Amalgamation scheme sanction requires fresh disclosures and financial viability; stale accounts and public prejudice justified refusal.

Sanction of an amalgamation scheme under sections 391 to 394 requires full disclosure of material facts, the latest financial position, and the latest auditor's report, in addition to the requisite shareholder and creditor approvals. Earlier consent did not prevent parties from placing relevant material before the Court, and non-attendance at a meeting did not amount to implied consent. On the facts, the company's financial condition had deteriorated, audited accounts were unavailable, the business had substantially ceased, and the proposed revival was based on speculative assumptions. The scheme was therefore found not financially viable, not fair or reasonable, and prejudicial to public interest; sanction was refused and the petitions were dismissed.

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Issues: Whether the proposed scheme of amalgamation deserved sanction in the light of the company's financial viability, disclosure of material facts, and public interest.

Analysis: Sanction of a scheme under sections 391 to 394 of the Companies Act, 1956 depends not only on approval by the requisite majority but also on disclosure of all material facts, the latest financial position, the latest auditor's report, and the absence of prejudice to members, creditors, and the public interest. The Court held that the consent earlier given by shareholders and creditors did not bar them from placing relevant material before the Court, and that absence from a meeting does not amount to implied consent. On the facts, the company's financial condition had deteriorated drastically, the latest audited accounts were unavailable, the business had substantially ceased, the memorandum of understanding and related book entries created serious doubt about real consideration, and the revival plan depended on speculative assumptions. The proposed amalgamation was therefore found to be not just, fair, reasonable, or financially viable, and was also held to be prejudicial to public interest.

Conclusion: The scheme of amalgamation was not sanctioned and the petitions were dismissed.

Ratio Decidendi: A scheme of amalgamation will be refused where the statutory disclosures are inadequate or stale, the scheme is not financially viable, and the Court concludes that sanction would be contrary to public interest.

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