Amalgamation sanction and statutory vesting follow where shareholders approve and no creditor objection or legal impediment is shown.

A scheme of amalgamation under the Companies Act, 1956 may be sanctioned where material facts are disclosed, shareholders approve the arrangement, and the Court is satisfied it is fair and not prejudicial to members or creditors. Secured and unsecured creditors having raised no objection, the Court may dispense with formal creditors' meetings under its inherent powers, and objections to the exchange ratio or absence of an independent valuation report do not, by themselves, bar approval. Once sanctioned, the transferor company's property, rights, liabilities, pending proceedings and authorised share capital vest in the transferee company, and the transferor stands dissolved without winding up on filing of the certified order.

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Issues: (i) Whether the scheme of amalgamation of the transferor company into the transferee company should be sanctioned despite objections regarding non-convening of creditors' meetings and absence of an independent valuation report. (ii) Whether the transferor company's assets, liabilities, pending proceedings and share capital should stand transferred and merged consequentially on sanction of the scheme.

Issue (i): Sanction of a scheme under section 391 of the Companies Act, 1956 depends upon disclosure of all material facts, approval by shareholders, and the Court's satisfaction that the arrangement is fair and not prejudicial to members or creditors. Where secured and unsecured creditors have given no-objection and the scheme is supported by the shareholders, the Court may, in an appropriate case, dispense with the formal convening of creditors' meetings by exercise of inherent powers under rule 9 of the Companies (Court) Rules, 1959. Objections as to the exchange ratio and the absence of an independent valuer did not demonstrate any legal or factual impediment to approval of the scheme.

Conclusion: The objections were overruled and the scheme of amalgamation was sanctioned in favour of the petitioner.

Issue (ii): Once the scheme is sanctioned, the statutory consequences under sections 394(1)(iv) and 394(2) of the Companies Act, 1956 follow, namely transfer and vesting of all property, rights, powers, liabilities and duties in the transferee company, continuation of pending proceedings by or against the transferee company, merger of authorised share capital as directed by the Court, and dissolution of the transferor company without winding up upon filing of the certified copy of the order.

Conclusion: The consequential transfer, vesting, continuation of proceedings, merger of capital and dissolution of the transferor company were directed.

Final Conclusion: The scheme of amalgamation was approved, the transferor company was to be absorbed into the transferee company, and the petition was disposed of with the statutory consequences flowing from the sanctioned arrangement.

Ratio Decidendi: In proceedings for sanction of amalgamation, the Court may approve the scheme and dispense with creditors' meetings where shareholder approval is obtained, creditors have no objection, and no legal or factual impediment to the arrangement is shown; upon sanction, the statutory vesting consequences under the Companies Act follow.

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