Section 391 of the Companies Act, 1956 provides that when a compromise or arrangement (the word compromise implies the existence of some dispute, but the word arrangement is of wider application) is proposed between a company and (a) its creditors or any class of them; or (b) its members or any class of them, then the court may, on the. application of the company, or any creditor or member, or, if the company is being wound up, the liquidator, order a meeting to be called of the creditors or class of creditors, or of the members or class, of members, as the case may be.

**COMPROMISE ARRANGEMENT AND SETTLEMENT** Section 391 of the Companies Act, 1956 provides that when a compromise or arrangement (the word compromise implies the existence of some dispute, but the word arrangement is of wider application) is proposed between a company and (a) its creditors or any class of them; or (b) its members or any class of them, then the court may, on the. application of the company, or any creditor or member, or, if the company is being wound up, the liquidator, order a meeting to be called of the creditors or class of creditors, or of the members or class, of members, as the case may be. The compromise or scheme of arrangement will then be binding upon: (a) all the creditors or class of creditors; (b) the members or class of members; (c) the company; and (d) in the case of a company being wound up, upon the liquidator and contributories. Provided that: (1) it is approved by a majority in number representing three-fourths in value of the creditors or class of creditors, or members or class of members as the case may be, present and voting in person or by proxy; and (2) it is sanctioned by the court. Thanks

A compromise is an agreement between two or more persons to amicably settle their dispute[i]. It is a settlement of a disputed claim by mutual concession to avoid a lawsuit[ii]. The word compromise contemplates a mutuality of concessions for the purpose of the termination of litigation[iii]. Thus, a compromise is an agreement between two or more persons who, to avoid a lawsuit, amicably settle their differences on such terms as they can agree on[iv].

Dear Uma > Compromise arrangements and settlements Compromise is a type of settlement – where there is a settlement between company and its creditors arrangement is type of reorganization of share capital. Compromise & arrangements are undertaken when there is a dispute / conflict. ‘Compromise’ or ‘Arrangement’ are mainly applicable to those companies which are liable to be wound up under the act Thanks

A compromise is an agreement between two or more persons to amicably settle their dispute[i]. It is a settlement of a disputed claim by mutual concession to avoid a lawsuit[ii]. The word compromise contemplates a mutuality of concessions for the purpose of the termination of litigation[iii]. Thus, a compromise is an agreement between two or more persons who, to avoid a lawsuit, amicably settle their differences on such terms as they can agree on[iv]. A settlement agreement is defined as an agreement to terminate, by means of mutual concessions, a claim that is disputed in good faith or unliquidated. It is an amicable method of settling or resolving bona fide differences or uncertainties and is designed to prevent or put an end to litigation[v].