Sanction under Companies Act granted for composite amalgamation and demerger, subject to sanction by other jurisdictions.

Grant of sanction under the Companies Act for a composite amalgamation and demerger was approved after the court found statutory convening and conduct of shareholder and creditor meetings compliant, the Registrar raised no objection, and approvals were unanimous. The court held the scheme was not illegal, mala fide, or designed to defeat creditor or minority shareholder rights, and noted administrative and commercial benefits alongside safeguards for stakeholders. Sanction is granted subject to corresponding sanction by the High Courts where the other companies are registered.

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Issues: Whether the Court should grant sanction under sections 391 and 394 of the Companies Act, 1956 to the composite scheme of amalgamation/demerger submitted by the petitioner company.

Analysis: The petition concerns a scheme providing for transfer of the automobile undertaking and amalgamation, which was considered under sections 391 and 394 and the Companies (Court) Rules, 1959. The Court noted the chairman's report under Rule 78 confirming convening and conduct of meetings of shareholders and creditors, and the Registrar of Companies' affidavit stating no objection. The scheme was unanimously approved by the shareholders and creditors in the convened meetings and was found not to be illegal, mala fide, or designed to defeat creditors' or minority shareholders' rights. The Court examined whether any infirmity, illegality, or prejudicial conduct existed and found none, and considered the scheme's administrative and commercial benefits and safeguards for creditors and shareholders.

Conclusion: The Court grants sanction to the proposed composite scheme of amalgamation/demerger under sections 391 and 394 of the Companies Act, 1956, subject to sanction by the other High Courts where the other companies are registered.

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