Scheme of amalgamation may be sanctioned when stakeholders approve it and the arrangement is fair, beneficial, and non-prejudicial.

A scheme of arrangement and amalgamation may be sanctioned where equity shareholders, secured creditors and unsecured creditors have unanimously approved it, no objection remains from the Regional Director or Official Liquidator, and the court is satisfied that the merged entity will have sufficient assets to meet liabilities. The arrangement should not prejudice creditor interests, and the absence of pending investigation or proceedings supports approval. On these facts, the scheme was found fair, beneficial and in the interest of the companies and all concerned, and sanction was granted.

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Issues: Whether the proposed scheme of arrangement and amalgamation between the transferee company and the transferor company deserved sanction.

Analysis: The scheme had been unanimously approved in the meetings of equity shareholders, secured creditors and unsecured creditors. The Regional Director conveyed that the Central Government had no objection. The Official Liquidator also raised no objection. The Court further recorded that the assets of the amalgamated entity would be sufficient to meet liabilities, that creditor interests would not be prejudiced, and that no investigation or proceedings were pending against either company under sections 235 to 251 of the Companies Act, 1956 or otherwise. On these facts, the scheme was found to be beneficial and in the interest of the companies and all concerned.

Conclusion: The scheme of arrangement and amalgamation was sanctioned.

Ratio Decidendi: A scheme of amalgamation may be sanctioned when it has been duly approved by the stakeholders, no statutory or public interest objection survives, and the Court is satisfied that the arrangement is fair, beneficial, and not prejudicial to creditors or other concerned persons.

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