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of <h1>Court allows modification of sanctioned scheme under Section 153 of Indian Companies Act</h1> <h3>Dewanganj Bank & Industry Ltd., In re</h3> The Court allowed the application to modify the sanctioned scheme under Section 153 of the Indian Companies Act, ruling that the decree-holders were not ... Compromise and arrangement Issues:Application to modify a sanctioned scheme under Section 153 of the Indian Companies Act by decree-holders against a company. Jurisdiction of the court to entertain the application and make the order.Analysis:The judgment pertains to an application by two individuals who obtained decrees against a company, seeking modification of a scheme sanctioned by the Court under Section 153 of the Indian Companies Act. The petitioners were depositors in the company but became decree-holders after obtaining a decree for their claim. The scheme, approved by the Court, included a modification that deemed decree-holders as creditors bound by the scheme. The petitioners, having obtained decrees before the scheme, argued they were not bound by it. The Court noted that the decree-holders had ceased to be depositors and were justified in not attending the meeting where the scheme was adopted. The Court found that the petitioners were not bound by the scheme and ordered the modification to expunge the specific words binding decree-holders to the scheme.The company contended that the agreement was binding on the petitioners despite their decrees, citing a precedent that did not apply to the current circumstances. The Court distinguished the present case, highlighting that the decree was obtained before the scheme was proposed and sanctioned. It was emphasized that the decree-holders were not obligated to follow the scheme, as they had already obtained decrees against the company. The Court rejected the company's argument and ruled in favor of the petitioners, ordering the modification of the scheme.Regarding the jurisdiction to entertain the application, the Court dismissed the suggestion to have the decree-holders execute their decrees in a different court and challenge the scheme there. The Court deemed such a course as unnecessary and opted to address the matter directly. It was concluded that the petitioners were not bound by the scheme, and the only recourse for them was to seek modification through the Court. The Court granted the application, ordering the company to pay the costs of the proceedings.In conclusion, the Court allowed the application to modify the sanctioned scheme, ruling that the decree-holders were not bound by the scheme's provisions. The judgment clarified the distinction between depositors and decree-holders, emphasizing the petitioners' right to seek modification through the Court. The company was directed to cover the costs of the application, and the scheme was to be amended as per the Court's order.
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