Judgement Appeal from a judgment and decree of the Court of the Judicial Commissioner (September 16, 1915) modifying a decree of the Subordinate Judge of Lucknow. On May 31, 1913, the appellant deposited with the respondent bank the sum of Rs. 25,000, which under the terms of the deposit he was entitled to withdraw on or after November 30, 1914. On October 8, 1914, the respondent bank suspended payment. On December 21, 1914, an extraordinary meeting of the shareholders adopted a proposed arrangement dealing with the rights of the creditors with a view to the bank resuming its business, and resolved to apply to the Court under s. 153 of the Indian Companies Act for its sanction. An application was accordingly made on December 21 to the High Court at Allahabad, and on December 23 that Court ordered that a meeting of the creditors be held at Meerut, the headquarters of the bank, to consider the proposed arrangement, notice to the various classes of creditors being provided for. Meanwhile, on December 19, 1914, the appellant, after giving 24 hours notice requiring repayment of his deposit, filed a suit to recover the principal and interest in the court of the Subordinate Judge of Lucknow. 7 Law Rep. 46 Ind. App. 135 ( 1918- 1919) Raghubar Dayal V. Bank of Upper India, Limited 18 The meeting of the creditors was held on March 4, 1915, when a majority in number representing three-fourths in value of those present (as provided by s. 153) agreed to the proposed arrangement. The appellant received due notice of the meeting, but was not an assenting party to the scheme. On April 17, 1915, the Subordinate Judge made a decree in the appellants suit for the recovery of the deposit and interest; and on May 7, 1915, the appellant applied to the Subordinate Judge to execute the decree by attachment of the property of the bank. On June 2, 1915, the High Court at Allahabad sanctioned the arrangement under s. 153. On July 3, 1915, the respondent bank appeared before the Subordinate Judge and objected to the appellants application for execution of his decree, contending that he was bound by the arrangement; the Subordinate Judge dismissed the application for execution. On June 2, 1915, the High Court at Allahabad sanctioned the arrangement under s. 153. On July 3, 1915, the respondent bank appeared before the Subordinate Judge and objected to the appellants application for execution of his decree, contending that he was bound by the arrangement; the Subordinate Judge dismissed the application for execution. On appeal to the Court of the Judicial Commissioner, the view of the Subordinate Judge was affirmed save as to the costs awarded to the appellant in his suit, which it was pointed out was instituted before the application to the High Court to sanction the arrangement. A voluntary winding-up resolution was passed by the shareholders of the respondent bank on June 13, 1917, and was duly confirmed and notified. 1919. Jan. 31. De Gruyther K.C. and Dube for the appellant. The appellant having obtained a decree before the scheme was sanctioned was entitled to execute it; he had not assented to the scheme and was not bound by it. Upon the proper construction of s. 153 of the Indian Companies Act, 1913, a scheme when sanctioned has not a retrospective effect. Dunne K.C. and OGorman for the respondents were not called upon. The judgment of their Lordships was delivered by VISCOUNT HALDANE. If this was a difficult case their Lordships would take time before formulating their report ; but the case appears to them to be one of no difficulty. Sect. Dunne K.C. and OGorman for the respondents were not called upon. The judgment of their Lordships was delivered by VISCOUNT HALDANE. If this was a difficult case their Lordships would take time before formulating their report ; but the case appears to them to be one of no difficulty. Sect. 153 of the Indian Companies Act provides that " Where a compromise or arrangement is proposed between a company and its creditors, or any class of them, or between the company and its members, or any class of them, the Court may on the application in a summary way of the company, or of any creditor or member of the company, or, in the case of a company being wound up, of the liquidator, order a meeting of the creditors, or class of creditors, or of the members of the company, or class of members, as the case may be, to be called, held, and conducted in such a manner as the Court directs." Then by the second part of the section " If a majority in number representing three-fourths in value of the creditors, or class of creditors, or members or class of members, as the case may be, present either in person or by proxy at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the Court, be binding on all the creditors, or the class of creditors, or on all members, or class of members, as the case may be, and also on the company, or, in the case of a company in the course of being wound up, the liquidator and contributories of the company." In this case the Bank of Upper India closed its doors. The appellant was a customer of the bank who 7 Law Rep. 46 Ind. App. 135 ( 1918- 1919) Raghubar Dayal V. Bank of Upper India, Limited 19 had a fixed deposit with it, which became repayable by the bank on November 4, 1914. Before that day, on October 8, the bank had suspended payment. The appellant, on December 19, began a suit for his money, and on April 19, 1915, he got a decree for payment. The amount was over Rs. 25,000. So much for the proceed ings of the appellant. Now we turn to what happened in connection with the bank in order to see how s. 153 comes into operation. The appellant, on December 19, began a suit for his money, and on April 19, 1915, he got a decree for payment. The amount was over Rs. 25,000. So much for the proceed ings of the appellant. Now we turn to what happened in connection with the bank in order to see how s. 153 comes into operation. On December 15 an extraordinary meeting of the shareholders formulated a scheme of arrangement, and on December 21 there was an application to the High Court for an order under s. 153. On December 23, two days after, an order was made directing the creditors to meet and consider the scheme, and on March 4, 1915, they did meet, and they passed a resolution sanctioning the scheme by the requisite majority. A little later, on June 2 of the same year, the Court gave its sanction. It will be observed therefore that the plaintiffs decree on April 19 was granted to him before the order confirming the resolution, but after the meeting at which the resolution and the scheme to which it related had been agreed on. The question is whether under s. 153 (which is a section in familiar language, practically identical with the corresponding section of the English Companies Act) the creditor was bound. The Court of the Judicial Commissioner, agreeing with the Judge who heard the case in the first instance, says that it was so, and it is obvious that it is convenient that it should be so. Otherwise, with the uncertainty as to what the ultimate rule of the Court may be, when a decision has finally been obtained, the door would be open for a race between creditors and persons concerned in administering the affairs of the bank. The Court of the Judicial Commissioner put it very well in its judgment when it said this " If it had been the intention of the Legislature that such an agreement should not be binding until the arrangement had been sanctioned by the Court, instead of the words if sanctioned by the Court the words when it has been sanctioned by the Court would] ordinarily have been used. The agreement becomes binding from the date when it is arrived at, subject to subsequent sanction by the Court. If that sanction be refused, the agreement is without effect. The agreement becomes binding from the date when it is arrived at, subject to subsequent sanction by the Court. If that sanction be refused, the agreement is without effect. But it is not the case that the agreement is to take effect from the date of sanction. It takes effect from the date when it is made. Such is our interpretation of the words of the section." When regard is had to the latter part of s. 153 it appears that this is so, because the words there are that if the compromise or arrangement, which is the compromise or arrange ment sanctioned by a majority of the meeting, is passed, then the compromise or arrangement, if sanctioned by the Court, is to be binding. It is the proceeding of the meeting that is to be binding, provided only that it does not fail to be subsequently sanctioned. Therefore, not only convenience, but the literal language of the section, is in favour of the view to which the Court below adhered, and their Lordships will humbly advise His Majesty that that view should be affirmed, and that the appeal should be dismissed with costs.