9911796707
TMI Blog1996 (3) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... hairman. This application for confirmation was opposed in the first instance by Narayan Prasad Lohia, representing a group of shareholders of the transferee-company. After the matter was heard for two days learned counsel on behalf of the said Narayan Prasad Lohia submitted that he has instructions not to oppose the application. His further submission is recorded in the minutes of the order dated February 27, 1996, which is set out hereinbelow: The court : Mr. S.K. Gupta, the learned advocate on behalf of Mr. Narayan Prasad Lohia and his group, submits that talks of settlement are going on between the family members and he expects that an amicable settlement will be achieved and good relationship may be established between the members of the family and as such he does not oppose this application. Mr. Anindya Mitra, the learned advocate submits that the company is not aware nor concerned with such settlement between the members of Narayan Prasad Lohia family and the same is not relevant for deciding this matter. He further submits that the company does not admit that any talks of settlement are going on. This matter stands adjourned till March 4, 1996, when it will appear at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... algamation. He has also contended that both the transferor and transferee-companies have no fixed assets. It is also his contention that both the transferee-company and some of the transferor-companies are having creditors and they should be informed that the order of amalgamation should be binding upon them. In the present case the creditors were never consulted as no meeting of creditors was held. The further contention of Mr. Kundu is that the share ratio of 10 : 1 between the transferor-companies and transferee-company requires scrutiny. The equity share of Rs. 10 each of the transferee-company has been valued at Rs. 79.09 per equity share by Bhuteria and Co., chartered accountants and the said chartered accountants have valued the equity share of Rs. 10 each of the transferor-companies below Rs. 10, that is Rs. 9.88, Rs. 7.86, Rs. 9.89, Rs. 9.96, Rs. 9.98 and Rs. 9.95, respectively, and their earning per share is also different. Mr. Kundu has further submitted that there is no rationale behind the fixation of share ratio at 10 : 1. Every case is to be decided on its own merits as the facts would be different in different cases. It has accordingly been submitted by Mr. Kund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Ltd. [1995] 83 Comp. Cas. 30, 37 ; AIR 1995 SC 470, 472, 473, relied upon on behalf of the petitioner may be taken note of. In the aforesaid decision it was held by the Supreme Court in para. 3 at pages 472 to 473 of the said judgment as follows : "But what was lost sight of is 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 good as it would have been if another method had 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, he did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statutory formalities have been complied with and the scheme is fair and reasonable and that there is no fraud involved in propounding the scheme, the petitioners are taken to have discharged their onus and the scheme ought to be sanctioned by the court. The onus lies heavily on those who oppose the sanction of the scheme to show that the scheme is unfair, unreasonable or fraudulent. In this connection the following decisions relied upon by the learned advocates for the petitioners may be taken note of : Hindustan General Electric Corporation Ltd., In re [1959] 29 Comp. Cas. 46, 48 ; AIR 1959 Cal 679, 680, 681 and Sussex Brick Co. Ltd., In re [1960] 30 Comp. Cas. 536 ; [1961] 1 All ER 772, 774 (Ch D). The duty of the court in an application for consideration of an application under section 391(2) was considered by this court in the case of Hindustan General Electric Corporation Ltd., In re [1959] 29 Comp. Cas. 46 ; 48 AIR 1959 Cal 679, 680, 681. In the aforesaid decision it was held that the function and duties of the court in the matter of sanctioning of schemes are well known. Any scheme which is fair and reasonable and made in good faith will be sanctioned, if it could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioners does not contain express power to amalgamate with another company, the petition is not maintainable cannot be accepted. In this connection the judgment and decision of the Division Bench of this court in H.K. Lohia v. Hoolungooree Tea Co. Ltd., AIR 1969 Cal 312, 314 ; [1970] 40 Comp. Cas. 458 may be taken note of. In the aforesaid decision the Division Bench held that the power to amalgamate is a statutory power and this power may be exercised notwithstanding the fact that the memorandum of association of a particular company may not contain express power to amalgamate with another company. Accordingly, the contention of the learned advocate of the Central Government on this point fails. The other contention of the learned advocate, Mr. Kundu, for the Central Government, with reference to the directors' reports on the balance-sheet and profit and loss account of the transferor-companies for the year ended March 31, 1994, that these companies are not profit-making companies and they have not recommended any dividend to the shareholders. In the premises, inasmuch as these companies are not faring well the proposed scheme of amalgamation should not be sanctione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d against them the court will accept such valuation and ratio of exchange. This view has been taken by the courts in several decisions of which the following may be mentioned : M.G. Investment and Industrial Company Limited v. New Shorrock Spinning and Mfg. Co. Ltd. [1972] 42 Comp. Cas. 145 (Bom); Piramal Spinning and Weaving Mills Ltd., In re [1980] 50 Comp. Cas. 514 (Bom) ; Ucal Fuel Systems Ltd., In re [1992] 73 Comp. Cas. 63 (Mad) and Hindustan Lever Limited, In re [1994] 81 Comp. Cas. 754 (Bom) ; [1994] 4 Comp LJ 267. It is also well-settled that when the majority of the shareholders accepted the valuation there is no reason why their business decision should be interfered with and the court would proceed on the basis that the ratio of exchange is a fair ratio of exchange. Section 394(1)( v ) provides that provision may be made for any person who within such time and in such manner as the court directs dissented from the compromise or arrangement. A minority group cannot hold the majority to ransom. In the instant case, however, the scheme was approved at the meeting of the members. There is no dissent. The Central Government, therefore, cannot raise such objecti ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
