Mandatory Registrar report under merger law is essential before final court order on compromise or amalgamation schemes.

In compromise, amalgamation or merger proceedings under Sections 391 and 394 of the Companies Act, 1956, the proviso to Section 394(1) requires a mandatory report from the Registrar of Companies. The report must specifically state that the company's affairs have not been conducted prejudicially to members or to public interest; a mere reference to consideration of the scheme or an objection does not satisfy the requirement. Without such a compliant report, the Court cannot pass a final order either approving or refusing the scheme.

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Issues: Whether, in proceedings for compromise, amalgamation, or merger under Section 391 read with Section 394 of the Companies Act, 1956, the Court could pass a final order in the absence of a report from the Registrar of Companies satisfying the proviso to Section 394(1).

Analysis: The requirement under the proviso to Section 394(1) is mandatory. The Registrar's report must categorically indicate that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest. A report that merely notes consideration of the scheme and the existence of an objection does not amount to compliance with that statutory obligation. Until such report is filed, the Court cannot proceed to pass a final order either approving or refusing the compromise.

Outcome: Fresh report directed to be submitted by the Registrar within one month, and the report of the Official Liquidator was taken on record.

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