Composition Deed by Gupta

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 [date] 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 [date]

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