditors and/or the members, or the creditors or members of any class, as the case may be, whose meetings have to be held ; (6
(f) Notice to be given of the meeting or meetings and the advertisement of such notice;
(g) The time within which the chairman of the meeting is to report to the Court the result of the meeting; and such other matters as the Court may deem necessary. The order made on the summons shall be in Form No. 35 with such variations as may be necessary.
iv) Rule 70. Proxies -
(a) Voting by proxy shall be permitted, provided a proxy in the prescribed form duly signed by the person entitled to attend and vote at the meeting is filed with the company at its registered office not later than 48 hours before the meeting.
(b) Where a body corporate which is a member or creditor (including holder of debentures) of a company authorises any person to act as its representative at the meeting, of the members or creditors of the company, or of any class of them, as the case may be, a copy of the resolution of the Board of Directors or other governing body of such body corporate authorising such person to act as its representative at the meeting, and certified to be a true copy by a director, the manager, the secretary, or other authorised officer of such body corporate shall be lodged with the company at its registered office not later than 48 hours before the meeting.
(c) Rules 227 to 229 of these rules relating to proxies shall also apply to proxies lodged under this rule.
v) Rule 71. Application for stay - An application under sub-section (6) of section 391 for stay of the commencement or continuation of any suit or proceeding against the company may be moved by a Judge's summons ex parte, provided that where a petition for winding-up the company or a petition under section 397 or 398 is pending, notice of the application shall be given to the petitioner in such petition.
vi) Rule 72. Application to vacate or vary order of stay - Where an order has been made staying the commencement or continuation of any suit or proceeding under subsection (6) of section 391, any person aggrieved by such order may apply to the Court by a Judge's summons to vacate or vary such order. Notice of the application shall be given to the applicant at whose instance the order of stay was made and to such other persons as the Court may direct.
vii) Rule 73. Notice of meeting - The notice of the meeting to be given to the creditors and/or members, or to the creditors or members of any class, as the case may be, shall be in Form No. 36, and shall be sent to them individually the Chairman appointed for the meeting, or, if the Court so directs, by the company (or its liquidator), or any other person as the Court may direct, by post under certificate of posting to their last known address not less than 21 clear days before the date fixed for the meeting. It shall be accompanied by a copy of the proposed compromise or arrangement and of the statement required to be furnished under section 393, and a form of proxy in Form No. 37.
viii) Rule 74. Advertisement of the notice of meeting - The notice of the meeting shall be advertised in such newspapers and in such manner as the Judge may direct, not less than 21 clear days before the date fixed for the meeting. The advertisement shall be in Form No. 38.
ix) Rule 75. Copy of compromise or arrangement to be furnished by the company- Every creditor or member entitled to attend the meeting shall be furnished by the company, free of charge and within 24 hours of a requisition being made for the same, with a copy of the proposed compromise or arrangement together with a copy of the statement required to be furnished under section 393, unless the same had been already furnished to such member or creditor.
x) Rule 76. Affidavit of service - The chairman appointed for the meeting of the company or other person directed to issue the advertisement and the notices of the meeting shall file an affidavit not less than seven days before the date fixed for the holding of the meeting or the holding of the first of the meetings, as the case may be showing that the directions regarding the issue of notices and the advertisement have been duly complied with. In default thereof, the summons shall be posted before the Judge for such orders as he may think fit to make.
xi) Rule 77. Result of the meeting to be decided by poll - The decisions of the meeting or meetings held in pursuance of the order made under rule 69 on all resolutions shall be ascertained only by taking a poll.
xii) Rule 78. Report of the result of the meeting - The chairman of the meeting, (or where there are separate meetings, the chairman of each meeting) shall, within the time fixed by the Judge, or where no time has been fixed, within seven days after the conclusion of the meeting, report the result thereof to the Court. The report shall state accurately the number of creditors or class of creditors or the number of members or class of members, as the case may be, who were present and who voted at the meeting either in person or by proxy, their individual values and the way they voted. The report shall be in Form No. 39.
xiii) Rule 79. Petition for confirming compromise or arrangement - Where the proposed compromise or arrangement is agreed to, with or without modification, as provided by sub-section (2) of section 391, the company, (or its liquidator, as the case may be), shall, within seven days of the filing of the report by the chairman, present a petition to the Court for confirmation of the compromise or arrangement. The petition shall be in Form No. 40. Where a compromise or arrangement is proposed for the purposes of or in connection with scheme for the reconstruction of any company or companies, or for the amalgamation of any two or more companies, the petition shall pray for appropriate orders and directions under section 394. Where the company fails to present the petition for confirmation of the Compromise or arrangement as aforesaid, it shall be open to any creditor or contributory as the case may be, with the leave of the Court, to present the petition and the company shall be liable for the cost thereof. Where no petition for confirmation of the compromise or arrangement is presented, or where the compromise or arrangement has not been approved by the requisite majority under section 391(2) and consequently no petition for confirmation could be presented, the report of the chairman as to the result of the meeting made under the preceding rule shall be placed for consideration before the Judge for such orders as may be necessary.
xiv) Rule 80. Date and notice of hearing - The Court shall fix a date for the hearing of the petition, and notice of the hearing shall be advertised in the same papers in which the notice of the meeting was advertised, or in such other papers as the Court may direct, not less than 10 days before the date fixed for the hearing.
xv) Rule 81. Order on petition - Where the Court sanctions the compromise or arrangement, the order shall include such directions in regard to any matter and such modifications in the compromise or arrangement as the Judge may think fit to make for the proper working of the compromise or arrangement. The order shall direct that a certified copy of the same shall be filed with the Registrar of Companies within 14 days from the date of the order, or such other time as may be fixed by the Court. The order shall be in Form No. 41, with such variations as may be necessary.
xvi) Rule 82. Application for directions under section 394 - Where the compromise Id.scheme for the reconstruction of any company or companies or the amalgamation of any two or more companies, and the matters involved cannot be dealt with or dealt with adequately on the petition for sanction of the compromise or arrangement, an application shall be made to the Court under section 394, by a summons supported by affidavit, for directions of the Court as to the proceedings to be taken. Notice of the summons shall be given in such manner and to such persons as the Court may direct.
xvii) Rule 83. Directions at hearing of application - Upon the hearing of the summons or upon any adjourned hearing thereof the Court may make such order or give such directions as it may think fit, as to the proceedings to be taken for the purpose of reconstruction or amalgamation, as the case may be, including, where necessary, an inquiry as to the creditors of the transferor company and the securing of the debts and claims of any of the dissenting creditors in such manner as to the Court may seem just.
xviii) Rule 84. Order under section 394 - An order made under section 394 shall be in Form No. 42 with such variation as the circumstances may require.
xix) Rule 85. Compromise or arrangement involving reduction of capital - Where a proposed compromise or arrangement involves a reduction of capital of the company, the procedure prescribed by the Act and these rules relating to the reduction of capital, and the requirements of the Act and these rules in relation thereto, shall be complied with, before the compromise or arrangement so far as it relates to reduction of capital, is sanctioned.
xx) Rule 86. Report on working of compromise or arrangement - At any time after the passing of the order sanctioning the compromise or arrangement, the Court may, either of its own motion or on the application of any person interested, make an order directing the company, or, where the company is being wound-up, the liquidator, to submit to the Court within such time as the Court may, fix, a report on the working of the said compromise or arrangement. On a consideration of the report, the Court may pass such orders or give such directions as it may think fit.
xxi) Rule 87. Liberty to apply -
a) The company, or any creditor or member thereof, or in case of a company which is being wound-up, the liquidator, may, at any time after the passing of the order sanctioning the compromise or arrangement, apply to the Court for the determination of any question relating to the working of the compromise or arrangement.
b) The application shall in the first instance be posted before the Court for directions as to the notices and the advertisement, if any, to issue, as the Court may direct.
c) The Court may, on such application, pass such orders and give such directions as it may think fit in regard to the matter, and may make such modifications in the compromise or arrangement as it may consider necessary for the proper working thereof, or pass such orders as it may think fit in the circumstances of the case.
4) Corporate Debt Restructuring: Corporate Debt Restructuring (CDR) means the reorganization of a company's outstanding obligations, by reducing the burden of the debts on the company, by decreasing the rates paid and increasing the time by which the company has to pay its obligation back. This allows a company to increase its ability to meet the obligations. Also, some of the debt may be forgiven by creditors in exchange for an equity position in the company. The need for a CDR often arises when a company is going through financial hardship and is having difficulty in meeting its obligations. If the troubles are enough to pose a high risk of the company going bankrupt, it can negotiate with its creditors to reduce these burdens and increase its chances of avoiding bankruptcy.
A number of companies are now taking a good look at business debt restructuring to resolve their unmet financial obligations. This is often a preferable solution to bankruptcy probably because it is less expensive and more discreet. But just like bankruptcy, CDR also involves a systematic process.
The Steps involved in CDR are as follows;
a) The Consultation Process
As business debt restructuring is nothing but an aggregate loan agreement, the lender seeks a series of consultation sessions with the borrower. During these meetings, the lender assesses the company's overall financial situation. It is at this point that all the company's financial obligations are evaluated against the expected regular cash flow. Primarily because of this, small business debt restructuring works differently than that of big corporate restructurings.
b) The Negotiation Process
Once the assessment procedure is finished, the lender then settles an agreement with all the borrower's creditors and vendors. The main idea is to arrive at a solution that is acceptable to all the parties involved. When that is achieved, the lender can proceed to implement the solution as agreed upon.
c) The liquidation of assets
The liquidation of the business's assets is the next step in the process, if found to be necessary by all parties concerned. In some cases, restructuring the existing debt may require a large amount of up front money to be paid. If the lender is not able to cover that, there is no other choice but to liquidate some of the assets. But most of the time, the liquidation strategy is only used to get the profitability of the business back.
d) The restructuring process
This is the step where the contract is signed and the agreement is enforced. The borrower, and in this case the business, agree to the aggregate loan amount and to other details including the monthly payment obligation, the interest rate, and the term of payment. After everything is accounted for, the business which officially under a debt-restructuring program is expected to make payments as stipulated. This is the last level of debt help available to the business before a filing for bankruptcy. CDR is a process that has to be critically evaluated to ensure the ultimate fate of the business involved.
 Supra note 1
 Supra N. 1
 Sakamari Steel and Alloys Ltd. v/s State of Maharastra, para 20, available at:<https://www.lawyerservices.in/Sakamari-Steel-and-Alloys-Ltd-Versus-State-of-Maharastra-1979-04-03>, accessed on 23/01/2022.
 Compromise or Arrangement under section 391 and 394, available at:< https://buycollegesdelhi.blogspot.com/2011/02/compromise-or-arrangement-under-section.html>, accessed on:23/01/2022.
 Supra N. 7
 Supra N. 7
 Supra N.7
 Supra N. 7.
 Supra N. 7.