CONVEYANCING, DRAFTING & DEEDS [Ch. 30
require registration) applies to any composition deed but this does not
mean that if a document requires registration under any other enact-
ment the exemption in Cl. (2) would prevail against the other enactment.
What Registration Act provided is that composition deed so far as it
purports or operates to create, declare, assign, limit or extinguish,
whether in present or in future, any right, title or interest, vested or
contingent, of value of Rs. 100 and upwards to or in immovable property
will not require registration but it does not say that any composition deed
if it purports to do or operates to do anything else will not require
registration either??Govindram v Madan Gopal AIR 1945 PC 74 :
(1945) 1 MLJ 82: ILR 1945 All 241.
The exemption from registration is available to a deed under the Registration
Act only to the extent that it purports or operates to create, etc. a right in
immovable property and not when it amounts to a trust which contemplates
something more than mere creation or assigning of a right in immovable property.
The Trust is an integral part of a composition and not a mere accidental element
which is not the essence of it. On the contrary the trust is the essential machinery
for producing the means of paying of the creditors. Therefore, registration is
essential to the validity of a composition deed which is in the nature of a trust
requiring registration under section 5 of the Indian Trusts Act, 1882?Govind
Ram v madan Gopal AIR 1945 PC 74 at p.77.
FORMS
1
Deed of Covenant by a Debtor and his surety to pay a
Composition to creditors without the
intervention of a Trustee
THIS COMPOSITION DEED is made, etc., BETWEEN A B, of, etc. (hereinafter
called the Debtor), of the 1st part, C D, of, etc. (hereinafter called the Surety),
on the 2nd part, and the Several Persons and Firms mentioned in the Schedule
hereto, being creditors of the Debtors who or whose attorneys or agents on their
behalf execute or otherwise accede to this deed (hereinafter called the Creditors)
of the 3rd part:
WHEREAS:
(1) The Debtor is indebted to the Creditors in the sums set opposite to their
names in the Schedule hereto:
(2) It has been agreed between the Debtor and the Creditors that the
Creditors shall accept a composition of fifty paise in the rupee on their respective
debts, payable by two equal instalments and to be secured by the joint and
several covenants of the Debtor and the Surety in manner hereinafter appearing:
NOW, in consideration of the release hereinafter contained.THIS DEED WITNESSETH as follows:
1. The Debtor and the Surety hereby jointly and severally covenant with the
Creditors and with each of them to pay to them respectively a sum equal to twenty
five paise in the rupee on their respective debts on the ……..day of……next and
a further sum of money equal to twenty five paise in the rupee on their respective
debts on the……… day of………. next.
2. In consideration of the foregoing covenants the Creditors hereby release
the Debtor from all debts, claims and demands whatsoever, subject to the
provisions herein contained.
3. Nothing herein contained shall prejudice any right or remedy which any
of the Creditors may have against any person other than Debtor, nor prejudice
or affect any mortgage, lien or security which any such Creditors may have on
any property or effects of the Debtor, or of any person; but any of the Creditors
holding any mortgage, lien, or security on any property of the Debtor shall be
entitled to receive the composition hereby provided in respect only of the amount
of the debt owing to him after realising or giving credit for the value of such
mortgage, lien or security, in like manner as he would have had to realise or give
credit for the same in order to obtain a dividend in case of insolvency.
IN WITNESS, etc.
THE SCHEDULE
Name, address and signature of Creditor Amount of Debt
[Signatures of all parties]
2
Deed of composition in respect of insolvent estate
of intestate
THIS DEED OF COMPOSITION AND RELEASE is made the……….. day of
…………… BETWEEN the several creditors whose names are entered in the
schedule hereto (hereinafter called the creditors) of the one part and [admin-
istrators] of [addresses etc.] (hereinafter called the administrators) of the other
part.
WHEREAS :
(1) [Intestate] (hereinafter called the intestate) late of [address] died intestate
on 2024 and his estate has proved insufficient to pay all creditors in full.
(2) The creditors are all the creditors of the intestate who have made any
claims against his said estate and the amount of the claim of each is entered
against his respective name in the schedule hereto.
G : CDD (Vol. 2) ? 53
Ch. 30] ARRANGEMENTS WITH CREDITORS & DEEDS OF COMPOSITION?FORMS 833834 CONVEYANCING, DRAFTING & DEEDS [Ch. 30
(3) At a meeting of the creditors held on……… two of them namely the
administrators were appointed to take out letters of administration to the estate
of the intestate and on…….. such letters of administration were granted to the
administrators out of the………. Court.
(4) One of the creditors namely………… claims to be an unsecured creditor
of the intestate in the total sum of Rs………. but there is no evidence therefor apart
from the statement of the said creditor.
(5) At a further meeting of the creditors held on…….. it was agreed to allow
the said to prove for the said total sum of Rs……… and to accept a composition
of…….. paisa in the rupee for their said respective debts and upon receipt of such
composition to execute this deed.
NOW THIS DEED WITNESSETH as follows:
1. The Creditors hereby acknowledge the receipt of the said composition for
their said respective debts and in consideration thereof do and each of them does
hereby absolutely release and discharge the estate of the intestate and the
creditors other than the administrators do and each of them does hereby release
the administrators from the said debts and from all actions claims demands or
other proceedings by the creditors or any of them in respect thereto.
2. The foregoing release shall in no way affect the rights and remedies of the
creditors against third parties in respect of the said debts and all rights and
remedies against any surety or sureties for the said debts are hereby expressly
reserved.
IN WITNESS, etc.
SCHEDULE
[Names of creditors and particulars of claims]
[Signatures of creditors]
3
Composition by insolvent partner with separate creditors?
release?assignment to solvent co-partner of joint and
separate estate of insolvent partner in consideration
of payment of composition to separate creditors
and indemnity against joint debts
THIS DEED OF COMPOSITION is made the……… day of………. BETWEEN
[solvent partner] of [address, etc.] of the first part [insolvent partner] of [address,
etc.] (hereinafter referred to as the debtor) of the second part and the several
persons firms and companies being separate creditors of the debtor whose
names and seals are entered and affixed in the schedule hereto and all other
the separate creditors of the debtor who may execute or assent to or agree to
take the benefit of this deed (hereinafter referred to as the separate creditors)
of the third part.WHEREAS:
(1) The said [solvent partner] and the debtor have for many years past carried
on business in partnership under the name or style of [name of firm] at [address,
etc.]
(2) The debtor is personally indebted to the separate creditors in the amounts
set opposite their respective names in the schedule hereto and being unable
to pay the said debts in full has offered the separate creditors a composition
of……….. paise in the rupee on the amount of their respective debts and the
separate creditors have agreed to accept the same in satisfaction of their debts
and to grant the debtor the release hereinafter contained.
(3) By an agreement of even date herewith the said [solvent partner] and the
debtor have agreed to dissolve the said partnership and in consideration of the
said [solvent partner] paying the said composition and indemnifying the debtor
against all debts and claims of the said partnership the debtor has agreed to
execute the assignment and conveyance hereinafter contained.
(4) In pursuance of the said agreement the said [solvent partner] has duly
executed a deed of indemnity and paid to the separate creditors the said
composition of………… paise in the rupee upon the amount of their respective
debts as the separate creditors hereby acknowledge.
NOW THIS DEED WITNESSETH as follows :
1. The separate creditors do and each of them does hereby absolutely release
and discharge the debtor from the said debts and from all actions claims
demands or other proceedings in respect thereof.
2. The foregoing release shall in no way affect the rights and remedies of the
separate creditors against third parties in respect of the said debts and all rights
and remedies against any surety or sureties for the said debts are hereby
expressly reserved.
3. The debtor as beneficial owner hereby conveys and assigns to the said
[solvent partner] all the estate of the debtor whatsoever and wheresoever
whether separate or joint including all the share and interest of the debtor in the
property effect and goodwill of the said partnership TO HOLD the same unto the
said [solvent partner] absolutely and as the whole for his own use and benefit
discharged from any claim by the debtor his personal representatives or assigns
whether in respect of partnership dealings or by way of partnership account or
otherwise howsoever.
IN WITNESS, etc.
SCHEDULE
[Signatures and seals and amounts of debts of separate creditors]
[Signatures and seals of solvent partner and debtor]
Ch. 30] ARRANGEMENTS WITH CREDITORS & DEEDS OF COMPOSITION?FORMS 835836 CONVEYANCING, DRAFTING & DEEDS [Ch. 30
4
Composition deed by partners?payment of one composition
to both joint and separate creditors?secured by promissory
notes of partners and surety?assignment by partners of
stock in trade and firm business to surety?trust of
leasehold business premises
THE DEED OF COMPOSITION is made the………… day of………… BETWEEN
[names of partners] of [addresses, etc.] carrying on business under the name
or style of [firm name] (hereinafter called the debtors) of the first part [surety]
of [address, etc.] (hereinafter called the surety) of the second part and the several
persons firms and companies whose names and seals are set out and affixed
in the schedule hereto and who are respectively creditors of the debtors jointly
or of one or other of them separately and all other joint and separate creditors
of the debtors who shall execute or in writing or otherwise assent to or agree
to take the benefit of this deed (hereinafter referred to as the creditors) of the
third part.
WHEREAS :
(1) The debtors being indebted to their creditors either jointly or severally in
the several sums set opposite the respective names of their creditors in the
schedule hereto and being unable to pay the same in full have proposed to the
creditors to pay each of them a composition of………. paise in the rupee on the
amount of their debts to the intent that such composition shall be accepted by
the creditors in full satisfaction and discharge of the said debts and be paid by….
equal instalments of……… each the first of such instalments to be paid at the
expiration of……….. of months from the date hereof and thereafter at equal
intervals of……… months and that the payment thereof should be secured by the
joint and several promissory notes of the debtors and the surety and the creditors
have agreed to such proposal and to accept such composition.
(2) The joint and several promissory notes of the debtors and the surety have
been delivered to the creditors of the debtors.
(3) In consideration of the surety becoming surety for the debtors for the
payment of the said composition and of the covenant by the surety with the
creditors hereinafter contained the debtors have consented and agreed to
execute the assignment hereinafter appearing.
NOW THIS DEED WITNESSETH as follows:
1. The surety hereby covenants with the creditors and each of them that he
the surety will pay or cause to be paid to then the said composition of………. paise
in the rupee on the amount of their respective debts in the manner and by the
instalments hereinbefore mentioned.
2. The creditors do and each of them does hereby absolutely release and
discharge the debtors from all the said debts both joint and separate and from
all actions claims demands or other proceedings in respect thereof.3. If the surety shall make default in payment of any of the said instalments
for…….. days after the same becomes due and payable or if the debtors either
jointly or separately or the surety shall have a receiving order in insolvency made
against them or either of them or him or shall suffer any execution or other like
process or shall make any other arrangements or composition with their or his
creditors or any of them then and in any such event the foregoing release shall
be void and of no effect and the creditors shall be at liberty to enforce their rights
and remedies in respect of their said debts against the debtors or either of them
as fully or freely as if this deed had never been executed subject only to
accounting for any instalment received in respect of such debt hereunder.
4. The foregoing release shall not affect the rights or remedies of the creditors
in respect of the said debts against any person or persons other than the debtors
and the rights of the creditors against any surety or sureties for the debtors or
either of them in respect thereof are hereby expressly reserved.
5. Any creditor who holds any mortgage lien pledge charge or other security
over the property whether joint or separate of the debtors or either of them shall
within…….. days of his execution of this deed give notice in writing to the surety
that he intends to surrender his security and take the said composition upon his
whole debt or of the value at which he estimates his security whereupon the
surety shall be entitled within……… days after such notice to redeem the same
at such estimated value: PROVIDED that whether the surety redeems such
security or not if such creditor so values his security he shall only be paid the
said composition upon so much of his debt as shall remain and deducting
therefrom such estimates value AND PROVIDED also if such creditor fails to give
such notice as aforesaid of his intention to surrender his said security or the value
at which he estimated the same he shall at the option of the surety be absolutely
debarred from taking the benefit of this deed.
6. In consideration of the premises and of the covenants by the surety
hereinbefore contained the debtors do and each of them as beneficial owner
does hereby assign and transfer unto the surety all their stock in trade goods
and effects in about or upon their said business premises or used and employed
by them in or in connection with the said business together with the goodwill of
the said business and the right to use and carry on the same under the name
or style of [firm name] TO HOLD the same unto the surety absolutely.
7. The debtors hereby declare that they will henceforth stand possessed of
the leasehold business premises at………. and of the net and profits thereof upon
trust for the surety and the debtors hereby jointly and severally covenant to
assign the same to the surety or as he shall in writing request and that in the
meanwhile neither they nor either of them will deal with or encumber the said
leasehold premises in any way.
IN WITNESS, etc.
SCHEDULE
[Signatures and seals of creditors, and amounts of their debts]
[Signatures and seals of debtors and surety]
Ch. 30] ARRANGEMENTS WITH CREDITORS & DEEDS OF COMPOSITION?FORMS 837838 CONVEYANCING, DRAFTING & DEEDS [Ch. 30
5
Deed of composition and arrangement between company
director or promoter and his creditors?composition
payable in cash and vendor?s share at per?covenant
not to sue?conditional release
THIS DEED OF COMPOSITION AND ARRANGEMENT is made the………. day
of………. BETWEEN [debtor] of [address etc.] (hereinafter called the debtor) of
the first part [trustee] of [address etc.] (hereinafter called the trustee which
expression shall include any new trustee for the time being appointed as
hereinafter provided to replace the original trustee) of the second part [judgment
creditor] of [address, etc.] of the third part and the several persons firms and
companies whose names and seals and the amounts of whose debts are
subscribed affixed and entered in the first schedule hereto and all other the
creditors of the debtor who shall within one month from the date of this deed
assent hereto (hereinafter called the creditors) of the fourth part.
WHEREAS :
(1) The said [judgment creditor] being a creditor of the debtor for the sum of
Rs………. has obtained judgment against the debtor in an action of [judgment
creditor] v [debtor] 20…..No…..for the said sum and costs and is threatening to
make the debtor insolvent.
(2) The debtor is indebted to the creditors in the amounts set opposite their
names in the said first schedule hereto and is at present unable to pay in full
either the said [judgment creditor] or any of the creditors.
(3) The debtors is a director of the several companies whose names appear
in the first column of the second schedule hereto and is entitled to receive as
such director the fees set out in the second column of the said second schedule
but the respective articles of association of the said companies contain
regulations disqualifying a director from holding office upon his becoming
bankrupt.
(4) The debtor also holds the shares in the said companies set out in the third
column of the said second schedule but such shares are directors qualification
shares.
(5) By a contract dated………. and made between the debtor of the one part
and……….. as trustee for the……….. Company Limited of the other part the debtor
or his nominee is entitled to the allotment of……….. thousand fully paid vendor?s
shares in such company and to the sum of Rs……….. in cash upon certain
conditions therein specified.
(6) The debtor is also entitled to certain mining rights and claims situated
at……… in………. the duly registered in accordance with the laws of………..
aforesaid particulars of which claims are set out in the third schedule hereto but
the said claims cannot be realised advantageously at the present time.
(7) The debtor has proposed to the creditors that?
(a) One half of the amount of the creditors? debt shall be satisfied anddischarged by the transfer to the creditors in manner hereinafter
appearing of the said vendor?s shares in the said………. Company
Limited at per value.
(b) The balance of the said debts shall be paid and discharged by
instalments in cash out of a fund made up as follows :
(i) The sum of Rs……….. to be paid by the debtor annually out of the
said director?s fees;
(ii) The dividends declared and paid to the debtor in respect of the
said directors qualification shares;
(iii) The said sum of Rs……….. cash as and when the same is paid
to the debtor by the said………. Company Limited; and
(iv) The sums arising from the realisation of the said mining claims
as and when sold in accordance with the powers and provisions
hereinafter contained.
(8) The creditors by a resolution dated………have agreed to accept the
debtor?s offer and to enter into covenants and to grant the release hereinafter
contained.
(9) The said [judgment creditor] has consented to execute and take the benefit
of this deed on the same terms as the creditors on condition of having all his
taxed costs of the said action paid in full to which the creditors have also agreed
by the said resolution.
NOW in pursuance of the said agreement and in consideration of the
premises.
THIS DEED WITNESSETH:
1. The debtor hereby covenants with the trustee that the debtor will pay over
to the trustee within…….. days of the receipt thereof?
(a) One-half of the said director?s fees specified in the second column of
the second schedule hereto or of any of them and also one-half of all
other fees to which he may hereafter become entitled in respect of any
directorships in any other companies, and
(b) All dividends, bonuses or other profits declared and paid in respect of
the said directors qualification shares specified in the third column of
the second schedule hereto or in respect of any other shares which
he may hereafter acquire or become entitled to in the said companies
or in respect of any other directors qualification or other shares to which
he may hereafter become entitled in any other company.
2. The debtor hereby assigns unto the trustee all the right title and interest
of the debtor in the said contract dated……… and the right to receive and give
a valid discharge for the said sum of Rs….in cash payable thereunder as and
when the same shall become due and payable and to call for the allotment to
the trustee in his name as the nominee of the debtor of the said………… thousand
fully paid vendor?s shares in the said……….Company Limited TO HOLD the said
Ch. 30] ARRANGEMENTS WITH CREDITORS & DEEDS OF COMPOSITION?FORMS 839840 CONVEYANCING, DRAFTING & DEEDS [Ch. 30
sum of Rs……… in cash and the said vendor?s shares unto the trustee upon and
subject to the trusts conditions and provisions hereinafter declared and
contained concerning the same.
3. The debtor as beneficial owner hereby assigns and conveys unto the
trustee all the said mining rights and claims particular whereof are contained
in the said third schedule hereto TO HOLD the same unto the trustee according
to the tenure thereof upon and subject to the trusts conditions and provisions
hereinafter declared and contained concerning the same.
4. The trustee shall stand possessed for the said vendor?s shares as soon
as the same shall have been allotted to him upon trust-
(a) to transfer to each of the creditors such number thereof as near as may
be as shall be equivalent at par value to fifty paise in the rupee of the
debt owing to each creditor:
PROVIDED that?
(i) Each creditor shall have the option of taking the balance of his
debt in the said vendor?s shares such option to be exercised by
notice in writing to the trustee within one week after notice to the
creditor of the transfer to him of the said vendor?s shares and
(ii) If there are not sufficient of the said vendor?s shares to pay the
balance of their debts to all the creditors who shall exercise the
said option the same shall be transferred to such creditors pro rata
to the amount of their respective debts;
(b) to transfer the balance (if any) of such vendor?s shares to the debtor
or as he may direct.
5. The trustee shall stand possessed of the said mining rights and claims
upon the following trustee that is to say :
(a) To retain the same and not without the consent of the debtor to sell the
said mining rights or claims or any part thereof for a period of……… years
from the date hereof for a price of less than Rs……in cash and Rs……in
vendor?s shares in a company to be formed but if at any time the debtor
shall succeed in finding a ready willing and able purchaser at that or
any higher price to sell the said mining rights and claims to such
purchaser if so requested by the debtor.
(b) If at or before the expiration of the said period of…………… years the
balance of the creditors? debts shall have been paid in full whether
hereunder or otherwise howsoever and also all costs, charges and
expenses payable under or by virtue of the provisions hereof at the
expense of the debtor to reconvey the said mining rights and claims
to the debtor or as he shall direct;
(c) If at the expiration of the said period of……….years there shall remain
unpaid any balance of the creditors? debts or of any other money
payable by the debtor hereunder and the debtor shall have failed or
neglected within one month after receiving written notice in that behalffrom the trustee to pay to the trustee a sum sufficient to pay and
discharge such unpaid balance to sell the said mining rights and claims
by public auction or private contract at such price either in cash or
shares or partly in one and partly in the other and upon such terms
in all respects as he shall think fit and in the event of such sale the
creditors shall have the option of taking the balance of the debts still
owing to them in any shares which may form part of the consideration
for such sale at the par value but the remainder of such shares shall
be transferred to the debtor or as he shall direct.
6. The trustee shall pay and apply all such monies as come to his hands under
and by virtue of the trusts of this deed in the order and for the purposes following:
(a) Interest at the rate of…………per cent per annum of the judgment debt
and the taxed costs of the said [judgment creditor] in the said action
of [judgment creditor] v [debtor] but so that the trustee shall have power
to pay to the said [judgment creditor] by agreement a lump sum in lieu
thereof;
(b) All such fees payable in performance and observance of all such acts
regulations and otherwise as may be necessary by the laws for the said
mining rights and claims to preserve the validity of the same and
prevent the forfeiture thereof;
(c) All the costs, charges and expenses of and incidental to the negotia-
tions for and preparation and execution of this deed and of carrying out
the trusts and provisions hereof including therein remuneration to the
trustee of………. per cent upon the amount distributed among the
creditors (including therein the said vendor?s shares at par value) [and
a bonus of Rs……. if the said debts are fully paid in manner aforesaid
within…….. years from the date of this deed];
(d) Such debts as would be payable by the trustee in priority if the debtor
had been adjudged insolvent and the date hereof were the date of the
receiving order;
(e) Such dividends upon the balance of the creditors? debts as the trustee
shall think fit PROVIDED ALWAYS that the trustee shall be bound to
declare a dividend if at any time after allowing for payments due or to
become due under sub-clauses (b) and (c) of this clause he shall have
in his hands a sum sufficient to pay to the creditors a dividend of not
less than………….. paise in the rupee on the balance of the said debts;
(f) The balance (if any) to the debtor.
7. The trustee may if he deems it necessary in the interests of the creditors
pay in full or settle or compound for at a higher rate or give security for or otherwise
deal with the debt or claim of any creditor of the debtor who shall refuse to come
in under and take advantage of this deed.
8. Subject and in addition to the provisions of this deed and so far as is not
inconsistent therewith the trustee shall administer the property of the debtor
Ch. 30] ARRANGEMENTS WITH CREDITORS & DEEDS OF COMPOSITION?FORMS 841842 CONVEYANCING, DRAFTING & DEEDS [Ch. 30
which shall come to his hands according to the rules applicable to the
administration of the property of an insolvent with all the powers of a trustee in
insolvency.
9. The debtor hereby appoints the trustee his attorney in his name and on
his behalf to make execute and so all such deeds, documents and things as the
trustee shall deem necessary for more effectually executing the trusts of this
deed and in particular to take all such steps and do all such acts as may be
necessary or expedient in order to preserve the validity of the said mining rights
and claims and vest the same in the trustee for all the estate and interest of the
debtor therein in accordance with the laws of……… aforesaid. And the debtor
hereby covenants with the trustee to give to the trustee all information and
assistance in his power to enable the trustee to preserve the validity of the said
mining rights and claims and in case of a sale thereof to enable the trustee to
realise them to the best advantage and if required at the expense of the trust
estate to proceed to………. aforesaid for such purposes.
10. The debtor hereby covenants with the trustee that he will if so required
at all times do everything in his power to procure and facilitate the allotment to
the trustee of the said vendor?s shares and the payment to the trustee of the said
sum of Rs……….
11. If the debtor shall at any time pay to the trustee the balance of the debts
for the time being owing to the creditors and all the costs, charges and expenses
and other sums payable under clause 6 hereof and give the trustee an indemnity
against all claims demands and proceedings in respect of his dealings with the
debtor?s property and particularly with the said mining rights and claims the
trustee at the expense of the debtor shall at once reassign and reconvey to the
debtor the said mining claims and shall transfer to the debtor all shares not
already distributed among the creditors and thereupon the provisions of this
deed shall determine and the obligations of the debtor under his covenants
hereinbefore contained shall absolutely cease.
12. The creditors including the said [judgment creditor] hereby jointly and
severally covenant with the debtor that so long as the debtor shall duly observe
all the covenants by him hereinbefore contained the creditors will not nor will the
said [judgment creditor] bring or prosecute any action or proceeding whatsoever
against the debtor nor attach molest or impede the debtor in his person goods
or estate for or on account of any of their respective debts or claims against the
debtor and this deed may be pleaded as a defence to any such action or
proceeding which may have been or may hereafter be brought or prosecuted
against the debtor his person goods or estate for or on account of any such debt
or claim.
13. In and when the trustee shall certify by writing under his hand that all the
said debts and claims of the creditors have been paid and satisfied in manner
aforesaid or otherwise under the trusts of this deed the debtor and his personal
representatives and his estate and effects shall be absolutely released and
discharged from the said debts and claims of the creditors respectively including
the said [judgment creditor] and from all actions proceedings claims or demands
arising thereout or in respect or on account thereof.14. All rights and remedies of the creditors against any surety or sureties for
the said debts and claims are hereby expressly reserved and any creditor who
holds any mortgage lien pledge charge or other security on the property of the
debtor in respect of his debt or claim shall be at liberty to enforce and take the
full benefit of any such security provided that such creditor (unless he surrenders
his security to the trustee for the benefit of the creditors) shall be entitled to vote
on and receive payment of the balance only of his debt or claim after valuing
and deducting the value of such security and such valuation shall be made and
notice thereof given to the trustee within…….. days from the date of the assent
of such creditor to this deed and the trustee after giving…….. day?s notice of his
intention so to do shall thereupon be entitled to redeem any such security at such
estimated value.
15. If the debtor shall fail to perform any of his covenants hereinbefore
contained or if execution shall be levied upon any party of the estate of the debtor
or a receiving order shall made against him or if the debtor makes any other
compromise or arrangement with his creditors or any of them except with the
consent of the creditors assenting to this deed or if the debtor attempts to give
any of the creditors a preference or advantage over the other creditors then and
in every such case this deed shall become void and of no effect save and except
as to any matter or thing lawfully done hereunder and the creditors and each
of them including the said [judgment creditor] shall be remitted to and be entitled
to exercise and enforce against the debtor and his estate in respect of their
respective debts all such rights and remedies as they and each of them would
have been entitled to exercise if this deed had never been executed subject only
to giving credit for any shares or money received on account of their said debts
and claims.
16. If by reason of the date of the trustee or his going and remaining abroad
for more than………. months or becoming incapable of acting or refusing to act
or having a receiving order made against him or from any other cause a vacancy
shall arise in the office of trustee hereunder the committee of inspection or if
there shall be no committee of inspection the creditors may by resolution appoint
a new trustee in place of the trustee who has so vacated his office.
IN WITNESS, etc.
FIRST SCHEDULE
[Signatures and seals of creditors, and the amounts of their debts]
SECOND SCHEDULE
Company Director?s Fees Qualification Shares
Ch. 30] ARRANGEMENTS WITH CREDITORS & DEEDS OF COMPOSITION?FORMS 843844 CONVEYANCING, DRAFTING & DEEDS [Ch. 30
THIRD SCHEDULE
Mining Claims
Description Situation Date of registration Date when Registration
and in whose name renewable fee payable
[Signatures of debtors, trustee and judgment creditor]
6
Deed of composition with creditors by debtor who has
turned his business into limited company?payment of
debts in full by instalments?company joining as
guarantors?deposit of shares and debentures in
company by certain shareholders as
security?release
THIS DEED OF COMPOSITION is made the……….. day of………. BETWEEN
[debtor] of [address, etc.] ( hereinafter called the debtor) of the first part [trustee]
of [address, etc.] (hereinafter called the trustee which expression shall include
any new trustee for the time being appointed as hereinafter provided to replace
the original trustee) of the second part [guaranteeing company] carrying on the
business of [description of business] at [registered office] (hereinafter called the
guaranteeing company) of the third part [shareholders] of [addresses, etc.]
(hereinafter called the concurring shareholders) of the fourth part and the several
persons firms and companies whose names and the amounts of whose debts
are set out in the first schedule hereto or who being creditors of the debtor shall
assent to or agree to be bound by the provisions of this deed or undertake to
execute the same (all of which bound by provisions of this deed or undertake
to execute the same ( all of which persons firms and companies are hereinafter
called the creditors) of the fifth part.
WHEREAS :
(1) The debtor lately carried on the business of [description of business] at……
but has recently transferred the said business to the guaranteeing company.
(2) The debtor is indebted or liable to the creditors in and for the sums of
money set out in the said first schedule hereto which he is at present unable
to pay in full.
(3) The debtor has proposed to the creditors that the debts due to them shall
be paid in full by instalments equal to………paise in the rupee on the amounts
of such debts such instalments to be payable at intervals of three months as
hereinafter provided and to be secured in manner hereinafter appearing.(4) The creditors have agreed with the debtor to accept the said composition
in discharge and satisfaction of their debts and to enter into the covenants
hereinafter contained.
(5) The guaranteeing company and the concurring shareholders have agreed
to join in this deed for the purposes and in the manner hereinafter appearing.
NOW THIS DEED WITNESSETH as follows :
1. The debtor and the guaranteeing company hereby jointly and severally
covenant with the trustee that they or one of them will pay to the trustee in trust
for the creditors such a sum as shall be sufficient to pay to each of the creditors
in full the amount of the debt due to such creditor by the debtor or for which the
debtor is liable to such creditor by………. equal instalments each amounting
to……… paise in the rupee the first such instalments to be paid on……… and each
of the ensuring instalments to be paid at the expiration of three months from the
date on which the last preceding instalment was payable.
2. The debtor and the guaranteeing company hereby further jointly and
severally covenant with the trustee that they or one of them will on demand in
writing by the trustee pay all costs charges and expenses of or incidental to the
investigation of the affairs of the debtor including those in connection with the
preparation of the account and balance sheet of the debtor?s business at 2024
last and all costs charges and expenses of or incidental to the preparation and
execution of this deed and the carrying of the same into effect including such
remuneration to the trustee for his services in relation to the trusts hereof as shall
from time to time be determined by any committee appointed by the creditors
or if no such committee is appointed as may be sanctioned by the creditors.
3. The debtor having deposited with the trustee……… debentures for Rs……….
each and a certificate for………. shares of Rs……… each fully paid in the
guaranteeing company which the debtor hereby states to be his own unecumbered
property hereby covenants with the trustee that he will forthwith on the request
of the trustee duly execute a proper assignment and transfer or proper
assignments and transfers of such debentures and shares to the trustee and
give all such notices and execute and do all such documents and things as shall
at any time be necessary to vest in the trustee the complete unecumbered title
to the said debentures and shares and enable him to obtain registration as holder
of such debentures and shares in the register of the guaranteeing company.
4. Each of the concurring shareholders having deposited in the hands of the
trustee the certificate of the shares in the guaranteeing company held by him
the amount and number of which certificate is set opposite his name in the
second schedule hereto hereby covenants with the trustee that he will forthwith
on the request of the trustee duly executed a proper transfer of his said shares
to the trustee and give all such notices and execute and do all such documents
and things as shall at any time be necessary to vest in the trustee the complete
unencumbered title to the said shares and enable him to obtain registration as
holder of such shares in the register of the guaranteeing company.
5. The guaranteeing company hereby covenants with the trustee that so long
Ch. 30] ARRANGEMENTS WITH CREDITORS & DEEDS OF COMPOSITION?FORMS 845846 CONVEYANCING, DRAFTING & DEEDS [Ch. 30
as the debts or any part of the debts due to the creditors remain unpaid and until
all the said instalments have been fully paid the guaranteeing company will not
issue or attempt to issue any further debentures or debenture stock in addition
to those already issued or in any way charge or encumber or attempt to charge
or encumber the business undertaking or property of the guaranteeing company
or any part thereof or dispose of or deal with the same or attempt so to do
otherwise than in the ordinary course of business.
6. The guaranteeing company and the debtor hereby jointly and severally
covenant with the trustee that during the continuance of this deed the guaran-
teeing company will permit the trustee and any committee appointed by the
creditors or any person authorised by the said trustee or committee in writing
at all reasonable time to examine and inspect the books accounts and other
records of the guaranteeing company in its custody or power or in that of the
debtor on its behalf relating to its business undertaking and property and to take
copies thereof or extracts therefrom.
7. So long as the debtor or the guaranteeing company shall punctually pay
the amounts required for payment of the said composition by the instalments
and at the times and in the manner aforesaid and shall perform and fulfil all their
respective obligations under this deed and make no default therein the trustee
shall not sell the said debentures and shares or compel payment of the said debts
due to the creditors or any of them or enforce the security hereby created.
8. (a) If the debtor and the guaranteeing company shall fail punctually to pay
to the trustee the amount of any instalment hereby made payable to him at the
time and in the manner aforesaid or shall fail to perform or fulfil any of their
respective obligations under this deed or make default therein then and in any
such case:
(i) The whole of the instalments under this deed shall forthwith become
payable to the trustee;
(ii) Notwithstanding anything to the contrary herein or in the said deben-
tures or any trust deed relating thereto contained the principal monies
thereby secured shall immediately become payable and the trustee
may immediately enforce the same in the manner therein prescribed
and provided;
(iii) The trustee may sell the said debentures and shares or any of them
at such times and in such manner as he shall think fit.
(b) All monies received by the trustee under or in exercise of any of the powers
in this clause contained (including any interest and dividends from time to time
received by him on the said debentures and shares) shall after deduction and
retention by the trustee of the expenses of realisation collection and adminis-
tration and his remuneration be paid and applied by the trustee in and towards
payment of the monies payable under this deed by the debtor and the
guaranteeing company and any surplus shall be held by the trustee in trust for
the debtor or the guaranteeing company as the case may be.9. The creditors hereby respectively release the debtor from their respective
debts and from all other debts (if any) owing from the debtor to the creditors
respectively PROVIDED that?
(a) Nothing herein contained shall prevent the creditors or any of them from
suing any person or persons other than the debtor who may be liable
to pay to any of the creditors all or any part of their respective debts
and all rights of the creditors against any surety or sureties for the said
debts or any of them are hereby expressly reserved and
(b) Any creditor who holds any mortgage lien pledge charge or other
security on or over any property of the debtor shall be entitled to enforce
or otherwise obtain the full benefit thereof but so that such creditor shall
be entitled to receive the said composition in respect of the balance
only of such debt after realising and allowing for or valuing and
deducting the value of such mortgage charge lien pledge or other
security as aforesaid and so that also any creditor neglecting to realise
or value any such security prior to receiving the said composition shall
be taken to have abandoned the same.
10. If by reason of the death of the trustee or his going and remaining abroad
for more than…….. months or becoming incapable of acting or refusing to act
or having a receiving order made against him or if from any other cause a vacancy
shall arise in the office of trustee hereunder the committee of creditors or if there
be no such committee the creditors may by resolution appointing a new trustee
in place of the trustee who has so vacated his office.
11. (a) The creditor shall have power to elect a committee of creditors not
exceeding…in number [whose debts amount to not less than Rs….each] …of
whom shall form a quorum. The committee of creditors shall meet from time to
time as they think fit and any resolution may be carried by a majority of such
committee present in person or by proxy.
(b) The trustee or the committee of creditor or creditors whose debts amount
to not less than Rs……… may call a meeting of the creditors and any resolution
passed at such meeting by a majority in number (representing Rs………in value)
of the creditors present treat in person or by proxy shall be valid and binding.
(c) The trustee shall in executing of the trusts of this deed observe the
directions and be under the control of the committee of creditors or if there is
no such committee of the creditors and any resolution of the creditors shall
override any directions of the committee of creditors.
IN WITNESS, etc.
FIRST SCHEDULE
[Signatures and seals of creditors, and amounts of debts]
Ch. 30] ARRANGEMENTS WITH CREDITORS & DEEDS OF COMPOSITION?FORMS 847848 CONVEYANCING, DRAFTING & DEEDS [Ch. 30
SECOND SCHEDULE
Name of Shareholder Date of Certificate Number of Shares
[Signatures of debtor, trustee and concurring shareholders,
and common seal of guaranteeing company]
7
Deed of composition?payment of certain creditors by
instalments?postponed payment of remaining creditors?
assignment of book debts?declaration of trust of
lease containing option to purchase?covenant
not to sue? release
THIS DEED OF COMPOSITION is made the………. day of………. BETWEEN
[debtor] of [address, etc.] (hereinafter called the debtor) of the first part [trustee]
of [address, etc.] (hereinafter called the trustee) of second part and the several
persons firms and companies whose names and seals and the amounts of
whose debts are subscribed affixed and set out in the first schedule hereto
(hereinafter called the A creditors ) of the third part and the several persons firms
and companies whose names and seals and the amounts of whose debts are
subscribed affixed and set out in the second schedule hereto (hereinafter called
the B creditors) of the fourth part.
WHEREAS :
(1) The debtor being unable to pay his creditors their debts in full has made
an offer to the creditors to pay them and each of them a composition of……paise
in the rupee on the amount and in full satisfaction of their respective debts
payable at the times and in the manner hereinafter appearing.
(2) It was a term of such offer that the A creditors should be paid the said
composition by instalments of…….paise in rupee payable on the [dates]
respectively and that the B creditors should consent postpone their claims to
the payment of the said composition until……..months after the date when
the…and last instalment payable to the A creditors should become due.
(3) It was also a term of such offer that the payments thereunder should be
secured as to the…….. and…….. instalments payable to the A creditors by the
assignment to the trustee of the monies due and accruing due under certain
contracts hereinafter more particularly specified and as to the sums payable to
the B creditors by the declaration of trust of a lease hereinafter more particularly
specified under which the debtor is entitled to become the purchaser of the
freehold reversion thereof.(4) The A and B creditors by a resolution passed at a meeting held on…….
resolved to accept the said offer and to take the said composition in full discharge
and satisfaction of their respective debts and claims against the debtor.
NOW THIS DEED WITNESSETH as follows:
1. In pursuance of the said agreement and in consideration of the premises
the debtor hereby covenants with the A creditors and each of them that he will
pay to them the said first instalment of…….. paise in the rupee on………
2. In further pursuance of the said agreement and in consideration of the
premises the debtor as beneficial owner hereby assigns to the trustee all the
right title and interest of him the debtor of and in all the monies which are now
or may hereafter at any time become due under the contracts [give particulars
of contracts, dates, parties etc.] upon trust that the trustee shall as soon as
possible collect get in receive and compel payment of the monies due and
accruing due under the same and shall pay and apply such monies after payment
of all expenses of and incidental to such collection and payment in or towards
payment to each of the A creditors of the second and subsequent instalments
of the said composition on the amounts of their respective debts and shall hold
the surplus (if any) upon trust to apply the same towards the payment of the
composition to the B creditors as and when such payment shall become due.
3. The debtor hereby covenants with the trustee that if the said monies shall
not be sufficient to pay the second and subsequent instalments of the said
composition in manner aforesaid the debtor will on the demand of the trustee
or within such time as the trustee may in his discretion allow pay to the trustee
such sum as will make up the deficiency.
4. In further pursuance of the said agreement and in consideration of the
premises the debtor hereby agrees and declares that he will henceforth stand
possessed of the lease [give particulars of term, grantor, option clause, etc.]
upon trust to exercise his right to purchase the freehold reversion thereof at such
time as the trustee may direct and to convey assign and transfer the said lease
or in the event of his becoming the freeholder at such time and in such manner
as the trustee may direct and that in the meanwhile he will not without the consent
of the trustee sell dispose of or encumber the same or any part thereof and further
that he will pay over to the trustee as and when received the net rents and profits
of the said property and if required by the trustee he will give the trustee full written
authority to collect and receive such net rents and profits by himself or his agents.
5. The debtor hereby further covenants with the trustee that if the monies
obtained by the trustee from the sale or disposal of or from the rents and profits
derived from the said property and the surplus (if any) of the monies received
in respect of the contracts aforementioned shall not be sufficient to pay the
composition to the B creditors on its becoming due he the debtor will on the
demand of the trustee or within such time as the trustee may in his discretion
allow pay to the trustee such sum as will make up the deficiency.
6. The debtor hereby covenants with the trustee to give him all the information
and assistance in his power in order to enable the trustee to collect the monies
G : CDD (Vol. 2) ? 54
Ch. 30] ARRANGEMENTS WITH CREDITORS & DEEDS OF COMPOSITION?FORMS 849850 CONVEYANCING, DRAFTING & DEEDS [Ch. 30
due and to become due under the contracts aforementioned and the net rents
and profits of the said property and the debtor hereby irrevocably appoints the
trustee his attorney in his name and on his behalf to demand sue for recover
and receive the said monies and to give a valid receipt and discharge for the
same and to compromise and compound with any person or persons liable to
pay the said monies or any part thereof and generally to do all such acts and
things and make and execute all such deeds and documents as he may think
necessary or expedient for the speedy collection and recovery of the said
monies.
7. In further pursuance of the said agreement and in consideration of the
premises the B creditors hereby jointly and severally covenant with the debtor
and also as separate covenants with the A creditors that they the B creditors
will not until the expiration of the aforesaid……. months bring or prosecute any
action or proceeding whatsoever against the debtor or attach molest or impede
the debtor in his person goods or estate for or on account of any of the debts
or claims in respect whereof the B creditors are entitled to receive payment of
the said composition hereunder and this deed may be pleaded as a legal defence
to any such action or proceeding which may have been or may hereafter be
brought or prosecuted against the debtor his person goods or estate for or on
account of any such debt or claim.
8. In further pursuance of the said agreement and in consideration of the
premises the A creditors hereby jointly and severally covenant with the debtor
that they will not if and so long as the instalments aforementioned are punctually
paid in accordance with the covenants hereinbefore contained bring or pros-
ecute any action or proceeding whatsoever against the debtor or attach molest
or impede the debtor in his person goods or estate for or on account of any of
the debts or claims in respect whereof the A creditors are entitled to receive
payment of the said composition hereunder and this deed may be pleaded as
a legal defence to any such action or proceeding which may have been or may
hereafter be brought or prosecuted against the debtor his person goods or estate
for or on account of such debt or claim.
9. If and when the said composition shall be duly paid to the A and B creditors
in the manner hereinbefore provided then the debtor and his personal represen-
tatives shall be absolutely released and discharged from the several debts and
liabilities now owing from or incurred by the debtor to the A and B creditors
respectively.
10. If default shall be made in the payment of any instalments of the said
composition for a period exceeding……….. days after the same is due and
payable or if execution shall be levied on any part of the estate of the debtor or
a receiving order shall be made against him or if the debtor shall make any other
compromise or arrangement with his creditors or any of them except with the
consent of the creditors assenting to this deed or if the debtor shall attempt to
give any of the creditors a preference or advantage over the other creditors then
and in every such case this deed shall become void and of no effect save and
except as to any matter or thing lawfully done hereunder and the A and B creditors
shall (save as aforesaid) be remitted to and be entitled to exercise and enforceagainst the debtor and his estate in respect of their respective debts all such
rights and remedies as they and each of them would have been entitled to
exercise if this deed had never been executed subject only to giving credit for
any instalment or instalments or any part thereof received on account of the said
composition.
IN WITNESS etc.
FIRST SCHEDULE
[Signatures and seales of A creditors, and the amounts of their debts]
SECOND SCHEDULE
[Signatures and seals of B creditors, and the amounts of their debts]
[Signatures and seals of debtor and trustee]
8
Deed of composition?payment by instalments secured by
assignment of money due under contracts and promissory
notes of debtor and two sureties?covenant by sureties,
who are also creditors, to postpone payment of
composition on their debts?covenant not to sue?
conditional release
THIS DEED OF COMPOSITION is made the…………. day of…….. BETWEEN
[debtor] of [address, etc.] (hereinafter called the debtor) of the first part [sureties]
of [address, etc.] (hereinafter called the sureties) of the second part [trustee]
of [address, etc.] (hereinafter called the trustee) of the third part and the several
persons firms and companies whose names and seals and the amounts of
whose debts are subscribed affixed and set out in the schedule hereto and all
other creditors of the debtor who shall assent to and take the benefit of this deed
or undertake to execute the same (hereinafter called the creditors) of the fourth
part.
WHEREAS:
(1) The debtor being unable to pay his creditors their debts in full has made
an offer to the creditors to pay them and each of them a composition of …….paise
in the rupee on the amounts and in full satisfaction of their respective debts
payable by three instalments the first of such instalments to be paid on…….and
to be secured by the assignment to the trustee of the monies due and accruing
due under certain contracts hereinafter more particularly specified and the
second and third of such instalments to be payable on…….. and……… respec-
tively and to be secured by the joint and several promissory notes of the sureties.
(2) The sureties are also creditors of the debtor and it was also a term of such
offer that the sureties should consent to postpone their claims to the payment
of the said composition until the other creditors had been paid the whole thereof
Ch. 30] ARRANGEMENTS WITH CREDITORS & DEEDS OF COMPOSITION?FORMS 851852 CONVEYANCING, DRAFTING & DEEDS [Ch. 30
and should on their part accept as security for the payment of the said
composition the promissory notes of the debtor payable at the dates and in
manner hereinafter appearing.
(3) The creditors by a resolution passed at a meeting held on……… resolved
to accept the said offer and to take the said composition in full discharge and
satisfaction of their respective debts and claims against the debtor.
NOW THIS DEED WITNESSETH as follows:
1. In pursuance of the said agreement and in consideration of the premises
the debtor as beneficial owner hereby assigns to the trustee all the right title and
interest of him the debtor of and in all the monies which are now or may at any
time hereafter become due and payable to the debtor under the two contracts
[give particulars of contracts, dates, parties etc.]
2. The trustee shall as soon as possible collect get in receive and compel
payment of the said monies and shall pay and apply the same after payment
of all expenses of and incidental to such collection and payment [and after
payment of the costs charges and expenses of and incidental to the investigation
of the affairs of the debtor and the meetings of his creditors and of and incidental
to the preparation and execution of this deed and the carrying of the same into
effect and the remuneration of the trustee such remuneration not to exceed the
sum of Rs……..] in or towards payment to each of the creditors other than the
sureties of the first instalment of the said composition on the amount of their
respective debts and shall hold the surplus (if any) in trust to apply the same
towards the payment of the second and third instalments of the said composition
as and when the same become due and payable under the provisions hereinafter
contained and in exoneration pro tanto of the liability of the debtor and the
sureties for the second and third instalments of the said composition.
3. The debtor and the sureties hereby jointly and severally covenant with the
trustee that if the said monies shall not be sufficient to pay the first instalment
of the said composition in manner aforesaid the debtor and the sureties for one
or other of them will on the demand of the trustee or within such times as the
trustee may in his discretion allow pay to the trustee such sum as will make up
the deficiency.
4. The debtor hereby covenants with the trustee to give him all the information
and assistance in his power in order to enable the trustee to receive collect and
get in and compel payment of the said monies due or as they become due under
the said contracts and the debtor hereby appoints the said trustee his attorney
in his name and on his behalf to demand sue for recover and receive the said
monies and to give a valid receipt and discharge for the same and to compromise
or compound with any person or persons liable to pay the said monies or any
part thereof and generally to do all such acts and things and make and execute
all such deeds and documents as he may think necessary or expedient for the
speedy collection and recovery of the said monies.
5. In further pursuance of the said agreement and in consideration of the
premises :
(a) The debtor hereby covenants with the trustee and each of the creditorsthat he the debtor will pay to the creditors and each of them the said
second and third instalments of the said composition upon………
and…….. respectively and
(b) The sureties having delivered to the trustee (as the trustee hereby
acknowledges) their joint and several promissory notes for and in
respect of the amounts of the said second and third instalments of the
said composition and as security for the due payment thereof hereby
jointly and severally covenant with the trustee to deliver to him upon
demand other like promissory notes in respect of any composition
which the trustee shall hereafter certify in writing will become payable
in respect of the debts of any creditors who may assent to this deed
before………. and duly prove their debts to claims hereunder to the
satisfaction of the trustee.
6. It is hereby declared that although as between the debtor and the sureties
the sureties are sureties only for the debtor yet as between the creditors and
each of them and the sureties the sureties shall be in the position of principal
debtors to the creditors and each of them and shall not in anywise be released
or discharged by any act done time given or indulgence granted to the debtor
by the said creditors or any of them and so that the creditors and each of them
may modify or abstain from taking advantage of or enforcing any contracts
obligations or rights to which the creditors or any of them may be entitled and
discharge any party and accept any composition or arrangement or realise any
securities when and in such manner as they or any of them may deem expedient.
7. The debtor hereby covenants with the sureties that he will pay to the
sureties the said composition upon the amount of their respective debts by two
instalments on……… and……… respectively and as security for the due payment
thereof the debtor has delivered to the sureties (as they hereby acknowledge)
promissory notes of the debtor for Rs……… and Rs……… respectively payable
at the said dates.
8. The creditors and the sureties hereby jointly and severally covenant with
the debtor that if and so long as the said instalments of the said composition
[and the said costs charges expenses and remuneration] are punctually paid
in accordance with the covenants in that behalf hereinbefore contained and the
said promissory notes given in respect thereof duly honoured at maturity the
creditors will not nor will the sureties or any of them bring or prosecute any action
or proceeding whatsoever against the debtor or attach molest or impede the
debtor in his person goods or estate for or on account of any of the debts or
claims of the creditors and the sureties in respect whereof the creditors and the
sureties are entitled to receive payment of the said composition