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TMI Blog1994 (11) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... disposed of in accordance with the Press Note 13 of 1992 series. 3. The petitioners have also sought a declaration that the impugned decision contained in the letter dated 17-6-1994 be directed to be quashed and withdrawn. 4. Though the writ petition was admitted on 12-7-1994, so far as the prayer for interim relief was concerned, the same was adjourned from time to time as the petition for the Scheme of Amalgamation was pending before the Hon'ble Supreme Court. On an application being made on behalf of the Advocates for the petitioners, the application for interim relief was fixed for hearing on 15-11-1994. 5. Petitioner No. 1 - Hindustan Lever Ltd. is a subsidiary of petitioner No. 3 - Unilever Plc. At the time of the incorporation of petitioner No. 1 - Lever Brothers (India) (P.) Ltd., petitioner No. 3 held 100 per cent shares of petitioner No. 1, which have been diluted from time to time and in the year 1980 in compliance with the Foreign Exchange Regulation Act, 1973, the shareholding of Unilever by process of dilution was brought down to 51 per cent. 6. In consequence of the new industrial policy (1992 series) issued in pursuance thereto, the 1st petitioner d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the shareholding of petitioner No. 3 - Unilever Pic. in the amalgamated company would be reduced from 51 per cent to 49.98 per cent. In order to maintain the shareholding of Unilever in the petitioner at 51 per cent post-merger, the Scheme of Amalgamation itself proposed allotment of 29,84,347 equity shares of Rs. 10 each on a preferential basis at a price of Rs. 105 per share. According to the petitioners, the Scheme of Amalgamation would not have been initiated but for the assurance and representations contained in the new industrial policy and the press notes and guidelines issued by the Government of India, which assured automatic approval which would thus restore Unilever's shareholding from 49.98 per cent to 51 per cent. 9. On 30-6-1993, the petitioner-company also convened an Extraordinary General Meeting of its shareholders, inter alia, to consider the allotment of equity shares on a preferential basis at a price of Rs. 105 per share, which was worked out on the basis of nationally approved formula under section 81(1 A) of the Companies Act. At the said meeting, the resolution was passed by a overwhelming majority of shareholders, which included the positive vote of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HLL shares have so far been allotted to the shareholders or TOMCO and as such level of foreign shareholding in HLL remains at 51% even on date. The exact position about the foreign shareholding may please be indicated to us. Further, as you may be aware that Central Government has issued the Press Note No. 2 (1994 series) in supersession of Press Note No. 13 of 1992 issued on 29-6-1992. As stated in the Press Note No. 2, the guidelines therein are also applicable to all pending applications. In view of this, you may submit a revised application in conformity with the said Press Note 2 (1994 series) and Press release dated 3-6-1994 issued by the Reserve Bank. While submitting the revised application, price for the issue may be worked out as per the revised guidelines of the Government duly certified by an independent chartered accountant." 15. According to these guidelines, the price was to be worked out based on daily high and low price for the six months which will be reckoned from the month in which the Company's board resolution in connection with the preferential allotment has been passed. 16. According to the petitioners, after they had submitted their applica tion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TOMCO, i.e., respondent No. 3. Consequent to the allotment, petitioner No. 3 was entitled to allotment of additional shares to maintain its equity level of 51 per cent. The Scheme of Amalgamation and the scheme of allotment of preferential shares was an integral part of the Scheme of Amalgamation and it is not open for RBI to contend that the shareholding of petitioner No. 3 was required to be reduced down to 48.98 per cent to be entitled to the allotment of preferential shares as contained in the application of 16-11-1993. If that be so, the same would have found place or reference in the letter of 29-3-1994 which is silent on this issue and does not record any such objection, but the same merely refers to the fact that the proposal was under consideration and that the petitioners would be advised as soon as the decision is taken in the matter. 21. It has also been vehemently urged on behalf of the respondents that RBI has the statutory powers to give its approval or to reject the same and that the approval of RBI is given considering the well-being of the economy. It has been vehemently urged on behalf of RBI that as there was a change in the policy and as the question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the shares were given at a very low price to the international concerns and, therefore, the change of policy was in the public interest and for deriving the foreign exchange reserves. Hence it was vehemently urged on behalf of respondent No. 1 that the application of the petitioners was required to be considered under Press Note 2 (1994 series) and the guidelines issued by SEBI. Reliance has been placed by Dr. Chandrachud on the observations in the case of Dy. Asstt. Iron Steel Controllers. L. Manickchand AIR 1972 SC 935, wherein it has been observed as follows : "Now, it has to be borne in mind that in the present stage of our industrial development, imports requiring foreign exchange have necessarily to be appropriately controlled and regulated. Possible abuses of import quota have also to be effectively checked and this inevitably requires proper scrutiny of the various applications for import licence. In granting licences for imports, the authority concerned has to keep in view various factors which may have impact on imports of other items of relatively greater priority in the larger interest of the overall economy of the country which has to be the supreme consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause ( 13 ) of the SEBI guidelines, the same are applicable to the petitioners as the petitioners' cases of preferential issues were approved by the general body of shareholders held prior to 5-5-1994 would be governed by these guidelines, if they had not been acted upon up to 4-8- 1994. 24. As regards the applicability of the clause 'acted upon', it was vehe mently urged on behalf of the petitioners that they have already acted upon these guidelines inasmuch as they have made the necessary application as far back as on 16-11-1993, which has not received consid eration of respondent No. 1 who have sat over the same for a period of seven months and thereafter rejected the same on the basis that the application is required to be made under the new guidelines Press Note (1994 series) which has come into force. So far as the words 'acted upon' are concerned, it has been urged on behalf of respondent No. 4 that 'acted upon' means necessary sanction or approval is required to be sought from RBI which has not been granted and hence clause (13) is made applicable to the petitioners. We accept this contention that RBI approval has not been sanctioned in respect of the petitioners' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same footing as a private individual so far as the obligation of the law is concerned; the former is equally bound as the latter. It is indeed difficult to see on what principle can a Government, committed to the rule of law, claim immunity from the doctrine of promissory estoppel ? . ... The doctrine of promissory estoppel is a significant judicial contribution in that direction. But it is necessary to point out that since the doctrine of promissory estoppel is an equitable doctrine, it must yield when the equity so requires. If it can be shown by the Government that having regard to the facts as they have subsequently transpired, it would be inequitable to hold the Government to the promise made by it, the Court would not raise an equity in favour of the promisee and enforce the promise against the Government. The doctrine of promissory estoppel would be displaced in such a case because, on the facts, equity would not require that the Government should be held bound by the promise made by it. When the Government is able to show that in view of the facts which have transpired since the making of the promise, public interest would be prejudiced if the Government were required to ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir behalf that it is with a view to preserve foreign exchange resources and to augment and bring in foreign exchange reserve that the factors are required to be taken into consideration for the purpose of granting permission. 29. Reliance has also been placed on behalf of the respondents on the observations in the case of Union of India v. Hindustan Development Corpn. [1993] 3 SCC 409, wherein it has been observed as under : "To strike down the exercise of administrative power solely on the ground of avoiding the disappointment of the legitimate expectations of an individual would be to set the courts adrift on a featureless sea of pragmatism. Moreover, the notion of a legitimate expectation (falling short of a legal right) is too nebulous to form a basis for invalidating the exercise of a power when its exercise otherwise accords with law. If a denial of legitimate expectation in a given case amounts to denial of right guaranteed or is arbitrary, discriminatory, unfair or biased, gross abuse of power or violation of principles of natural justice, the same can be questioned on the well-known grounds attracting article 14 but a claim based on mere legitimate expectation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough the application was made as far back as on 16-11-1993. No doubt, RBI has sat over the Scheme of Amalgamation for the last seven months, but at the same time so far as the petitioners are concerned, they have not adopted any proceedings seeking a mandate on automatic approval from the Court as their petitions were pending before the Supreme Court for the approval of the Scheme of Amalgamation and for that purpose this interim application was also adjourned from time to time. 30. The Scheme of Amalgamation though sanctioned and approved, the process of implementation is delayed which has, to a large extent, affected the interest of respondent No. 3 TOMCO as also public interest and the question of drawing foreign exchange reserves in the country are also affected as the preferential allotment sought in favour of petitioner No. 3 is not sanctioned by respondent No. 1. 31. We are of the opinion that in order that the Scheme of Amalgamation can further be processed to the extent of allotment of shares to TOMCO and preferential allotment to petitioner No. 3 and at the same time bearing in mind the well-being of the Indian Economy as also with a view to augment foreign excha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res of Rs. 10 each fully paid-up at a premium of Rs. 690 per share to Unilever and appropriate an amount of Rs. 31,33,56,435 being the price of the shares of Rs. 10 plus premium of Rs. 95 per share. ( ix ) The difference between Rs. 690 being the premium per share as per__ the revised guidelines and Rs. 95 being the premium per share approved by the shareholders and the approved Scheme of Amalgamation shall be kept in separate 'Share Premium Suspense Account' by the Company till the final disposal of the writ petition. ( x )In the meantime, the 1 st petitioner can invest the amount lying to the credit of the Share Premium Suspense Account in bank deposits, treasury bills, units of Unit Trust of India or such trusts securities as it thinks fit, maintain appropriate account of income and expenditure and take all appropriate steps to safeguard the interests of all affected parties till the final disposal of the present writ petition. ( xi ) The said Share Premium Suspense Account will be dealt with in accordance with the final judgment of the Court in the writ petition. ( xii ) Subject to the right of respondent No. 1 to scrutinize the application, the petitioners are at li ..... X X X X Extracts X X X X X X X X Extracts X X X X
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