1937 (4) TMI 12 - HC - Companies Law

Summary

Issues:
1. Whether the opposite party is precluded from executing the decree by a scheme sanctioned under Sec. 153, Companies Act.
2. Whether the scheme sanctioned by the Court binds judgment-creditors.
3. Whether non-service of notice of the meeting affects the jurisdiction of the Court.

Analysis:
1. The judgment dealt with the issue of whether the opposite party could execute their decree despite a scheme sanctioned under Sec. 153, Companies Act. The scheme in question allowed for gradual payment to depositors over ten years. The Court noted that the scheme included depositors who had sued and obtained decrees, indicating that all classes of depositors were considered. The executing Court was required to determine if the execution was affected by the terms of the sanctioned scheme. The Court concluded that the opposite party's application for execution was not maintainable under the sanctioned scheme, dismissing it.

2. The judgment also addressed whether the scheme sanctioned by the Court bound judgment-creditors. The executing Court considered various grounds raised by the opposite party, including non-service of notice of the meeting. The Court highlighted the importance of principles to be considered when sanctioning a scheme under the Companies Act. It was emphasized that when a scheme is sanctioned, the executing Court should only assess if the terms of the scheme affect the execution and if the sanctioning order was passed with jurisdiction. In this case, the Court found that the scheme included depositors who had obtained decrees, and the non-service of notice did not affect the jurisdiction of the Court.

3. Another issue raised was whether non-service of notice of the meeting affected the jurisdiction of the Court. The Court discussed the distinction between irregularities and nullities in legal proceedings. It was concluded that the defects pointed out by the opposite party were at most irregularities and did not render the sanctioning order void. The Court held that the order sanctioning the scheme was made with jurisdiction, and any defects were considered irregularities in the exercise of jurisdiction. As a result, the opposite party's application for execution was deemed not maintainable, and the Rule was made absolute with costs.