1929 (7) TMI 4 - Other - Companies Law

Summary

Issues:
1. Interpretation of Section 153 of the Companies Act 1913 regarding arrangements between a company and its members.
2. Approval of a scheme for financing a company in liquidation by shareholders.
3. Disputes arising from differences in approved schemes between shareholders and liquidators.

Detailed Analysis:
1. The judgment involves an appeal from the High Court of Judicature at Allahabad in a winding-up proceeding of a company. The Court considered the provisions of Section 153 of the Companies Act 1913, which allow for arrangements between a company and its members. The Court directed a meeting of shareholders to decide on proposals for financing or purchasing the company. The key issue raised was whether the proposals constituted an arrangement under Section 153, which the Court believed they did, despite arguments to the contrary by the liquidators' counsel.

2. The meeting of shareholders was held, and a scheme presented by one party was accepted by a majority. However, disputes arose when the liquidators reported higher creditor claims than previously anticipated. The Court adjourned the matter to allow for an increase in the financing offer. Subsequently, the approved scheme was found to differ from what was accepted by the shareholders, leading to disagreements between the shareholders and the liquidators regarding the terms of the scheme and the mortgage deed.

3. The Privy Council concluded that the shareholders had not assented to the amended scheme as approved by the Court. As a result, all previous orders related to the scheme were set aside. The Council directed that a detailed amended scheme should be presented to the shareholders for their consideration, with provisions for Court-approved modifications. The judgment highlighted the need for shareholder approval and the importance of aligning approved schemes with shareholder consent to avoid disputes between parties involved in the liquidation process.