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TMI Blog2013 (5) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... to the view taken by the Single Judge. As present appeal has been filed under section 483 of the Companies Act which forms part of Part – VII of Chapter – II which deals with winding up of a company but in the present case, we are concerned with a scheme of amalgamation/ arrangement which would be governed by Part – VI, Chapter – V dealing with Arbitration, Compromises, Arrangements and Reconstructions. In fact, u/s 391 of the Companies Act there was earlier a provision of appeal under sub-section (7) which since stands deleted without creating a corresponding provision for appeal. The present appeal has been filed impugning the order dismissing the application seeking recall of the sanction of the scheme which would virtually amount to being an appeal against the order of review - no infirmity in the impugned order and the appeal being devoid of merit is accordingly dismissed. - CO. APP. 70/2012 - - - Dated:- 16-5-2013 - Sanjay Kishan Kaul And Sanjeev Sachdeva,JJ. For the Appellant : Mr. V. N. Koura with Ms. Paramjeet Benipal, Advocates For the Respondent : Mr. N. P. S. Chawla, Mr. Satwinder Singh and Mr. Nitin Gera, Advocates JUDGMENT Sanjeev Sachdeva, J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant was a shareholder in M/s Select Holiday Resorts Ltd (Transferee Company). The transferor company held 98% shares of the transferee company and 1% shares in the transferee company belonged to Mr. Inder Sharma and his family and only 1% of the shareholding was with the outsiders. The appellant had a shareholding of approximately 0.001% (being 15000 shares out of 15,000,000 shares) in the said transferee company. 8. In the scheme that was proposed, the objects that were sought be achieved were as under:- (i) Both the transferor company as well as the transferee company are closely held unlisted companies with a commonlineage. The transferor company is holding approximately 98% shareholding in the transferee company and the balance is held by the individual shareholders, including family members of Ms. Inder Sharma, the promoter of both the companies whose holding constitutes approximately 1% in the transferee company. (ii) The transferee company has been incurring losses in its operations and had borrowed high cost funds over a period from the banks and financial institutions and continues to borrow funds from banks, which are secured by corporate guarantees given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any together with the copy of the scheme of arrangement besides being advertised in two newspapers i.e. The Statesman (English) and Dainik Jagran (Hindi). 11. The case of the appellant is that he never received any notice of the meeting but claims knowledge of the sanction of the scheme only on receipt of communication dated 14.12.2004 with regard to disposal of the odd lots shares held by the members/shareholders of the company. 12. The appellant who was holding 15,000 equity shares, as per the scheme since the value of the shares carrying face value of Rs.10/- had diminished to Rs.0.20 was to get one share for each 500 shares and was thus entitled to only 30 shares in the new company. As per the scheme shares below 50 in number were to be treated as fractions and fractional shares were not to be allotted but were to be sold by the trustees. The Board of Directors of the transferee company were to appoint any bank or financial institution or mutual fund or any of its directors or officers as trustees for the purposes of sale of the fractional shares at the best available price in one or more lots by private sale/placement. 13. The Scheme of amalgamation/arrangements that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,000,000 shares (i.e. 0.001% shares) in the transferee company. A person holding 0.001% miniscule share holding cannot defeat a scheme approved by at least 99% of the shareholders. Even Section 391 Sub Section (2) provides that a decision of majority i.e. 3/4th in value of the creditors or class of creditors or class of members as the case may, shall be binding on all the creditors and shareholders of that class as well as on the company. 20. In the present case, not only 3/4 majority but 99% of the shareholders have approved the scheme and the court has found that there is disclosure of all relevant facts, material and financial position. 21. We do not find any infirmity in the finding recorded in the impugned order that the appellant did not constitute a separate class of shareholders and that the due procedure as prescribed has been followed. 22. Mr. V.N. Kaura further submitted that the effect of the scheme was that the appellant was being forced to transfer his shares in the company which was not permissible. 23. We find that this aspect has been very elaborately considered by the company court in the impugned order and we are in full agreement with the findings recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The court cannot undertake the exercise of scrutinizing the scheme placed before it with a view to find out whether a better scheme could have been adopted by the parties. When the scheme is sanctioned by the requisite majority, the jurisdiction of the company court is to examine whether the scheme is fair and reasonable and whether or is not it is violative of any provisions of law or whether it is contrary to any public policy. 28. Learned senior Advocate for the appellant further submitted that an option should have been given to the appellant whether to continue as a shareholder or whether to accept the amount being offered and to exit. We find no merit in the submission inasmuch as the scheme as a whole has to be considered and the court cannot substitute the scheme. The scheme of acquisition of shares of minority as mentioned hereinabove has been held by various judicial pronouncements to be lawful, provided it is not done with ulterior motives or mala fides. On examination of the facts and circumstances we do not find that the scheme is mala fide or actuated by ulterior motives. The Company Court has found the scheme to be bona fide and reasonable and in the interests of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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