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TMI Blog2000 (3) TMI 930X X X X Extracts X X X X X X X X Extracts X X X X ..... d also objected to the scheme when the said scheme was placed before the learned Single Judge of this Court for necessary order for sanction of the scheme. 3. The sum and substance of the objections which have been raised by the learned advocate for the appellants is that the scheme of amalgamation was not in the interest of the shareholders of AIL for the reason that the exchange ratio of shares which was accepted by the shareholders was neither fixed properly nor it was favourable to them. It has been submitted by him that at the time of giving sanction to the scheme of amalgamation, the shareholders of AIL were not conscious about their rights and they were not well informed about the scheme and in the circumstances they had given their consent to the scheme of amalgamation without understanding the nature of the scheme. 4. It has been also submitted by the learned advocate that no meeting of the creditors of AIL had been convened and, therefore, also the scheme of amalgamation ought not to have been sanctioned by the learned Single Judge. 5. His another grievance is with regard to valuation of the assets of AIL. It has been submitted by him that the valuation arrive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impossible to segregate the said companies and to put life into AIL. 9. In addition to the above-referred preliminary objections, the learned advocate Shri Soparkar has submitted that the objections raised by the appellants had been duly considered by the learned Single Judge and as the learned Single Judge did not find any substance in the said objections, ultimately, the scheme of amalgamation was sanctioned by an order dated 6-12-1999. 10. We have heard the learned advocates and have also perused the relevant documents. Upon perusal of the impugned order, we have seen that the scheme was objected by Shri H.C. Shah, who was a shareholder of APL. Shri D.J. Shah, a shareholder of one of the transferor companies and the present appellants. The objections which had been raised before this court have been elaborately discussed by the learned Single Judge and only after considering those objections, the learned Single Judge thought it fit to sanction the scheme of amalgamation. It is pertinent to note here that when the learned advocate appearing for the appellants was asked to point out irregularities or illegalities alleged to have been committed by the learned Single Judge, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hange ratio was arrived at for transfer of shares of the transferor companies and transferee company. Transferee Co.Transferor Co. (APRL) 4:7 (AIL) 1:1 (APL) 5:7 (ACL) It has been submitted by the learned advocate appearing for the appellants that the share exchange ratio is not favourable to the shareholders of AIL for the reason that for every 7 shares of AIL, only 4 shares of APRL have been allotted under the scheme whereas for 1 share of APL, 1 share of APRL has been allotted. It has been therefore, submitted by the learned advocate that the share exchange ratio is not proper and, therefore, the scheme ought not to have been sanctioned by the learned Single Judge. 14. We do not find any substance in the submission of the learned advocate for the appellants. For the purpose of determining value of shares of a transferor or a transferee company, several factors are taken into account. Assets and liabilities of different nature are valued as per certain accounting principles. Simply because, for 7 shares of AIL only 4 shares of APRL have been allotted whereas for 1 share of APL 1 share of APRL has been allotted, it cannot be said that the share exchange ratio i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f its claim or has made any compromise with regard to the amount of claim and therefore, according to him, the submission made by the appellants is not just and proper. In view of the fact that the institutional creditors named hereinabove have accorded their sanction to the scheme and as no creditor has challenged the scheme, we do not find any substance in the said submission made on behalf of the appellants. 17. With regard to the submission about valuation of the assets and liabilities of the transferor and transferee companies, it is to be noted that the appellants have not come forward with any other valuer s report. The learned advocate appearing for the appellants has made comments on the methods of valuation adopted by the Chartered Accountants, namely, C.C. Chokshi Co. and Bansi S. Mehta Co. It has been submitted by him that different methods of valuation had been adopted for valuing different assets. It has been submitted by him that for the purpose of ascertaining the value of investments, the concerned Chartered Accountants had taken into account market value whereas in the matter of valuation of plant and machineries, the Chartered Accountants had looked into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hod of valuation adopted by somebody else. Had there been any substance in the submission which the learned advocate has made, the appellants would have come forward with another valuation report of a qualified Chartered Accountant, but, instead of doing so, the appellants have simply preferred to criticize the methods which were adopted by the firms of Chartered Accountants who were entrusted with the work pertaining to ascertaining the value of the shares. 18. With regard to non-disclosure of certain relevant facts, it has been submitted by the learned advocate for the appellants that interest of Shri Sanjay Lalbhai in APRL was not revealed to the shareholders of AIL. Upon perusal of the judgment delivered by the learned Single Judge, it appears that the said fact is far from the truth. The details with regard to the shares held by Shri Sanjay Lalbhai were duly communicated to the objectors as observed by the learned Single Judge in para 13 of his judgment. Thus, it is not true that there was non-disclosure of relevant facts as submitted by the appellants. 19. The submission of the learned advocate for the appellants that the profit making transferor companies have been a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or wrong. 21. Looking to the facts of the case, we do not think that the learned Single Judge has committed any error or illegality while according sanction to the scheme. We are not impressed by the submissions made by the learned advocate for the appellants especially in view of the fact that he has not pointed out any error in the judgment delivered by the learned Single Judge. We are also not prepared to accept the argument of the appellants that the majority of the shareholders had not understood the nature of the scheme and they had committed a blunder by accepting the scheme. 22. Looking to the facts stated hereinabove, and as we do not find any irregularity or illegality committed by the learned Single Judge, we do not interfere with the order passed by the learned Single Judge and this appeal is rejected with no order as to costs. 23. The learned Advocate Shri Bhavsar has submitted that implementation of this order be stayed for some time. We do not think that any fruitful purpose would be served by granting such a stay for the reason that the companies have already merged into each other as the scheme of amalgamation has already been sanctioned. It is not pos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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