Composition Deed Template India

About this agreement

Title: Composition Deed Format

Need a reliable Composition Deed Format to settle your debts amicably with creditors in India? Our ready-to-use Composition Deed template in PDF and Word format simplifies the process, ensuring legal compliance and protecting your interests.

What is a Composition Deed? A Composition Deed is a legal agreement between a debtor and their creditors, where the debtor offers to pay a reduced amount (composition) in full satisfaction of the outstanding debts. Commonly used under Indian insolvency laws and the Indian Contract Act, 1872, this deed helps avoid bankruptcy proceedings by mutually settling dues. Whether you're a business owner facing financial crunch or an individual with multiple loans, a well-drafted Composition Deed Format can be your pathway to financial recovery.

Why is a Composition Deed Important? In India, insolvency and debt recovery are governed by strict laws like the Insolvency and Bankruptcy Code (IBC), 2016, and older provisions under the Presidency Towns Insolvency Act. A Composition Deed prevents creditors from initiating legal action, such as winding-up petitions or recovery suits. It provides a binding contract that releases the debtor from further liability upon payment of the agreed composition amount. Key benefits include:

Legal Protection: Bars creditors from future claims once executed.
Cost-Effective: Avoids expensive court battles and insolvency costs.
Quick Resolution: Facilitates faster debt settlement compared to litigation. Using a professional Composition Deed Sample ensures all parties are on the same page, minimizing disputes.

Key Elements of a Composition Deed Format Our customizable Composition Deed template includes all essential sections required for enforceability in Indian courts:

Parties Involved: Details of the debtor and all consenting creditors.
Recitals: Background on the debts, reasons for composition, and insolvency threats.
Terms of Composition: Percentage or fixed amount to be paid, payment schedule, and mode (e.g., cheque, bank transfer).
Release Clause: Full discharge of debts upon payment.
Covenants: Promises by debtor and creditors, including no further claims.
Notarization and Witnesses: Signatures, dates, and execution formalities.
Governing Law: Reference to Indian laws, jurisdiction clause. This ready-to-use legal template is drafted by experts to meet court and company requirements.

Who Should Use This Composition Deed Sample?

Businesses: Facing cash flow issues, multiple vendor dues, or loan defaults.
Individuals: With personal loans, credit card debts, or unsecured borrowings.
Insolvency Professionals: Assisting clients in pre-insolvency settlements. Common use cases include trade debts, partnership dissolutions, or family business settlements in civil matters across India. Ideal for Mumbai, Delhi, Bangalore courts or company boards.

Download Your Composition Deed Format Now Get instant access to our premium Composition Deed Format in editable Word or printable PDF. Customize it with AI assistance or seek legal help for perfection. Free download preview available – upgrade for full ready-to-use version. Start your debt-free journey today!

Important Note: While our Composition Deed template is customizable and legally sound, it's recommended to consult a lawyer for specific advice. Tailor it to your situation and get it stamped/notarized as per state laws. Related searches: Composition Deed PDF India, free Composition Deed download, Composition Agreement Sample, debt settlement deed format.

COMPOSITION DEED

Non-Judicial

COMPOSITION DEED

THIS DEED [P1]is made at?????..on this day of?????..20...between A son of ................resident of?????..(hereinafter called "the Debtor") of the FIRST PART andB son of ?????..resident of?????..(hereinafter - called "the Trustee") of the SECOND PART and several persons, firms and companies who have executed this deed, whose names, extent of debts and signatures and seals appear in the First Schedule hereto and all other creditors of the debtor, who shall in writing or otherwise signify their assent to this deed (hereinafter called the "creditors") of the THIRD PART.

WHEREAS

(1)[P2]The debtor is not able to pay his debts due to his creditors on account of losses in business and is willing to assign to the trustee all his movable and immovable assets more particularly described in the Second Schedule hereto for the benefit of creditors pro rata amongst them.

(2)[P3]The creditors have agreed to accept the proposal and the said composition and to absolve him from their respective debts on the terms and conditions set out herein.

NOW THIS DEED WITNESSETH AS FOLLOWS:

(1) [P4]In pursuance of the said agreement and in consideration of the release hereinafter contained, the debtor as beneficial owner hereby assigns unto the Trustee all that the personal estate of the debtor, more particularly described in the Second Schedule hereto excepting the tools of his trade and the necessary wearing apparel and bedding of himself, his wife and children and to hold the said property hereby assigned unto the trustee and Subject to the trusts and conditions hereinafter contained.

(2) [P5]The trustee shall take possession of the properties, more particularly described in the Second schedule hereto, and sell and convert the said property into money and shall pay and apply the same as follows?

(a) In payment of all costs, charges and expenses of and incidental to the realisation of the said property including the out-of-pocket expenses and fair charges and remuneration of the trustee and the salary of such person or persons (if any), as the trustee may think fit to employ to assist him in the realisation of the debtor's estate.

(b) In payment of claims and demands, which would be payable as preferential claims.

(c) In payment to the creditors of such dividends and at such times, as the trustee deems expedient, of all such debts and claims of the creditors and after such payments as aforesaid to pay over the surplus (if any), to the debtor or his

successors in title.

(3) [P6]The trustee shall be empowered to give time for payment of any debts due to the debtor and to Compound, release any such debts or to accept payment for the same in instalments or by bills, notes or other negotiable instruments or in any other way which he may deem advantageous to the debtor's estate and to bring or defend and compromise or refer to arbitration the disputes or other proceedings arising out of or in relation to or in respect of debtor's estate.

(4) [P7]The debtor will at all times give the trustee all the documents, information and assistance in his power to enable him to get in and realise the debtor's estate and for that purpose will execute and do all such assurances and things as may be required by the trustee.

(5) [P8]The debtor hereby appoints the trustee to be his attorney on his behalf and in his name or otherwise to make, execute and sign any debtor deed, document or other instrument, which he may think necessary for effectually carrying this deed into execution.

(6) [P9]The creditors do and each one of them cloth hereby release and discharge the debtor from all debts due from the debtor to them or any of them and from all actions, suits, claims, demands or other proceedings, whatsoever in respect thereof

(7) [P10]The trustee may call a meeting of the creditors at such times and in such manner as he may think fit and the trustee shall have regard in the administration of the trusts hereby declared to the directions given by the creditors at such meetings.

(8) [P11]If the debtor has concealed any part, his estate or effect to the value of Rs ?????..or if insolvency petition is filed against the debtor within three months after the date of this deed, or if the debtor shall- refuse or fail within?????.. days after being so requested by the trustee to assist the trustee in realising the trust property, then and in any of the said cases, this deed shall be void and of no effect and the creditors shall be at liberty to enforce their debts or the balances thereof against the debtor.

(9) [P12]In case the trustee shall resign or go out of India for a period exceeding?????..months or die or shall refuse to act or become unfit to act from any cause whatever or in case the creditors shall desire to remove the trustee, the creditors shall have the power to appoint a new trustee of this deed in his place by a majority in number and three? fourth in value of all the creditors at a meeting convened by the trustee or by any two or more creditors whose debts exceed Rs ?????..in value by a seven days notice sent by letter to all the creditors at their last known addresses

IN WITNESS WHEREOF, the parties have signed this deed in token of acceptance thereof,

1 . ?????..Debtor

2 . ?????..Trustee

3 . ?????..Creditors

4 . ?????..? ..

5 . ?????..? ..

6 . ?????..? ..

7 . ?????..? ..

WITNESSES

First Schedule

______________________________________________________________________

Sr. Name & Address Amt. due Securities for the Signature/

No. of the creditor from debtor debtor, if any seal

______________________________________________________________________

Second Schedule

?????..?????.. Signature of Debtor

?????..?????.. Signature of Trustee

?????..?????.. Signature of Creditors

[P1]Parties

Deed of composition with creditors appointment of a trustee

[P2]Debtor willing to assign his assets to the trustee

[P3]Debtor's proposal accepted by creditors

[P4]Assignment of debtor's assets

[P5]Order of payment by trustee

[P6]Trustee's powers

[P7]Debtor to give information, documents to trustee

[P8]Trustee to be attorney of

[P9]Release of debtor by creditors

[P10]Meeting of creditors

[P11]Deed be void, in certain circumstances

[P12]New trustee may be appointed by creditors

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Important Guidelines

Guidelines for Drafting a Composition Deed:

A Composition Deed is a legal document used in various contexts where parties mutually agree to settle financial or contractual disputes by making partial payments or alternative arrangements instead of pursuing full legal action. Here are guidelines for drafting such a document and

Common Mistakes to Avoid:

Identification of Parties: Clearly identify all parties involved, including the debtor (payer) and the creditor (payee), along with their contact details.

Debt Details: Specify the nature of the debt, the original amount owed, any interest or penalties, and the agreed-upon settlement amount.

Payment Terms: Outline the terms of the payment arrangement, including the agreed-upon schedule, method of payment, and any conditions or deadlines.

Release of Claims: Include a clause stating that upon full compliance with the composition terms, the creditor releases the debtor from further claims related to the debt.

Legal Compliance: Ensure that the composition deed complies with relevant laws and regulations governing debt settlement and agreements.

Common Mistakes to Avoid:

Ambiguity: Use clear and precise language to prevent misunderstandings or disputes.

Failure to Consult Legal Counsel: Seek legal advice to ensure the composition deed is legally sound and enforceable.

Inadequate Witnessing and Signatures: Properly execute the document with the signatures of all parties involved and impartial witnesses to make it legally binding.

Failure to Notify Interested Parties: Inform all interested parties, such as co-debtors, guarantors, or relevant authorities, about the composition to prevent future claims or challenges.

Notarization: Depending on jurisdiction, notarizing the composition deed can provide added legal weight.

Ignoring Tax Implications: Address potential tax consequences of the debt settlement arrangement.

Drafting a Composition Deed is a useful way to resolve disputes and manage debt settlements. Legal consultation is advisable to ensure the document aligns with legal requirements, protecting the interests of both the debtor and the creditor while preventing future legal actions.

Frequently asked questions

What is a Composition Deed?→

A Composition Deed is a legal agreement in India where a debtor agrees to pay a reduced sum to creditors in full settlement of debts, often used in insolvency under the Indian Contract Act, 1872.

Is a Composition Deed legally valid and enforceable in India?→

Yes, it is legally valid and enforceable in India if properly executed with all parties' consent, adequately stamped, and registered where required under state laws.

What is the stamp duty required for a Composition Deed in India?→

Stamp duty varies by state; it is typically treated as an agreement or bond. Check the Indian Stamp Act or state schedules, and consult a lawyer for precise rates based on the amount involved.

In what format can I download the Composition Deed template?→

The Composition Deed is available for free download in editable Word (.docx) and non-editable PDF formats for easy customization and professional use.

Can I edit or customize the Composition Deed agreement?→

Yes, the template is fully customizable. Modify clauses, parties' details, and settlement amounts in the Word version before stamping, signing, and registering if needed.

Who should use a Composition Deed and when?→

Debtors (individuals or businesses) in financial distress use it to negotiate debt settlement with multiple creditors in India, especially during insolvency proceedings.

COMPOSITION DEED

Non-Judicial

COMPOSITION DEED

WHEREAS

(2)[P3]The creditors have agreed to accept the proposal and the said composition and to absolve him from their respective debts on the terms and conditions set out herein.

NOW THIS DEED WITNESSETH AS FOLLOWS:

(a) In payment of all costs, charges and expenses of and incidental to the realisation of the said property including the out-of-pocket expenses and fair charges and remuneration of the trustee and the salary of such person or persons (if any), as the trustee may think fit to employ to assist him in the realisation of the debtor's estate.

(b) In payment of claims and demands, which would be payable as preferential claims.

successors in title.

IN WITNESS WHEREOF, the parties have signed this deed in token of acceptance thereof,

1 . ?????..Debtor

2 . ?????..Trustee

3 . ?????..Creditors

4 . ?????..? ..

5 . ?????..? ..

6 . ?????..? ..

7 . ?????..? ..

WITNESSES

First Schedule

______________________________________________________________________

Sr. Name & Address Amt. due Securities for the Signature/

No. of the creditor from debtor debtor, if any seal

______________________________________________________________________

Second Schedule

?????..?????.. Signature of Debtor

?????..?????.. Signature of Trustee

?????..?????.. Signature of Creditors

[P1]Parties

Deed of composition with creditors appointment of a trustee

[P2]Debtor willing to assign his assets to the trustee

[P3]Debtor's proposal accepted by creditors

[P4]Assignment of debtor's assets

[P5]Order of payment by trustee

[P6]Trustee's powers

[P7]Debtor to give information, documents to trustee

[P8]Trustee to be attorney of

[P9]Release of debtor by creditors

[P10]Meeting of creditors

[P11]Deed be void, in certain circumstances

[P12]New trustee may be appointed by creditors

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