Company-law scheme stay continues after sanction, governs execution, and supports a Section 47 CPC objection.

A stay of proceedings granted during pendency of a company-law scheme continued after the scheme was sanctioned, so execution of the decree could not proceed. An objection challenging the enforceability of the decree in execution was a question arising between the parties and was maintainable under Section 47 CPC. The stay order was construed to apply to all creditors, not only unsecured creditors, because its language covered all suits and proceedings and no provision in Section 153 of the Companies Act limited it otherwise. Payment made before the scheme's contemplated date did not amount to waiver of the scheme's benefits, as it was consistent with compliance and did not show relinquishment of rights.

---

---

Issues: (i) whether the order staying proceedings under Section 153 of the Companies Act continued to operate after the scheme was sanctioned and barred execution of the decree; (ii) whether the judgment-debtor's objection to execution was one under Section 47 of the Code of Civil Procedure; (iii) whether the stay order applied only to unsecured creditors and not to secured creditors; and (iv) whether payment made by the judgment-debtor amounted to waiver of the benefits of the sanctioned scheme.

Issue (i): whether the order staying proceedings under Section 153 of the Companies Act continued to operate after the scheme was sanctioned and barred execution of the decree.

Analysis: The stay order was made while the petition for sanction of the scheme was pending and expressly covered all suits and proceedings against the company, including execution. That order would have ceased only if the scheme had been refused. Once the scheme was sanctioned, no fresh formal order was needed to continue or give effect to the earlier stay.

Conclusion: The stay remained operative and the execution ought not to have proceeded, in favour of the appellant.

Issue (ii): whether the judgment-debtor's objection to execution was one under Section 47 of the Code of Civil Procedure.

Analysis: The objection went to the effect of the sanctioned scheme on the decree and the enforceability of the decree in execution. Such an objection concerns a question arising between the parties to the decree in execution proceedings and falls within the scope of Section 47.

Conclusion: The objection was maintainable under Section 47 of the Code of Civil Procedure, in favour of the appellant.

Issue (iii): whether the stay order applied only to unsecured creditors and not to secured creditors.

Analysis: The language of the stay order referred to all creditors. No support was found in Section 153 of the Companies Act, including its sub-sections dealing with the scheme, for confining the order only to unsecured creditors.

Conclusion: The stay order applied to all creditors, including secured creditors, in favour of the appellant.

Issue (iv): whether payment made by the judgment-debtor amounted to waiver of the benefits of the sanctioned scheme.

Analysis: Payment before the date contemplated by the sanctioned scheme did not amount to relinquishment of the rights or privileges created by the scheme. Voluntary earlier payment was consistent with compliance and did not show waiver.

Conclusion: No waiver was established, in favour of the appellant.

Final Conclusion: The execution order was unsustainable because the scheme-related stay governed the decree, the execution objection was properly taken, the stay covered all creditors, and no waiver arose from the payment made.

Ratio Decidendi: A stay of proceedings granted during the pendency of a scheme under company law continues to govern execution after sanction of the scheme, and objections raising that effect are questions arising in execution.

---