Unfairness of company reconstruction scheme requires obvious, patent and convincing unfairness; mere criticisms are insufficient.

The article explains the legal standard for challenging a statutory scheme as unfair under company reorganisation rules: a dissenting shareholder bears a heavy onus to prove the scheme is "unfair" in the sense used in prior authorities, which requires obvious, patent and convincing unfairness. Criticisms of the circular, alternative valuations or possibility of a better scheme are insufficient absent bad faith or intentional misleading. Market quotations showing higher value of substituted shares and acceptance by a statutory majority weighed against unfairness. The applicant failed to discharge the onus and relief was refused.

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Issues: (i) Whether the scheme under section 209 of the Companies Act, 1948 (by which Redlands Holdings Ltd. sought to acquire shares of Sussex Brick Co. Ltd.) is unfair to the applicant shareholder so as to entitle him to refuse the scheme and be relieved from transferring his shares.

Analysis: The Court applied the established test that a dissenting shareholder relying on section 209 must affirmatively establish that the scheme is unfair in the sense used in prior authorities (notably In re Hoare & Co. Ltd. and In re Press Caps Ltd.), bearing the heavy onus where a statutory majority has accepted the offer. The Court examined the scheme, the company circular, balance sheet information and stock exchange quotations; found criticisms of the scheme and circular but no evidence of bad faith or intentional misleading. The Court observed that while a better scheme might have been possible, mere possibility of improvement or the existence of arguable criticisms does not meet the threshold of being obviously, patently and convincingly unfair. The market quotations indicated that the substituted shares were of substantially greater quoted value than the surrendered shares, and the majority of shareholders had accepted the scheme.

Conclusion: The applicant has not discharged the onus of proving that the scheme is unfair; the scheme is not unfair in the required sense and the application under section 209 fails.

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