Sanctioned scheme of arrangement binds decree-holder depositors and limits execution despite alleged defects in meeting procedure.

A scheme of arrangement sanctioned by a competent court remains binding on decree-holder depositors where the scheme expressly treats them as creditors, even if they had already sued or obtained decrees. The absence of a separate meeting of decree-holder depositors, even if assumed, was only a procedural irregularity and did not render the sanction without jurisdiction. Because the sanctioned order had not been set aside or modified, the executing court was bound to give effect to it and could not go behind the order to examine alleged defects in class representation or meeting procedure. The decree-holder could not execute the decree contrary to the subsisting scheme.

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Issues: Whether a decree-holder depositor was bound by a scheme of arrangement sanctioned under Section 153 of the Companies Act, although no separate meeting of decree-holder depositors was held, and whether the executing court could refuse to execute the decree on that ground.

Analysis: The scheme as sanctioned by the High Court expressly provided that depositors would be bound by its terms and would be treated as creditors for the scheme even if they had instituted suits or obtained decrees. The order sanctioning the scheme had never been set aside or modified, and it remained a judicial order binding on those whom it purported to bind. Any defect in not holding a separate meeting of decree-holder depositors, even if assumed, did not deprive the Court of jurisdiction to sanction the scheme. At most, such a defect was an irregularity in the exercise of jurisdiction. The executing court was therefore bound to act upon the sanctioned scheme and could not go behind it to examine the alleged defect in procedure or class representation.

Conclusion: The sanctioned scheme bound the decree-holder depositor, and the executing court could not entertain the objection to execution on the basis of the alleged absence of a separate meeting of decree-holders.

Final Conclusion: The decree-holder was not entitled to execute the decree contrary to the subsisting sanctioned scheme, and the appeal failed.

Ratio Decidendi: A scheme of arrangement sanctioned by a competent court remains binding and enforceable in execution unless it is shown to be without jurisdiction; procedural defects or irregularities in the convening or classification of meetings do not permit the executing court to treat the sanction as a nullity or to go behind the order.

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