Amalgamations: court no judge of commercial wisdom

Ruling in Sesa Industries Ltd v Krishna Bajaj & Ors, the Supreme Court recently held that a scheme of amalgamation should not be held up merely on the ground that the conduct of an official liquidator is found to be blameworthy.

Revisiting the law on amalgamations under the Companies Act, 1956, the apex court said it was not proper or feasible to lay down absolute parameters as to when an official liquidator’s report could hold up the sanction of such a scheme; what matters are the facts and circumstances of the case.

Ruling that the company court had been justified in sanctioning the amalgamation of Sesa Industries (SIL) with Sesa Goa (SGL), the court observed that the company judge had been presented with all the material facts that had a direct bearing on the scheme. In addition, all material information had been disclosed to the shareholders.

Shilpa Shah is a senior partner and Sharan A Kukreja is an associate at Singhania & Partners, which is a full-service national law practice. The firm has offices in New Delhi, Noida, Bangalore, Hyderabad and Mumbai.