JUDGMENT - Dr. D.Y. CHANDRACHUD, J.:---Sanction of this Court is sought in pursuance of the provisions of sections 391 and 394 of the Companies Act, 1956, for a scheme of Amalgamation by which two companies Ion Exchange Speciality Chemicals Limited and Ion Exchange Environmental Services Limited will be merged with a company known as Ion Exchange (India) Limited. The two Transferor Companies are wholly owned subsidiaries of the Transferee company.

2. The Transferee, Ion Exchange (India) Limited, was incorporated on 6th March, 1964 and inter alia, carries on the business of manufacturing water treatment plants, ion exchange resins and chemical additives. Under Clause 3 of the Memorandum of Association, the main objects of the company include manufacturing and dealing in ion exchange resins, organic solvents, wetting agents, textile processing compounds and agents, fibre glass, heavy and other chemicals, petro-chemicals, electro-chemicals and of designing, fabricating, manufacturing and dealing in water treatment machinery.

3. The first Transferor Company, Ion Exchange Speciality Chemicals Ltd. was incorporated on 29th September, 1994 and subsequently became a deemed public company. The First Transferor Company is presently engaged in the business of marketing speciality chemicals. The Second Transferor Company, Ion Exchange Environmental Services Limited, was incorporated on 19th January, 1998 as a Private Limited Company and immediately became a deemed public company. The Second Transferor company is presently engaged in the business of waste water treatment and sewage and solid waste management.

4. The grounds on which the merger has been sought are specified thus, in para 17 of Company Petition No. 980 of 2000.

"17. All the companies are under the same management. The management is of the opinion that the merger will lead to synergise of operations and more particularly the following benefits :

a) It will make available to the parties the benefit of financial resources, managerial, technical, distribution and marketing expertise of each other.

b) The companies will have the benefit of combined reserves, manufacturing and other assets, manpower and cash flows of the companies. The combined resources shall be conducive to enhance its capability to face competition in the market place more effectively.

c) From the shareholders perspective, the consolidated post-merger balance sheet of Ion would reflect increased shareholders value."

In para 25 it has been averred that the sanctioning of the arrangement embodied in the Scheme of Amalgamation will be for the benefit of the Transferee Company.

5. In so far as the observance of statutory requirements is concerned, the Board of Directors of the Transferee Company resolved in its meeting dated 27th July, 2000 that subject to the sanctions of the appropriate courts and the permission required of the statutory authorities, the Scheme of Amalgamation be implemented. Similar resolutions were passed by the Board of Directors of the two Transferor Companies on 27th July, 2000. On a Judge's Summons taken out by the Transferor Companies, this Court by its order dated 18th August, 2000 dispensed with the convening and holding of meetings of members/shareholders and creditors of the Transferor Companies. In para 19 of the two petitions by the Transferor Companies it has been stated that the shareholders of both the Transferor Companies had given their letters of consent agreeing in writing to the Scheme of Amalgamation. In so far as unsecured creditors are concerned, the Transferor Companies undertook to issue notice of the hearing of the petitions to each and every one of the unsecured creditors. The Transferor Companies were also directed to publish the same in newspapers and in the Maharashtra Government Gazette.

6. In so far as the Transferee Company is concerned, by an order made on 18th August, 2000 in Company Application No. 434 of 2000, the Transferee Companies was directed to convene a meeting

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