Power to impose modifications to a scheme requires an express assent clause or an empowered assenting person; absent that, sanction set aside.

The core issue concerned whether a court may itself impose modifications or conditions when sanctioning a scheme of arrangement absent an express clause empowering assent or any person authorised to give assent. The court applied statutory scheme principles governing sanction of compromises and relied on precedent and practice showing that schemes customarily include an assent clause or a person (for example, a liquidator) before the court to accept imposed changes. It held that without an express provision or an empowered assenting representative the judge was not competent to make suo motu modifications; the sanction was set aside and costs awarded to the appellants.

---

---

Issues: Whether, in the absence of a clause in the scheme authorising assent to modifications (or any person empowered to assent), the Court may itself impose modifications or conditions when sanctioning a scheme of arrangement under Section 153 of the Companies Act.

Analysis: The Court examined the statutory procedure under Section 153 which permits sanction of a compromise or arrangement by the Court when a requisite majority of creditors or members agree. It considered customary practice and precedents showing that schemes ordinarily contain an express clause empowering a company officer or liquidator to assent to modifications which the Court may impose. The Court contrasted authorities where sanction with modifications was permitted only because a person empowered to give assent (for example, a liquidator) was before the Court and had undertaken to accept the modifications. In the absence in the present petition of any provision authorising assent to modifications and with no party empowered to accept alterations on behalf of the company or creditors, the Court held that it was not competent for the Judge to suo motu impose conditions or modify the scheme.

Conclusion: The Court held that, in the absence of an express provision in the scheme or an empowered person to assent to modifications, the learned Judge was not entitled to impose modifications or conditions of his own motion; the appeal is allowed and the order sanctioning the modified scheme is set aside, with costs awarded to the appellants.

---