JUDGMENT - Dr. CHANDRACHUD D.Y., J.:---In these proceedings an order passed by Justice D.K. Deshmukh on 7th February, 2003 by which the learned Judge sanctioned a scheme of Amalgamation of Parke-Davis (India) Ltd. with Pfizer Limited is called into question. By and as a result of the scheme of Amalgamation, the undertaking of Parke-Davis (India) Ltd., stands transferred and vested in Pfizer Ltd. pursuant to the provisions of section 394 of the Companies Act, 1956, as a going concern with effect from 1st December, 2001, the appointed date.

The Transferor Transferee:

2. Pfizer, the transferee, was incorporated on 21st November, 1950 under the Companies Act, 1913. The authorised capital of the company is Rs. 40 crores, while the issued capital is Rs. 23.44 crores. Pfizer engages in the business of the manufacture and sale of Bulk Drugs, Pharmaceutical formulations, Animal Health Products and Nutritional Supplements. Pfizer was incorporated inter alia with the object of carrying on the business of the manufacture of and of a dealer in pharmaceutical, medical, chemical, industrial, and other preparation and articles. Parke Davis, the transferor, was incorporated on 18th April, 1958. The authorised share capital of the transferor is Rs. 15 crores while its issued subscribed and paid up share capital is Rs. 12.05 crores. The main objects for which the Transferor was incorporated were inter alia to manufacture, refine, import, export, buy, sell and deal in drugs, medicines and chemicals, pharmaceutical, herbal, bacteriological and biological products and the preparation of all kinds of toilet articles and cosmetic articles.

The rationale for the Scheme:

3. The Sheme of Amalgamation was proposed and came to be approved by the Boards of Directors of the Transferor and Transferee in separate meetings held on 27th June 2002. Amongst the benefits of the amalgamation that have been cited before the Court are these :

(i) Since both the transferor and transferee are manufacturers of pharmaceutical formulations, and of nutritional and supplementary products the amalgamation would provide synergistic linkages and economies in cost by combining the total business functions and related activities;

(ii) As a result of enhanced capabilities and resources, the amalgamated company will have greater flexibility to market and meet customer needs and will be able to compete more effectively thereby strengthening its market position;

(iii) The amalgamated company will have the benefit of the combined reserves, manufacturing and other assets, manpower and cash flows of the two companies;

(iv) The scheme will make available the benefit of financial resources, as well as the managerial, technical, distribution and marketing expertise of each of the companies;

(v) The amalgamated company will be able to source and absorb new technology and its capacity to spend on Research and Development will be enhanced;

(vi) A larger and growth oriented company will mean enhanced financial and growth prospects for the people and organisations connected with the company and will be in public interest; and

(vii) The amalgamated company will have a balanced portfolio of products, thereby insulating the business from dependence on one or two product areas.

The Essential features:

4. The salient features of the Scheme proposed are thus:

(i) With effect from the appointed Date, 1st December, 2001: (a) the undertaking of the transferor shall stand transferred to and vested in the transferee in pursuance of the provisions of section 394 of the Companies Act, 1956; and (b) all the debts, liabilities, duties and obligations of the transferor shall stand transferred to the transferee;

(ii) From the effective date, the reserves of the Transferor will be merged with those of the Transferee in the same form as they appear in the financial statements of the Transferor;

(iii) The scheme, though operative from the Appointed Date, shall become effective from the Effective Date, meaning the last of the

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