Scheme of amalgamation objections at convening stage are limited; meetings may proceed, with objections reserved for sanction.

At the stage of directions for convening meetings under the Companies Act, 2013, objections to a proposed amalgamation are confined to the statutory threshold for maintainability and the limited question whether meetings should be called. The Tribunal held that the shareholder's objection could not be finally decided at that preliminary stage because the shareholder's voting and shareholding position depended on pending connected proceedings. It therefore directed meetings of equity shareholders and unsecured creditors to be convened, while leaving the objector free to raise surviving objections at the sanction stage, subject to the outcome of the connected litigation.

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Issues: Whether the objections of the shareholder to the proposed amalgamation were sustainable at the stage of directions for convening meetings of equity shareholders and unsecured creditors, and whether the Tribunal should direct such meetings to be held.

Analysis: The objection was examined in the light of the statutory scheme governing compromise, arrangement and amalgamation under the Companies Act, 2013. The Tribunal noted that objections to a scheme are maintainable only by persons satisfying the threshold in the proviso to Section 230(4), and that the merger provisions apply mutatis mutandis under Section 232(1). It further held that the shareholder's voting and shareholding position was entangled in pending proceedings and subject to the result of connected litigation, and therefore the objection could not be finally adjudicated at the stage of convening meetings. The Tribunal distinguished the precedent relied upon and held that the present stage was confined to deciding whether meetings should be convened.

Conclusion: The objections were not sustained at this stage, and directions were issued to convene the meetings for consideration of the proposed scheme.

Final Conclusion: The scheme process was permitted to proceed to the meeting stage, while the objector was left at liberty to raise all surviving objections at the stage of sanction, subject to the outcome of the pending connected proceedings.

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