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TMI Blog1994 (10) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... are also set out in the petitions. The main objects of the transferor-company, Mahavir Fabrics (Surat) Pvt. Ltd., inter alia , are to carry on business comprising all activities connected with manufacture and, or process of cotton, blended and synthetic yarn and cloth which include spinning, crimping, texturising, twisting, carding, combing, weaving, dyeing, printing and to work as commission agent and/or otherwise to have dealings in all kinds of cotton, blended and synthetic yarns, fabrics and textile including garments and hosiery. The main object of the other transferor-company, viz., Mahavir Marketing (Surat) Pvt. Ltd. is to carry on the business of purchasing, selling, importing, exporting, marketing, acting as commission agents or otherwise deal in all kinds and qualities of chemicals, dyes, colours, paints, varnishes, resins, glues, chemical-compounds (organic or inorganic) in forms, acids, alkalies, petro-chemicals and petroleum products, solvents, plastics, rubber, drugs and medicines and textile auxiliaries. The detailed ancillary objects are set out in the memorandum of association annexed in Company Petition No. 25 of 1994. The main objects of the transferee-company a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h as the affairs of the company have not been conducted in any manner prejudicial to the interest of the companies or to the public interest. It would, therefore, be appropriate to consider now the objections of the Central Government as displayed in letter dated September 26, 1994, placed on record by the learned additional standing counsel. The injections contained in this letter as treated as objections for the purpose of the same being considered by this court without insisting upon any affidavit-in-reply in support of theft objections. The first objection, then, reads : "the companies have not got the valuation of shares done by any chartered accountant and companies themselves have fixed the exchange ratio of 1 : 1 which is not based on facts. The net intrinsic worth of one equity share of Rs. 100 based on the respective balance-sheet as at March 31, 1993, of the said company works out as under : Rs. ( i ) Mahavir Fabrics (Surat) Pvt. Ltd. 422 ( ii ) Mahavir Marketing (Surat) Pvt. Ltd. 394 ( iii ) Mahavir Weaves Pvt. Ltd. 622 The fair exchange ratio, therefore, would be 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of business would reasonably approve. One of the notable features of the facts in this case is that the majority of the shareholders had approved the scheme in the meeting held for the purpose of considering the approval of the scheme. With regard to the ratio of exchange it was held that the ratio of exchange of the shares was by and large fair and reasonable and since it had received the approval of the statutory majority and nobody had complained about it in court, the scheme could not be said to be unfair or unreasonable on that account. ( iii ) M. G. Investment and Industrial Company Ltd. v. New Shorrock Spinning and Mfg. Co. Ltd. [1972] 42 Comp. Cas. 145 (Bom.). It was held in this case that two reputed firms of chartered accountants had, after careful consideration, come to the conclusion that the ratio of 5 : 2 for allotment of shares was fair and equitable, and that a scheme of amalgamation may be open to criticism but unless it was affirmatively shown that the scheme was unfair, the court would not interfere. Having heard learned additional standing counsel on the aforesaid three authorities, it was pointed out to him that in none of the aforesaid three cases pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany having not been increased as on the appointed date the scheme cannot be effected. In reply it has been submitted by Mr. Soparkar that in no amalgamation matters, the share capital of transferee-company is increased beforehand ; that exercise is conducted after the scheme is sanctioned. In support of his submission he argues that if the authorised capital increased and the scheme is not sanctioned that would create an anomalous situation. According to his submission as on today the transferee-company has required authorised capital for issuing the shares as per the scheme of amalgamation. In practice the shares are being allotted after the schemes are being sanctioned. They are never allotted beforehand. Amplifying the anomalous situation that might arise, he further submitted that during the intervening period between the appoint ed date set out in the scheme of amalgamation and the date on which the scheme is sanctioned the shareholders of the transferor-company might have entered into transactions of transfer of shares, and accordingly the shareholders might change. As against this, it is the submission that if the authorised capital is not increased no allotment can be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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