Fair shareholder representation is essential in amalgamation sanctions; arbitration orders cannot override Companies Act voting rights.

A scheme of amalgamation requires the meetings to be properly convened, the class of shareholders to be fairly represented, and the statutory majority to act bona fide and without oppression. Where a substantial shareholder block was excluded from personal participation and represented only through attorneys and proxies under an arbitration arrangement under challenge, the voting process was materially affected and sanction could not rest on a valid statutory majority. An interim order under section 9 of the Arbitration and Conciliation Act, 1996 could not override participation rights under the Companies Act, and pending Company Law Board proceedings did not justify keeping the scheme petition in abeyance. The scheme was therefore not fit for sanction.

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Issues: Whether the scheme of amalgamation deserved sanction when shareholders holding a substantial block of shares were prevented from participating in the meeting and represented only through attorneys, and whether the pending arbitration-related proceedings or Company Law Board proceedings warranted withholding approval.

Analysis: The statutory jurisdiction in sanctioning a scheme is supervisory, and the Court must be satisfied that the meetings were properly convened, the class was fairly represented, and the majority acted bona fide and not oppressively. The exclusion of a significant shareholder group from personal participation in the meeting, coupled with representation through attorneys and proxies under an arbitration arrangement still under challenge, meant that the statutory voting process was materially affected. The interim order under section 9 of the Arbitration and Conciliation Act, 1996 could not validly override statutory rights in a meeting convened under the Companies Act. The pending Company Law Board proceedings did not justify keeping the scheme petition in abeyance.

Conclusion: The scheme was not fit for sanction and could not be treated as approved by a valid statutory majority.

Final Conclusion: The petition seeking confirmation of the amalgamation scheme failed because the meetings were not conducted in a manner satisfying the statutory requirements for sanction.

Ratio Decidendi: A scheme of amalgamation cannot be sanctioned unless the meeting process under the Companies Act secures fair representation of shareholders and a bona fide statutory majority, and an interim order in arbitration cannot curtail those statutory participation rights.

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