9911796707
TMI Blog1992 (11) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... , by one Dinesh Gupta and some others professing to be prospective investors in the respondent companies allegedly in public interest is directed against the simultaneous offer of equity shares and secured optionally fully convertible debentures by the two respondent-companies belonging to the Reliance Group of industries, namely, Reli-ance Polyethylene Ltd. and Reliance Polypropylene Ltd. (respectively 'RPEL' and 'RPPL'). Each of the two companies, viz., RPEL and RPPL has offered a simulta-neous issue for cash at par 2.5 crore equity shares of Rs. 10 each aggregating Rs. 25 crore and 6 crore 16 per cent secured optionally fully convertible debentures of Rs. 50 each for cash at par aggregating Rs. 300 crore. These offers were made for financing a project for the manufac- ture respectively of polyethylene and polyroplyene. The project was corporated by Reliance Industries Ltd., and was an Indo-Japanese joint venture with financial participation by Itochu Corporation (formerly C. Itoh Co. Ltd.). In the prospectus the terms and conditions of the offer have been elaborated in considerable detail setting forth inter alia the reservation carved out in favour of the co-promoters, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belonging to one group or to the other at the same price, the only difference being that a larger percentage of equity shares has been kept in reserve for the co-promoters, foreign collaborators and the others specified in that group. The reservation in favour of this group was carved out on legitimate and proper grounds, including larger public interest. Further, the respondent asserts, the proposed offer has received the approval of the CCI under the relevant statute as well as of the Central Government under section 81(3). In addition, a special resolution in terms of clause ( a ) of sub-section (1A) of section 81 had been passed by the shareholders of the company at an extraordinary general meeting fully endorsing and approving the scheme including the reservation carved out in favour of the co-promoters, foreign collaborators and the others falling in the reserved group. It was only thereafter that the proposal was submitted before the CCI and the Central Government for their approval. The proposal was comprehensively scrutinised by the CCI and the Central Government. They suggested insertion of rigorous condi- tions subject to which alone reservation could be made in favou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of further issue of capital within the meaning of section 81 which provides that where after the expiry of the stipulated period from the formation of a company, it is proposed to increase the subscribed capital of the company by allotment of further shares, such further shares shall be offered to the persons who at the date of the offer are holders of the equity shares of the company. Under sub-section (1A) of section 81, however further shares may be offered to any persons whether or not those persons include the persons referred to in clause ( a ) of sub-section (1) in any manner whatsoever inter alia if a special resolution to that effect is passed by the company in general meeting. Such a special resolution was passed by the shareholders who fully endorsed the proposed offer including the ear-marking of a certain percentage of shares for the benefit of the co- promoters and other falling in what has been characterised by the learned counsel for the applicants as the 'privileged class' or favoured group'. If the existing shareholders had no objection to the allocation of larger percentage of the offer to the promoters and foreign collaborators, we cannot see how anyone els ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture at Hazira. The co-promoters have also agreed to supply 'ethylene' which is the principal raw material and has besides agreed to the use by the respondent-company of steam, water and other facilities from its own resources. If in these circumstances any reservation was made in favour of the co-promoters and foreign collaborators with the express approval of the shareholders, the CCI and the Central Government, it is impossible to accept the contention that the classification made in favour of the reserved group is either unfair or unjust and discriminatory. Yet another aspect which cannot be lost sight of is that the offer is calculated inter alia to serve a larger public interest, viz., to attract foreign capital into the Indian market. Unless the offer is made sufficiently attractive to the foreign investors or collaborators, they will not be forthcoming to make available to the Indian companies their capital. This aspect was, therefore, rightly stressed by Mr. K.S. Cooper, the learned senior counsel who led the arguments for the respondent. We entirely agree that the offer is in consonance and in line with the current economic ethos prevailing in the country. Maximum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in holding that the charge against the respondent of deception or unfair trade practice is entirely unsustainable and un- founded. Finally, Mr. B.S. Nagar sought to support his argument with reference to injunction order passed by a single Member of this Commission in the case of Videocon [UTPE No. 133 of 1992 and IA No. 64 of 1992]. We have examined this order carefully and find that it lends no assistance in the resolution of the controversy at hand. No principle of law has been laid down therein. Indeed the learned Member himself has observed that the order was without prejudice to the merits of the case. Only an application for ad interim injunction has been disposed of by this order. On the facts of the present case, we have not the slightest hesitation in holding that there is nothing unjust and unfair or deceptive about the impugned issue. In our opinion, the decision to earmark a larger percentage of shares in favour of the 'reserved group' cannot be said to be unfair or founded on other than legitimate considerations. We are further of the opinion that not only is the impugned issue not unfair but the issue is intended to subserve a larger public purpose of attractin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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