The court upheld the validity of the scheme of arrangement for amalgamation, emphasizing the importance of compliance with statutory procedures and the binding nature of the majority's decision.

JUDGMENT - KARNIK D.G., J.:---IndusInd Enterprises and Finance Limited (for short, the "transferor company"), the petitioner in Company Petition No. 1085 of 2002, has filed this petition for sanction of the scheme of arrangement under which the petitioner company is proposed to be merged and amalgamated with IndusInd Bank Limited (for short the "transferee company"). The transferee company has filed the Company Petition No. 1086 of 2002 for sanction of the scheme of arrangement of the amalgamation of the transferor company into it.

2. In pursuance of the directions issued by this Court on 19th September, 2002 in Company Application No. 439 of 2002, a meeting of the members of the equity shareholders of the transferor company was held on 28th October, 2002. In the said meeting, the resolution approving the proposed merger of the transferor company with the transferee company was passed by the requisite majority of members. 159 members holding 5,85,81,800 shares voted in favour of the resolution and 5 members holding 2300 shares voted against the resolution.

3. In pursuance of the directions given by this Court on 19th September, 2002 in Company Application No. 440 of 2002, a meeting of the equity shareholders of the transferee company was held on 31st October, 2002. In the said meeting, the resolution approving the scheme of amalgamation was passed by the requisite majority of members. 150 equity share holders holding 8,51,72,959 shares voted in favour of the resolution and 2 share holders holding 600 equity shares voted against the resolution.

4. The meetings of the creditors of the transferor company as well as transferee company were dispensed with by two orders of this Court dated 19th September, 2002 passed in Company Application Numbers 439 and 440 of 2002 respectively. Having secured the necessary approval of the members, the transferor and transferee companies have filed the present petitions for sanction of the scheme by this Court.

5. The notices of the petitions were issued to the Central Government through the Regional Director, Western Region, Department of Company Affairs, Bombay and to the Official Liquidator and were also published in two newspapers. In his report dated 8th January, 2003 the Official Liquidator has stated that the affairs of the transferor company have not been conducted in a manner prejudicial to the interest of its members or to public interest. The Deputy Official Liquidator who is present in person states that the Official Liquidator has no objection for sanction of the scheme of amalgamation. Mr. Chakradhara Paik, Regional Director, Western Region, Department of Company Affairs, Bombay has filed an affidavit dated 15th January, 2003 stating that the scheme is not prejudicial to the interest of the creditors and share holders. He has filed further affidavit dated 16th April, 2003 stating that he has no objection to the scheme of amalgamation being approved subject to the sanction of the Reserve Bank of India. The learned Counsel representing the Regional Director states that the Government of India has no objection for sanctioning of the scheme of amalgamation.

6. In pursuance of the notices issued in the newspaper. Shri Ramchandra Jethanand Uttamchandani who is a share holder of the transferor as well as the transferee company appeared in person and objected to the sanctioning of the scheme of amalgamation on 3 grounds which are considered below:

7. Shri Uttamchandani firstly submitted that the transferor is a non-banking financial company while the transferee is a banking company and as such, prior permission of the Reserve Bank of India is necessary for the amalgamation. He invited my attention to section 44-A of the Banking Regulation Act, 1949.

Section 44-A reads as under:---

"Procedure for amalgamation of banking companies:

(1) Notwithstanding anything contained in any law for the time being in force, no banking company shall be amalgamated with another banking company, unless a scheme contain

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