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TMI Blog2003 (6) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the transferor company was held on 28th October, 2002. In the said meeting, the resolution approving the proposed merger of the transferor company with the transferee company was passed by the requisite majority of members. 159 members holding 5,85,81,800 shares voted in favour of the resolution and 5 members holding 2300 shares voted against the resolution. 3. In pursuance of the directions given by this court on 19th September, 2002 in Company Application No. 440 of 2002, a meeting of the equity shareholders of the transferee company was held on 31st October, 2002. In the said meeting, the resolution approving the scheme of amalgamation was passed by the requisite majority of members. 150 equity share holders holding 8,51,72,959 shares voted in favour of the resolution and 2 share holders holding 600 equity shares voted against the resolution. 4. The meetings of the creditors of the transferor company as well as transferee company were dispensed with by two orders of this court dated 19th September, 2002 passed in Company Application numbers 439 and 440 of 2002 respectively. Having secured the necessary approval of the members, the transferor and transferee companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies, present either in person or by proxy at a meeting called for the purpose. (2) Notice of every such meeting as is referred to in sub-section (1) shall be given to every shareholder of each of the banking companies concerned in accordance with the relevant articles of association, indicating the time, place and object of the meeting and shall also be published at least once a week for three consecutive weeks in not less than two newspapers which circulate in the locality or localities where the registered offices of the banking companies concerned are situated, one of such newspapers being in a language commonly understood in the locality or localities. (3) Any shareholder, who has voted against the scheme of amalgamation at the meeting or has given notice in writing at or prior to the meeting to the company concerned or to the presiding officer of the meeting that he dissents from the scheme of amalgamation, shall be entitled, in the event of the scheme being sanctioned by the Reserve Bank, to claim from the banking company concerned, in respect of the shares held by him in that company, their value as determined by the Reserve Bank when sanctioning the scheme and such dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore or after the commencement of the said section 19 be admitted as evidence to the same extent as the original order and the original scheme. (7) Nothing in the foregoing provisions of this section shall affect the power of the Central Government to provide for the amalgamation of two or more banking companies under section 396 of the Companies Act, 1956. Provided that no such power shall be exercised by the Central Government (except after consultation with the Reserve Bank)." On plain reading of the section, it is clear that the section applies when one banking company is to be amalgamated with another banking company. Section 44A of the Banking Regulation Act, 1949 does not apply where a non-banking finance company is proposed to be amalgamated with a banking company. No sanction of the Reserve Bank of India is necessary for amalgamation of non-banking finance company with banking company. In the matter of ICICI Ltd. reported in 2002 (3) Company Law Journal 111, dealing with the similar objection, this court observed thus : "One of the objections raised is that the approval of the RBI has not been secured as required by the provisions of the Banking Regulation Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it sworn in by Mr. Gopal Lohiya Company Secretary of the transferee company on 25th April, 2003 has been filed. Thus, the defect, if any, in not giving the addresses of the share holders who attended and voted at the meeting is cured. There has been substantial compliance of the rules and the petition cannot be dismissed on this ground. 9. Shri Uttamchandani lastly contended that there is no need of a merger of the transferor company into the transferee company. The transferor company has an equity base of 100 crores, and is debt free company. According to Mr. Uttamchandani, the transferor company has financial capacity to start any new project of its own and there is no necessity for its merger with the transferee company. Mr. Uttamchandani invited my attention to para 8 of his affidavit dated 8th April, 2003 in which he has made a reference to the valuation report made by S.B.I. Capital Market. In the said report, the valuer has reported that the several benefits that would be derived by the transferee company by amalgamation. On the other hand, Mr. Uttamchandani states, the transferor company and its share holders would not have any corresponding benefit. Therefore, accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce the veil of apparent corporate purpose underlying the scheme and can judiciously x-ray the same. (7) That the company court has also to satisfy itself that members or class of members or creditors or class of creditors, as the case may be were acting bona fide and in good faith and were not coercing the minority in order to promote any interest adverse to that of the latter comprising the same class whom they purported to represent. (8) That the scheme as a whole is also found to be just, fair and reasonable from the point of view of prudent men of business taking a commercial decision beneficial to the class represented by them for whom the scheme is meant. (9) Once the aforesaid broad parameters about the requirements of a scheme for getting sanction of the court are found to have been met, the court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the court there could be a better scheme for the company and its members or creditors for whom the scheme is framed. The court cannot refuse to sanction such a scheme o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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