Amalgamation scheme sanction turns on statutory compliance, answered regulatory objections, and a bona fide arrangement for stakeholders.

A scheme of amalgamation under the Companies Act, 1956 is sanctioned where the statutory procedure is followed, shareholder and creditor meetings are properly dispensed with on consent affidavits, notices are duly published and served, and objections from regulatory authorities are addressed. The Gujarat HC noted that the Official Liquidator found no prejudice to the members or the public interest, and that the scheme satisfied sections 391 to 394. On that basis, the scheme was treated as genuine and bona fide, and the amalgamation was approved.

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Issues: Whether the Scheme of Amalgamation of the transferor company with the transferee company deserved sanction under the Companies Act, 1956.

Analysis: The requisite meetings of equity shareholders and unsecured creditors had been dispensed with on the basis of consent affidavits, notice of the petitions had been duly published and served, and the Regional Director's observations regarding SEBI, RBI and income-tax compliance were found to have been addressed. The Official Liquidator reported that the affairs of the transferor company had not been conducted in a manner prejudicial to the interests of its members or the public interest. On consideration of the scheme, the proceedings and the affidavits on record, the requirements of sections 391 to 394 of the Companies Act, 1956 were held to be satisfied and the scheme was found to be genuine and bona fide.

Conclusion: The Scheme of Amalgamation was sanctioned and the company petitions were allowed.

Ratio Decidendi: A scheme of amalgamation will be sanctioned when statutory procedure is complied with, objections of the official and regulatory authorities stand answered, and the scheme is found to be genuine, bona fide and in the interest of shareholders and creditors.

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