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TMI Blog1999 (3) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... In the affidavit filed in support of the application, it is contended that he has already filed Company Application No. 674 of 1998 questioning the exchange ratio fixed by the A.C.L. and the A.C.L. has not furnished the details regarding the mathematical calculation as to how the value of the share is fixed for the purpose of amalgamation with the Conscoffee, transferee-company, and this material is necessary for filing a detailed reply to the counter filed by the A.C.L. Regarding his application in C.A. 674 of 1998, a detailed counter is filed by A.C.L. denying the allegations made by the applicant stating that the present application is not maintainable and it is filed only with an intention to delay the approval of the scheme of amalgamation. It is also stated that the A.C.L. has supplied the valuation report and this valuation report was explained to the shareholders at the time of the meeting. It is further submitted that the value of the shares has been fixed on the basis of the valuations done by N.M. Raiji Co. and A.F. Ferguson Co., which has been accepted by ANZ Grindlays Bank Ltd. It is also stated that the valuer is an expert who considered the value of the shares by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation is necessary to file reply to the counter and if such information is not furnished, he will be put to irreparable loss and, accordingly, he prayed that his company application may be ordered. 3. The learned counsel appearing for the applicant as well as the A.C.L. urged their respective contentions in support of their stand taken in the pleadings by seeking assistance from certain provisions of the Companies Act and also some of the Judgments of the High Courts and the Supreme Court, which I will be considering shortly. 4. Before going into the merits of the contentions, I think it appropriate to note a few admitted facts for the purpose of my consideration. It is an admitted fact that in a meeting called for, as per the direction of this Court, the Chairman appointed held the meeting at 11.00 a.m. on 23-10-1998 and the scheme proposed for amalgamation was approved by majority of shareholders without any modification. It is stated by the Chairman in his report that about six equity shareholders of A.C.L. voted against the proposed scheme being adopted and carried into effect without any modification. From the report I find that the present applicant is one of the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompromise or arrangement and explaining its effect. Section 393(3) further provides that where a notice is given by advertisement then the creditors or the members would be entitled to the copies of the statement setting forth the terms of the compromise or arrangement proposed and explaining its effect. If an application is made for that purpose, a copy of such statement shall be furnished to such creditor or a member. Relying on this section, the learned counsel appearing for the applicant contended that the applicant would be entitled to the statement explaining the effect of such compromise or amalgamation and such a statement includes also the mathematical calculation arrived at by the auditor regarding the valuation and equation of the exchange ratio. Therefore, the petitioner would be entitled to figures of such mathematical calculations, as to how this exchange ratio has been arrived at by the valuers. He buttressed the argument by referring to section 173 of the Act, stating that the statement annexed to the notice of the meeting shall state all material facts concern-ing each of such item of business, including in particular the nature of the concern or interest, if any, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, but a copy of which is also filed before the Court. From this it follows that even though the principle laid down in that case cannot be disputed, but the said case does not apply to the facts of this case, in the sense that in the present case such valuers report was furnished to the shareholders along with the statement, as contemplated by section 393(1) and (3). At any rate, the said judgment is not an authority for the proposition that the statement or the effect of statement contemplated by section 393 would also include the exact mathematical calculation arrived at by the valuers. In fact, a similar contention, as urged in this case, was urged in another judgment of the Gujarat High Court in Sidhpur Mills Co. Ltd., In re (2) AIR 1962 Guj. 305, contending that in order to explain the 'effect', the details as to how the ratio had been arrived at, should have been mentioned in the statement along with the details as to the benefit which was likely to accrue to the amalgamated company, on account of the unabsorbed depreciation. Negativing such contention, the Gujarat High Court observed as under : "I cannot agree with this contention. It is true that the first part of clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, the Hon'ble Supreme Court observed as under : "But what was lost sight of (was) that the jurisdiction of the court in sanctioning a claim of merger is not to ascertain with mathematical accuracy if the determination satisfied the arithmetical test. A company court does not exercise an appellate jurisdiction. It exercises a jurisdiction founded on fairness. It is not required to interfere only because the figure arrived at by the valuer was not as better as it would have been if another method would have been adopted. What is imperative is that such determination should not have been contrary to law and that it was not unfair for the shareholders of the company which was being merged. The Court's obligation is to be satisfied that valuation was in accordance with law and it was carried out by an independent body. The High Court appears to be correct in its approach that this test was satisfied as even though the chartered accountant who performed this function was a director of TOMCO, but he did so as a member of renowned firm of chartered accountants. His determination was further got checked and approved by two other independent bodies at the instance of shareholders of TO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ror-company has been worked out by a recognised firm of chartered accountants who are experts in the field of valuation and if no mistake can be pointed out in the said valuation, it is not for the Court to substitute its exchange ratio, especially when the same has been accepted without demur by the overwhelming majority of the shareholders of the two companies or to say that the shareholders in their collective wisdom should not have accepted the said exchange ratio on the ground that it will be detrimental to their interest." (p. 309) The Hon'ble Supreme Court further reiterated that the above observa- tions of the High Court made in that case represent the correct legal position on this aspect. From this law of the Hon'ble Supreme Court it is clear that it is enough if the expert opinion is obtained regarding the valuation and fixation of the exchange ratio and the mathematical calculation as to how those valuers had arrived at would be a technical and complex problem and should be left to the consideration of such experts in the field of accountancy only. Ultimately in paragraph No. 40, the Hon'ble Supreme Court concluded as under : "The aforesaid report of the chartered a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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