Scheme of arrangement requires shareholder and creditor meetings before court approval; refusal to dispense with them was set aside.

In a scheme of arrangement, the court first considers whether meetings of shareholders and creditors should be convened, and only after their approval does the company judge examine the scheme itself. Where refusal to dispense with those meetings would make a later approval application ineffective, the company may seek directions to call the requisite meetings before moving for final approval. The text states that the impugned orders were set aside and liberty was granted to proceed in that sequence.

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Issues: Whether the order refusing to dispense with meetings of shareholders and creditors for consideration of the proposed scheme of arrangement, and the appellate order upholding it, were liable to be set aside so that the company could first seek directions for convening such meetings.

Analysis: The appropriate stage for the company judge to examine the scheme was held to be after approval by the shareholders and creditors. The refusal to dispense with meetings, coupled with the appellate order, would make a fresh application for approval ineffective if left in force. The company was therefore entitled to move the High Court for directions to convene meetings of its shareholders and creditors for consideration of the scheme, after which a further application for approval would be required.

Conclusion: The impugned orders were set aside and liberty was granted to the company to apply for directions to call the requisite meetings; the appeal was disposed of in favour of the appellant.

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