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TMI Blog2004 (5) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... fraud on this Court and, therefore, this order is liable to be set aside, quashed and recalled. The second submission was that the said petitioner got shares transferred to it and got sanction of the Scheme envisaging such transfer from this Court in violation of the order of injunction passed in various proceedings and, therefore, also the said order is required to be recalled. 3. I heard the counsel appearing for the parties in respect of the aforesaid contentions raised. In order to appreciate the said contentions it would be necessary to set out herein certain material facts which are disclosed from the pleadings of the parties and on which heavy reliance was placed by the counsel appearing for the parties in support of their contentions. 4. On March 3, 1992, a company known as Skycell Communications Limited (for short Skycell ) was incorporated at Madras, inter alia, with the object of providing cellular services. On August 12, 1992, a Joint Venture Agreement was entered into amongst (1) Crompton Greaves Limited (for short CGL ), (2) DSS Enterprises Pvt. Ltd. (for short DSS ), (3) Bell South International (for short Bell South ), and (4) Millicom International C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was passed continuing the order dated March 30, 2000. Similar order also came to be passed on the subsequent date of the suit, i.e., August 24, 2000. On April 6, 2000, the Madras High Court disposed of petition under section 9 of the Arbitration Act filed by Bell South and granted a status quo order for four months. On April 24, 2000, Bell South appeared in Suit No. 115-/2000 and the matter was adjourned on April 24, 2000 to May 22, 2000. However, no order was passed by the Additional District Judge on the said date extending the ex parte interim injunction. In the meantime, Bharti filed appeals before the Madras High Court against the order of the learned Single Judge passed on April 6, 2000 whereupon leave to appeal was granted on July 24, 2000. A meeting of the joint venture partners of Skycell was held at Chennai on May 3, 2000 as directed in the order dated April 6, 2000. In the said meeting it was agreed by the joint venture partners that CGL, DSS and Bell South will sell their entire shares in Skycell to Bharti and the same was communicated to the Bharti on the same day and Bharti agreed to purchase the shares of Bell South, CGL and DSS in Skycell. On July 13, 2000, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls filed before it and as an interim arrangement pending suit, appointed Mr. Justice K.A. Swami, a retired Chief Justice of Madras High Court, as Chairman of the Board of Skycell, who assumed charge of his office on April 5, 2001. As against the aforesaid order passed by the Division Bench, Bell South, Millicom and DSS filed Special Leave Petitions before the Supreme Court which were, however, later on withdrawn. 5. On September 28, 2001, tenth annual general meeting of Bharti Mobinet Limited was attended by the representatives of Millicom, Bell South, Bharti. However, DSS did not attend the meeting. In the said annual general meeting a resolution was adopted changing the name of the company to Bharti Mobinet Limited from Skycell Communications Limited, and also from expanding the share capital of the company from Rs. 63 crores to Rs. 125 crores. Bharti withdrew the suit on October 4, 2001, whereas Bell South and Millicom withdrew the Special Leave Petitions filed by them against the order of the Madras High Court dated March, 27, 2001 in the month of October 2001. Thereafter, the shares were transferred from Bharti to Bharti Cellular Ltd. On October 13, 2001, the Board of Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 931/2000, wherefrom an appeal was preferred and disposed of by interim order dated March 27, 2001, was withdrawn on September 9, 2002. On July 29, 2003 this Court sanctioned the Scheme of Arrangement between M/s. Bharti Telenet Ltd., M/s. Bharti Mobinet Limited and M/s. Bharti Cellular Limited. Even Suit No. 115/2000 was dismissed by the Civil Judge on August 4, 2003 in which earlier appeals, namely, FAO Nos. 346 and 347 of 2000 were preferred. After the aforesaid Scheme of Arrangement was sanctioned by this Court, on August 4, 2003 the present Objector filed the present application. 6. The question, therefore, that arises for my consideration, in the light of the aforesaid facts, is whether there was any non-disclosure of material facts which were required to be disclosed by the applicant/petitioner while filing the application seeking for sanction of the Scheme of Arrangement. The next issue which would also arise for consideration is whether the Scheme of Sanction and transfer of shareholdings in respect of which the aforesaid Scheme of Arrangement was made was in violation of the interim order passed by the Court. However, before entering into the aforesaid contention I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts amounted to fraud. What are the material facts to be disclosed in the meeting seeking for approval of the Scheme and also in the application filed seeking for grant of sanction to the Scheme, would differ from facts to facts. In the decision of Tata Oil Mills Co. Ltd. v. Hindustan Lever Ltd. [1994] 3 Comp. Cas. 46 ( sic ) the Bombay High Court has held that section 393(1)( a ) does not require disclosure of all the material facts, it only requires explanation of material interest involved. In United Bank of India Ltd. v. United India Credit Development Co. Ltd. [1997] 4 Comp. Cas. 689 ( sic ), the Calcutta High Court has held that unless and until it could be shown that the shareholders have been misled by the statements made in the explanatory statements or any objection is raised regarding the notice by any of the shareholders, the Court would not accept a contention that the explanatory statements were misleading or insufficient. The Supreme Court in Hindustan Lever Employees Union v. Hindustan Lever Ltd. [1995] 83 Comp. Cas. 30, has held as follows : "[where]...considering the overwhelming manner in which the shareholders, the creditors, the debenture hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t thereto in the FAOs 346 and 347/2000 a common order was passed on September 13, 2000 whereby the impugned order was set aside and a direction was issued for maintenance of status quo as on August 24, 2000 in respect of the shareholding of the Objector in Skycell and that no further steps would be taken by it in that regard till its objections are considered by the trial court and appropriate orders passed thereon within the prescribed time fixed. Even the suit in respect of which the aforesaid appeals were filed has also been dismissed. In the context of the aforesaid facts I am of the considered opinion that it cannot be held that the decision taken for propounding a Scheme of Arrangement proposing transfer of shares and approval of the same in the meeting of the Board of Directors which was approved and sanction given by this Court to the aforesaid Scheme of Arrangement was passed in violation of the interim orders of the High Court as also of the District Court. 10. Having held thus, let me now examine the merit of the other submission of the counsel for the Objector. It was submitted that it was necessary for the petitioner to disclose at the time of convening the meeti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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