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TMI Blog2009 (8) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... e Petroleum Ltd. (transferor-company) with Reliance Industries Ltd. (transferee-company). 3. The facts which are relevant for the purposes of these appeals, are that the Reliance Industries Ltd., moved the petition before the Court to obtain sanction of the scheme of amalgamation of Reliance Petroleum Ltd., with Reliance Industries Ltd. The board of directors of the petitioner-company, on 2-3-2009, had approved the scheme. The scheme had received approval from the Bombay Stock Exchange and National Stock Exchange on 2-3-2009. On the basis of such approval, the company filed Company Application No. 288 of 2009, seeking direction to convene meetings of its equity shareholders, secured creditors (including debenture holders) and un-secured creditors to seek their approval to the scheme. That application had been filed on 3-3-2009, and the Court, on 6-3-2009, directed the petitioner-company to convene requisite meetings on 4-4-2009. Separate meetings of the equity shareholders, secured creditors and unsecured creditors of the petitioner-company were convened and held on 4-4-2009. In the meeting of the equity shareholders, 5,813 equity shareholders holding 1,06,76,27,438 equity shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the fact that one more objection had been received by the registry by post from one Rasiklal S. Mardia. The Court had not taken cognisance of this objection, as it had been brought to the notice of the Court after the conclusion of the hearing in the petition. 5. The objections, which were taken before the learned Company Judge, have been repeated before this Court in these appeals, and the only objection raised was that there was undue haste, as it was contended by learned senior counsel for the appellants that the board meeting was held on 27-2-2009, in which a decision was taken to amalgamate the two companies. It was Friday. Within two days, i.e., by Monday morning on 2-3-2009, the report of the valuation was ready. The fairness report also was ready on the same day, obviously before 10.15 a.m., as the Board met again at 10.15 a.m., on 2-3-2009. The whole thing was completed between February 27 to March 2, 2009. In between, there was only weekend days of Saturday and Sunday. Learned counsel has submitted that there was undue haste for reasons beyond comprehension. He has also submitted that valuation could not have been done within two days, which were general offdays, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process. The fairness of the scheme cannot be doubted with reference to those facts. It is not the case of the objectors that the experts' opinion (reports) were not placed before the board of directors when the decision was taken by the board of directors, albeit at 10.15 a.m. the same day. In other words, the fact that on the same day, the board of directors proceeded to give approval to the proposed scheme does not per se mean that the decision of the board of directors suffers from non-application of mind." (p. 137) 6. In any case, both the reports are opinion of experts, and in the absence of any material contradicting the conclusions reached with respect to valuation and fairness, it will be difficult for this Court to come to a finding that the conclusions drawn by those experts were absurd. We are conscious of the fact that the companies maintain their accounts meticulously and uptodate, and with computerisation in place, it is a matter of minutes when one can get the necessary data ready for the purpose of valuation. Now, it depends upon the skill, expertise and efficiency of a particular company dealing with such matters as to in what time they would be able to do so. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n fact, in paragraph 1 of his affidavit, he has said that he was holding 40 equity shares in the petitioner-company and 100 equity shares in Reliance Petroleum Ltd. If the exchange ratio was unfair to Reliance Industries, it would have been more than fair to the other company. He has also drawn our attention to various judgments of the Supreme Court to canvass that the scope of inquiry in this Court is limited. 10. One of the judgments is in the case of German Remedies Ltd., In re [2005] 125 Comp. Cas. 6152. In this judgment, the Bombay High Court held: "It is not for the Court to sit in appeal over the valued judgment of the equity shareholders who are supposed to be commercial men. Commercial men who know their common benefit and interests underlying the proposed scheme, with open eyes, have okayed the swap ratio of 7 to 4 as above by an overwhelming majority of 90 per cent in numbers and 99 per cent in value of the members present and voting. The limited jurisdiction of the Court is only to see whether the ratio is so wrong or the error is so gross as would make the scheme unfair or unjust or oppressive to the minority of the members or any class of them." (p. 622) 11. Simila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h has the support of the majority. None of the grounds exists in the present case which have been laid down as grounds for rejecting a scheme in this judgment. 14. Learned senior counsel has also relied on Miheer H. Mafatlal v. Mafatlal Industries Ltd. [1996] 87 Comp. Cas. 7923. The Supreme Court held in paragraph 39 : "It was submitted that the exchange ratio of equity shareholders so far as the transferee-company is concerned works very unfairly and unreasonably to them. As per the proposed scheme five equity shares of the transferor-company are to be exchanged for two equity shares of the transferee-company. So far as this contention is concerned, it has to be kept in view that before formulating the proposed scheme of compromise and amalgamation an expert opinion was obtained by the respondent-company as well as the transferor-company, namely, MFL on whose board of directors, the appellant himself was a member. M/s. C.C. Chokshi and Co., a reputed firm of chartered accountants, having considered all the relevant aspects suggested the aforesaid exchange ratio keeping in view the valuation of shares of respective companies. It must at once be stated that valuation of shares is ..... 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