Shareholder approval must match the sanctioned scheme when material changes alter the terms agreed by members.

A scheme sanctioned by the Court could not stand where the shareholder approval related to an advance of Rs. 10,00,000 only, but the sanctioned arrangement included an additional advance of Rs. 62,000. The earlier assent did not amount to approval of a materially altered scheme, because the consent given at the meeting was confined to the specific terms then placed before shareholders. Once the sanctioned scheme differed in substance from the one approved, the basis for treating it as duly authorised failed, and the orders made on that footing were liable to be set aside.

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Issues: Whether the amended scheme sanctioned by the Court was valid in the absence of assent by the shareholders to the increased advance and whether the orders made on that basis were liable to be set aside.

Analysis: The scheme placed before the shareholders was for an advance of Rs. 10,00,000 only, while the scheme ultimately approved by the Court involved an additional advance of Rs. 62,000. The earlier shareholder approval could not be treated as consent to the materially altered arrangement. The proceedings had throughout proceeded on the footing that the specific scheme sanctioned had been accepted by the shareholders, and that footing was not sustainable once the scheme approved differed in substance from the one agreed to at the meeting.

Conclusion: The amended scheme was not validly approved by the shareholders, and the Court's orders sanctioning it were liable to be set aside in favour of the appellants.

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