Sanctioned compromise and arrangement cannot be recalled once acted upon; court may direct implementation under supervisory powers.

A sanctioned compromise or arrangement, once acted upon by the parties, could not be recalled at the instance of one party in the absence of any apparent jurisdictional error. The Court treated the sanction order as binding and held that objections based on alleged breach of mining rules had lost force after the State executed a rectification deed substituting the transferee's name. It further recognised that the supervisory powers under Sections 391 and 392 of the Companies Act, 1956 extend to directions needed for proper working of a compromise or arrangement, and permitted implementation of the scheme despite subsequent objections and changed circumstances.

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Issues: (i) Whether the order sanctioning the scheme of arrangement could be recalled at the instance of the company that had participated in and acted upon the scheme. (ii) Whether the Court could direct implementation of the sanctioned scheme under its powers in relation to compromise and arrangement, in the light of subsequent events and the later rectification of the mining lease records.

Issue (i): Whether the order sanctioning the scheme of arrangement could be recalled at the instance of the company that had participated in and acted upon the scheme.

Analysis: The order sanctioning the scheme was treated as a consent order and, therefore, binding between the parties. The Court found no apparent legal or jurisdictional error in the sanction order. It also held that the challenge was not made in aid of the scheme but to frustrate it, and that the objection based on alleged breach of the mining rules had lost significance after the State executed the rectification deed substituting the transferee's name. In these circumstances, the order could not be recalled at the instance of one party.

Conclusion: The recall application was not maintainable and was rejected.

Issue (ii): Whether the Court could direct implementation of the sanctioned scheme under its powers in relation to compromise and arrangement, in the light of subsequent events and the later rectification of the mining lease records.

Analysis: The powers under Sections 391 and 392 of the Companies Act, 1956 were held to include supervisory authority to issue directions necessary for the proper working of a compromise or arrangement. The Court found that the transfer arrangement had been acted upon by the parties and that the objections founded on want of prior approval could not defeat implementation after the authorities had granted consent and the lease records had been rectified. The attempt to withdraw the transfer and defeat the arrangement was treated as a self-induced frustration that could not undo the scheme.

Conclusion: The application for implementation of the scheme was allowed and directions were issued for carrying it out in accordance with law.

Final Conclusion: The sanctioned scheme remained operative, the attempt to recall it failed, and the implementation of the arrangement was permitted to proceed.

Ratio Decidendi: A sanctioned compromise or arrangement, once acted upon and absent jurisdictional error, cannot be recalled at the instance of one party, and the Court may use its supervisory powers under Sections 391 and 392 of the Companies Act, 1956 to secure its proper working.

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