9911796707
|
Home
Issues Involved:
1. Financial viability of Neomer Ltd. 2. Valuation of Neomer shares. 3. Disclosure of material facts. 4. Voting process and alleged fraud. 5. Benefit to Alembic from the amalgamation. 6. Representation of shareholders at the meeting. 7. Dividend entitlement for Neomer shareholders. 8. Impact on Alembic employees. Detailed Analysis: 1. Financial Viability of Neomer Ltd. Neomer Ltd. faced significant financial difficulties since its inception, with production levels consistently below capacity and substantial losses. As of May 31, 1985, Neomer's liabilities were Rs. 721.82 lakhs against tangible assets of Rs. 537.01 lakhs. The financial institutions proposed the amalgamation to revive Neomer by leveraging Alembic's resources, enabling diversification into multifilament yarn and non-woven products, and offering concessions such as waiving compound and penal interest. 2. Valuation of Neomer Shares The objector, Mr. Pujara, contended that the chartered accountants' report on the break-up value of Neomer shares did not consider various factors and lacked transparency. The court noted that the valuation of Rs. 4.62 per share was based on stock market quotations, which is a generally accepted method. The court found the valuation reasonable and not grossly exaggerated, dismissing the objection that Alembic was taking over liabilities without corresponding benefits. 3. Disclosure of Material Facts Mr. Pujara argued that the explanatory statement sent to shareholders lacked necessary details, preventing them from fully understanding the scheme. The court reviewed the explanatory statement and the speech by Mr. Chirayu Amin, concluding that all material facts were disclosed, enabling shareholders and creditors to make an informed decision. The court rejected the contention of material non-disclosure. 4. Voting Process and Alleged Fraud Mr. Pujara alleged that the voting process was manipulated, with proxies collected unfairly and a non-existent shareholder, Geetaben B. Patel, participating. The court found no evidence of unfair proxy collection, and it was clarified that Geetaben Patel voted as a creditor, not a shareholder. The court concluded that the voting process was conducted properly under the supervision of a high officer of the court. 5. Benefit to Alembic from the Amalgamation While acknowledging that the scheme primarily aimed to revive Neomer, the court found that Alembic would benefit from diversified production lines, tax benefits amounting to almost three crores of rupees, and optimal utilization of Neomer's infrastructure. The court dismissed the argument that Alembic would not gain any significant benefit from the amalgamation. 6. Representation of Shareholders at the Meeting The objector claimed that the attendees of the meeting did not truly represent the shareholders of Alembic. The court noted that the meeting was attended by a substantial number of shareholders, creditors, and other stakeholders, and the scheme was approved by an overwhelming majority. The court found no merit in the contention that the representation was inadequate. 7. Dividend Entitlement for Neomer Shareholders Mr. Pujara argued that Neomer shareholders should not receive dividends from 1983, as they were not members of Alembic at that time. The court clarified that once the scheme is sanctioned, it relates back to the effective date, making Neomer shareholders entitled to dividends from that date. The court found no violation of Section 205 of the Companies Act. 8. Impact on Alembic Employees The objector expressed concerns about potential disadvantages to Alembic employees, including possible transfers and retrenchments. The court noted a statement from Alembic assuring no employee transfers to the Neomer unit and no retrenchments due to the amalgamation. Additionally, Alembic committed to keeping the Neomer unit operational for at least ten years. The court found these assurances sufficient to address the objector's concerns. Conclusion: The court sanctioned the scheme of amalgamation, finding that it complied with statutory requirements, was approved by a bona fide majority, and was beneficial for both companies. The court ordered the transfer of all assets, liabilities, and proceedings from Neomer to Alembic, with specific conditions to protect Alembic employees and ensure the continued operation of the Neomer unit. The scheme was deemed to rejuvenate an industry in a backward area, aligning with governmental objectives. No costs were awarded.
|
