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Issues: Whether the objections to sanction of the scheme of arrangement and demerger justified refusal of approval, and whether the scheme suffered from any legal infirmity in the convening of the members' meeting or in the challenged clauses.
Analysis: The petition complied with the statutory requirements for sanction of a scheme of arrangement under the Companies Act, 1956. The shareholders and unsecured creditors had approved the scheme by the requisite majority, and the Regional Director raised no objection. The objections directed at the challenged clauses were found not to affect the core demerger arrangement, and the dispute regarding share transfers and brand ownership was treated as a separate controversy already pending in other proceedings. The Court also found that the opposition was not bona fide and that it could not be used to defeat a scheme approved by the statutory majority.
Conclusion: The objections did not warrant refusal of sanction, and the challenge to the scheme failed.
Final Conclusion: The scheme was not interdicted on the grounds raised, and the opposition was rejected.
Ratio Decidendi: A scheme of arrangement will not be refused where statutory procedure has been followed, the requisite majority and regulatory authorities support the scheme, and the objector fails to raise a bona fide ground going to the legality or fairness of the scheme.
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