Acquisition of Dissenting Shares under Section 153B upheld where majority approval exists and no misrepresentation.

Section 153B permits a transferee company to acquire shares of dissenting shareholders once the requisite majority approves a scheme, and the dissentients bear the burden of showing why the majority's acceptance is wrongful - for example misrepresentation, unfair dealing, conflicted conduct, or a valuation method producing substantially less than fair value; absent such allegations or evidence and where an active market exists with more than a large outside majority approval, courts should defer to shareholder approval. Stock-exchange quotations are prima facie evidence of value and Section 153B contains no court-directed valuation mechanism, so the offered acquisition stood.

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Issues: Whether the dissenting shareholders are entitled to an order restraining the transferee company from exercising its statutory right under Section 153B of the Indian Companies Act, 1956 to acquire their shares.

Analysis: Section 153B permits the transferee company to acquire shares of dissenting shareholders where the requisite majority has approved the scheme, unless the court on application by dissentients "thinks fit to order otherwise". Precedent establishes that the burden lies on the dissentients to show reasons why the majority's acceptance is wrong, such as misrepresentation, unfair dealing, conflict of interest, or a valuation principle that renders the offer substantially less than fair. Where a large outside majority approves the scheme and no fraud, misrepresentation, or material nondisclosure is shown, the court should be reluctant to substitute its view of fairness for that of the shareholders. The factual matrix here: the offer expressly disclosed objectives and valuation basis; more than 95% of outside shareholders approved; no allegation or evidence of misrepresentation, nondisclosure, or conflicted majority conduct; shareholders were offered either share exchange (on comparable balance-sheet valuation) or a cash alternative above market quotation. Comparative authority on valuation recognizes stock exchange quotations as a prima facie indication of value where an active market exists, and Section 153B contains no provision for court-directed valuation or arbitration analogous to other statutory provisions.

Conclusion: The applicants have not established grounds to justify an order preventing the transferee company from acquiring their shares under Section 153B; the application is dismissed and the transferee company's right to acquire the dissenting shares under the terms offered is upheld in favour of the respondent.

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