Scheme of amalgamation upheld where stakeholder approval and statutory compliance were established, with no basis to reopen commercial wisdom.

A scheme of amalgamation may be sanctioned where shareholders, debenture holders and other stakeholders have unanimously approved it, statutory notice and disclosure requirements under the Companies Act, 2013 have been complied with, the accounting treatment conforms to prescribed standards, and no objection is raised by the Official Liquidator. In such proceedings, the tribunal examines whether the scheme is just, fair, reasonable, lawful and consistent with public policy, but does not reassess the commercial wisdom of the stakeholders once those conditions are met. A challenge based on alleged non-hearing and the claim that the merger was sequential or hypothetical failed where counsel was present, consent had been given to related schemes, and no prejudice, public interest harm or exchequer loss was shown.

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Issues: (i) Whether the scheme of amalgamation could be sanctioned when the stakeholders had unanimously approved it and the statutory procedure under the Companies Act, 2013 had been complied with. (ii) Whether the appeal could succeed on the grounds that the merger was allegedly sequential or hypothetical and that the appellant was not heard before the tribunal.

Issue (i): Whether the scheme of amalgamation could be sanctioned when the stakeholders had unanimously approved it and the statutory procedure under the Companies Act, 2013 had been complied with.

Analysis: The record showed unanimous approval by shareholders, debenture holders and other stakeholders, service of notices on the regulatory authorities, and compliance with the procedural requirements for a compromise or arrangement. The accounting treatment was certified as being in conformity with the prescribed accounting standards, and the Official Liquidator raised no objection. In such matters, the sanctioning forum is required to verify compliance with the statutory procedure, disclosure of material particulars, and whether the scheme is just, fair, reasonable and not contrary to law or public policy. Once those requirements are met, the court does not sit in appeal over the commercial wisdom of the stakeholders.

Conclusion: The scheme satisfied the statutory requirements and was not liable to be rejected on merits.

Issue (ii): Whether the appeal could succeed on the grounds that the merger was allegedly sequential or hypothetical and that the appellant was not heard before the tribunal.

Analysis: The material on record showed that counsel for the appellant was present and heard before the tribunal reserved the matter. The contention that the merger had become void because of earlier approvals of connected schemes was not accepted, since the appellant had itself given consent to relevant schemes and no prejudice, public interest violation, or loss to the exchequer was established. The tribunal found no illegality or infirmity in the order sanctioning the scheme.

Conclusion: The challenge based on alleged non-hearing and sequential merger failed.

Final Conclusion: The sanction of the scheme was upheld and the appeal was dismissed.

Ratio Decidendi: In proceedings for sanction of a scheme of amalgamation, once the statutory procedure is complied with, the affected stakeholders have given informed approval, and the scheme is not shown to be illegal, unfair, or contrary to public policy, the tribunal cannot refuse sanction by reappreciating the commercial wisdom of the stakeholders.

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