Sanctioned compromise binds unsecured judgment-creditors absent conflict of interest, even without individual notice to every creditor.

A compromise sanctioned under section 153 binds creditors of the relevant class once the statutory majority in number representing three-fourths in value has approved it and the court has sanctioned it; individual notice to every creditor is not a necessary condition. Unsecured judgment-creditors are treated as part of the same class as other unsecured creditors unless a real conflict of interest places them outside that class. On that basis, the sanctioned scheme bound the creditor, and execution could not continue.

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Issues: (i) Whether a creditor who did not receive individual notice of the meetings held for a compromise under section 153 was nevertheless bound by the sanctioned scheme; (ii) Whether a judgment-creditor was outside the class of creditors bound by the compromise.

Issue (i): Whether a creditor who did not receive individual notice of the meetings held for a compromise under section 153 was nevertheless bound by the sanctioned scheme.

Analysis: Section 153 did not require personal service of notice on every creditor. The governing safeguard was that the statutory majority in number representing three-fourths in value of the creditors or relevant class of creditors, present in person or by proxy, had approved the compromise and the Court had sanctioned it. Where that requirement was satisfied, the absence of individual notice to one creditor did not invalidate the arrangement or exempt that creditor from its binding effect.

Conclusion: The creditor was bound by the sanctioned scheme despite not having received individual notice.

Issue (ii): Whether a judgment-creditor was outside the class of creditors bound by the compromise.

Analysis: The Court treated unsecured judgment-creditors as belonging to the same class as other unsecured creditors for the purpose of a compromise under section 153. The authorities relied on for the contrary view concerned situations where the decree-holder's interest conflicted with that of the original class, whereas no such conflict existed here. The compromise was therefore applicable to unsecured creditors even if they had obtained decrees before sanction.

Conclusion: A judgment-creditor was within the class bound by the compromise.

Final Conclusion: The sanctioned compromise bound the appellant, and the execution proceeding could not continue.

Ratio Decidendi: Under section 153 of the Indian Companies Act, 1913, a duly sanctioned compromise is binding on creditors of the relevant class once the statutory majority approves it, and an unsecured judgment-creditor remains within that class unless a real conflict of interest places him outside it.

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