PETITIONER:
\nMIHEER H. MAFATLAL<\/p>\n
Vs.<\/p>\n
RESPONDENT:
\nMAFATLAL INDUSTRIES LTD.<\/p>\n
DATE OF JUDGMENT: 11\/09\/1996<\/p>\n
BENCH:
\nMAJMUDAR S.B. (J)
\nBENCH:
\nMAJMUDAR S.B. (J)
\nSINGH N.P. (J)<\/p>\n
CITATION:
\nJT 1996 (8) 205
\nACT:<\/p>\n
HEADNOTE:<\/p>\n
JUDGMENT:
\nJ U D G M E N T
\nS.B. Majmudar, J.
\nLeave granted.
\nBy consent of learned advocates of parties this appeal
\nwas taken up for final hearing We have heard the learned
\nadvocates of parties. The appeal is being disposed of by
\nthis judgment.
\nThis appeal by special leave arises out of the judgment
\nand order of a Division Bench of High Court of Gujarat in
\nOriginal Jurisdiction Appeal No. 16 of 1994 decided on 12th
\nJuly 1996. The Division Bench by the said impugned judgment
\ndismissed the appeal of the appellant and confirmed the
\norder of the learned Single Judge in Company Petition No. 22
\nof 1994 and sanctioned a Scheme of Amalgamation of two
\nPublic Limited companies, namely, Mafatlal Industries
\nLimited (‘MIL’ for short) being the transferor-company was
\nto be amalgamated. The learned Single Judge granted
\nrequisite sanction to the applicant transferee-company MIL
\nto amalgamate in it the transferor-company MFL under Section
\n391(2) of the Companies Act, 1956 (hereinafter referred to
\nas ‘the Act’). In order to appreciate the grievance of the
\nappellant who objected to the Scheme moved by the
\nrespondent-company MIL, as ventilated before us by its
\nlearned senior counsel Shri Shanti Bhushan, assisted by
\nlearned counsel Shri M.J. Thakore, it will be necessary to
\nglance through a few relevant background facts.
\nBackground Facts
\nThe respondent-company MIL which was the petitioner
\nbefore the learned Single Judge has its registered office at
\nAhmedabad in Gujarat State. It was incorporated on 20th
\nJanuary 1913 under the name ‘The New Shorrock Spinning &
\nManufacturing Co. Limited’ and its name was subsequently
\nchanged to ‘Mafatlal Industries Limited’ as per the fresh
\nCertificates of Incorporation dated 24th January 1974
\nconsequent upon change of name, as sanctioned by the
\nRegistrar of Companies, Gujarat, Ahmedabad. The objects of
\nthe transferee-company MIL as per its Memorandum of
\nAssociation, inter-alia, included activity of carrying on
\nall or any of the businesses such as cotton spinners and
\ndoublers, wool, silk flax, jute and hemp spinners and
\ndoublers, linen manufacturers, to work spinning and weaving
\nmills, cotton mills, jute mills and mills of any other
\ndescription. The Authorised Share Capital of respondent-
\ncompany was Rs. 100,00,000\/- (Rupees on hundred crores only)
\ndivided into 30,05,500 equity shares of each and 69,94,500
\nunclassified shares of Rs. 100\/- each. The Subscribed Share
\nCapital of the respondent-company as on 31st March 1993 was
\nRs. 26.30 crores (Rupees twenty six crores thirty lacs only)
\ndivided into 26,90,000 equity shares of Rs. 100\/- each.
\nThe respondent-company commenced the business of
\ntextiles and had been carrying on the same since
\nincorporation. The respondent-company is a large multi-
\nDivision, multi-locational company carrying on diversified
\nactivities including manufacturing and sale of textiles,
\ndyes intermediates and chemicals, professionals grade
\nconnectors, plastic processing machineries and promoting
\nvarious companies through Project Promotion Division.
\nThe MFL being transferor-company was incorporated on
\n20th April 1931 under the Baroda State Companies Act and had
\nbeen carrying on the business of manufacture and sale of
\ntextile piece goods and chemicals. Its registered office was
\nsituated at Mafatlal Centre, Nariman Point, Bombay. It was
\nengaged in the manufacture and sale of textiles and fluorine
\nbased chemicals. There were three units of the Textiles
\nDivision situated at (1) Vejalpur Road, Navsari, (2)
\nMazagon, Bombay and (3) Lower Parel, Bombay and the unit of
\nthe Chemicals Division was situated at Bhestan, District
\nSurat.
\nThe Authorised Share Capital of the transferor-company
\nas on 31st March 1993 was Rs. 30 crores (Rupees thirty cores
\nonly) divided into 30,00,000 ordinary shares of Rs. 100\/-
\neach. The Subscribed Share Capital of the transferor-company
\nas on 31st March 1993 was Rs. 26,25,77,100\/-(Rupees twenty
\nsix crores twenty five lacs seventy seven thousand and one
\nhundred only) divided into 26,25771 ordinary shares of Rs.
\n100\/- each. Subsequent to 31st March 1993 the transferor-
\ncompany had allotted further 1,00,000 ordinary shares of
\nRs.100\/- each at a premium of Rs. 200\/- per share on
\nconversion of 1,00,000. Partly Convertible Debentures of the
\nface value of Rs. 2,000\/- each issued to Financial
\nInstitutions with effect from 1st February 1994 by the
\ntransferor-company.
\nThe transferor-company MFL is proposed to be
\namalgamated with the respondent-company MFL under the
\nfollowing circumstances and for the following reasons. :
\n(1) The proposed amalgamation will
\npave the way for better, more
\nefficient and economical control in
\nthe running of operations.
\n(2) Economics in administrative and
\nmanagement costs will improve in
\ncombined profitability.
\n(3) The amalgamated company will
\nhave the benefit of the combined
\nreserves, manufacturing assets,
\nmanpower and cashflows of the two
\ncompanies. The combined
\ntechnological, managerial and
\nfinancial resources are expected to
\nenhance the capability of the
\namalgamated company to invest in
\nlarger and sophisticated projects
\nto ensure rapid growth.
\n(4) The amalgamated company will
\nhave a strong and large resource
\nbase. With a strong resource base,
\nthe risk bearing capacity of the
\namalgamated company will be
\nsubstantial. Hitherto, with limited
\nresources and capacity,
\nopportunities which would otherwise
\nhave been profitable to the group.
\n(5)”Exports” have been identified a
\n‘thrust’ area for both the
\ncompanies and response in time to
\ncustomers’ needs s considered to be
\ncritical in this area of
\noperations. An amalgamated company
\nwill be strategically better places
\nto reduce the response time.
\nCustomers’ confidence in dealing
\nwith such a mega company ensures
\ntimely delivery of large orders.
\n(6) The amalgamated company will be
\nable to source and absorb new
\ntechnology and spend on Research
\nand Development, Market Surveys
\netc. more comprehensively.
\n(7) More particularly in the
\nTextiles Division, with 5 operating
\nunits at the company’s disposal,
\nthe flexibility in operations will
\nbe very much pronounced. The
\nManagers will not be inhibited by
\ncapacity constraints and will have
\nthe freedom of choosing from
\nvarious options.
\n(8) Both the companies have been
\nsubject to the pressures of raw
\nmaterial price fluctuations and of
\nadverse market conditions in their
\nrespective product mix. Hence, the
\namalgamation will neutralise the
\nadverse effects of contrary
\nbusiness cycles. The operations of
\none unit will be complementary to
\nthe other and a stable
\nprofitability will be achieved.
\nThe directors of the respondent-company MIL and
\ntransferor-company transferor-company MFL approved the
\nproposal for amalgamation of the MFL with MIL and pursuant
\nto the respective Resolutions passed by them the detailed
\nScheme of Amalgamation was finalised. The directors of both
\nthe companies were of the opinion that such amalgamation was
\nin the interest of both the companies.
\nIt is pertinent to note at this stage that the
\nappellant who has objected to the amalgamation before the
\nHigh Court in the present proceedings so far as the
\namalgamation of the transferee-company is concerned, is
\nhimself one of the directors of the transferor-company being
\nMFL. So far as the transferor-company MFL is concerned as
\nits registered office is located at Bombay the corresponding
\napplication on behalf of the transferor-company for
\nsatisfaction this very Scheme of Amalgamation was moved in
\nthe Bombay High Court. The appellant at this stage did not
\nobject to this very Scheme for amalgamation on behalf of the
\ntransferor-company of which he was one of the directors and
\nparty to the Resolution approving the said amalgamation.
\nLearned Single Judge of the Bombay High Court sanctioned the
\nsaid Scheme of on behalf of transferor-company. It is not in
\ndispute between the parties that Bombay High Court had
\nalready sanctioned this very Scheme on behalf of the
\ntransferor-company.
\nAs the registered office of the transferee-company is
\nlocated at Ahemdabad the respondent transferee-company had
\napproved the High Court of Gujarat for sanctioning this very
\nScheme of Amalgamation on behalf of the transferee-company
\nand that application was moved on 8th February 1994. It is
\nat this stage that the appellant who was one of the
\nshareholders of the transferee-company filed his objections
\nto the Scheme of Amalgamation moved under Section 391 of the
\nAct. Earlier the learned single Judge directed convening of
\nmeeting of equity shareholders of the respondent-company. In
\nthe meeting of the equity shareholders convened pursuant to
\nthe order of the High Court, overwhelming majority of the
\nequity shareholders approved the Scheme in the meeting of
\n22nd January 1994 convened at Premabhai Hall, Bhandra,
\nAhmedabad. The said meeting was attended by 5522 members
\npresent in person or by proxy, holding 20,48513 fully paid
\nequity shares of Rs. 100\/- each aggregating to Rs.
\n20,48,51,300\/-. At the said meeting, resolution was passed
\nwithout modification by the requisite majority as 5298
\nmembers holding 19,36,964 fully paid equity voted in favour
\nof the Scheme and 143 members holding 86,061 fully paid
\nmeeting by requisite majority approved the proposed Scheme
\nof Amalgamation and report of the Chairman was submitted to
\nthe High Court. Thereafter the respondent-company MIL filed
\nCompany Petition No.22 of 1994 under Section 391(2) of the
\nAct. That application was ordered to be published in local
\nnewspapers as well as in the Bombay edition of the said
\nnewspaper. Notice was also issued to the Regional Director,
\nCompany Law Board, Western Region, Bombay.
\nIn response to the notice issued to the Central
\nGovernment under Section 394 A of the Act the learned
\nAdditional Central Government Standing Counsel appeared
\nbefore the High Court and submitted to the orders of the
\nCourt making it clear that the Capital Government is not to
\nmake any representation in favour or against the proposed
\nScheme.
\nPursuant to the public advertisement only the present
\nappellant, the shareholder of transferee-company holders
\n40,567 shares in MIL filed affidavit opposing the Scheme of
\nAmalgamation and Arrangement between the respondent
\ntransferee-company MIL and transferor-company MFL of which,
\nas noted earlier, he himself was one of the directors and
\nthe High Court of Bombay which sanctioned this very Scheme
\non behalf of the transferor-company had sanctioned the
\nScheme without any objection being taken by the appellant at
\nthat stage.
\nNine objections were raised by the appellant against
\nthe proposed Scheme of Amalgamation as shareholder of the
\ntransferee-company. At this stage we may not mention all
\nthese nine objections as ultimately only for objections have
\nsurvived for our consideration in the present proceedings
\nand to which we will make a detailed reference hereinafter.
\nSuffice it to state at this stage that after a prolonged
\nhearing the learned Single Judge S.D. Shah, J., over-ruled
\nthese objections and by a detailed and exhaustive judgment
\nrunning over 254 pages covering various aspects of the
\nmatters canvassed before him sanctioned the said Scheme
\nmoved on behalf of the respondent transferee-company.
\nThe Division Bench of the High Court to which the
\nappellant carried the matter in appeal confirmed the
\naforesaid decision of the learned Single Judge by a well
\nconsidered judgment which also ran into 136 pages and that
\nis how the appellant, original objector, is before us in
\nthis appeal.
\nFamily History
\nIn order to properly appreciate the grievance of the
\nappellant against the proposed Scheme and his role as an
\nobjector it will be necessary to note the family history of
\nthe appellant and tow of the directors of the respondent
\ntransferee-company who have a common ancestor Mafatlal
\nGagalbhai. The Family of Mafatlal Gagalbhai projects the
\nfollowing picture :
\nFamily Tree of Mafatlal Gagalbhai
\nSeth Mafatlal Gagalbhai
\n(Died on 19\/071994)
\nNavinchandra Bhaubhai Prasnasukhlal
\n(Died 31\/08\/1995) (Died 30\/09\/1944) (Deceased)
\n(No issues)
\nArvind Yogindra Rasesh
\nHemant
\n(Died on 16\/08\/1971)
\nAtulya Pradeep
\nMiheer
\n(Born on 27\/05\/1958)
\nPadmanabh Hrishikesh
\n(Died on
\n29\/07\/1990)
\nAs the aforesaid Family Tree shows, the appellant
\nMiheer is the son of cousin brother of Arvind Navinchandra
\nwho is said to be at the helm of affairs of the transferee
\ncompany along with his son Hrishikesh. As seen from the
\nFamily Tree the common ancestor Mafatlal Gagalbhai who was
\nhimself a very astute businessman and entrepreneur had three
\nsons Pransukhlal, Navinchandra and Bhagubhai. The eldest son
\nPransukhlal got out of the family prior to the death of
\nMafatlal Gagalbhai and he died without leaving any issue.
\nMafatlal Gagalbhai expired on 19th July 1944 and was
\nsurvived by his two sons Navinchandra and Bhagubhai. On 30th
\nSeptember 1944, the said Bhagubhai died leaving him
\nsurviving Hemant, then aged 9 as his only male issue. On
\n31st August 1955, Navinchandra Mafatlal died leaving him
\nsurviving the three sons, Arvind Mafatlal, Yogindra Mafatlal
\nand Rajesh Mafatlal as his male issues. On 16th August 1971,
\nsaid Hemant expired leaving behind his only male issue,
\npresent objector Miheer, then aged 13.
\nThe said Mafatlal Gagalbhai started different business
\nundertakings and with passage of time, the family of said
\nMafatlal consisting of Navinchandra and Bhagubhai expanded
\ntheir business undertakings. The said family held
\ncontrolling interest in different business concerns run
\nthrough public limited or private limited companies and the
\nmembers of the family were also partners in partnership
\nfirms. The pattern which was maintained throughout was that
\nthe two sons Navinchandra and Bhagubhai and their families
\nwould respectively have an equal interest in companies or in
\npartnership firms. At the time of the death of the said
\nBhagubhai the said Hemant was just 9 years of age. The
\nbusiness of Mafatlal Group was therefore for all practical
\npurposes managed by the said Navinchandra. At the time of
\nthe death of Navincandra the shareholding of the branch of
\nHeman Mafatlal in Mafatlal Group of Industries was equal to
\naggregate shareholding of Arvind Mafatlal, Yogindra Mafatlal
\nand Rajesh Mafatlal. On the death of Navinchandra, the
\nMafatlal Group was managed by Arvind Mafatlal, Yogindra
\nMafatlal, Rajesh Mafatlal and late Heman Mafatlal. Arvind
\nMafatlal was, however the eldest male member in the family
\nwho was always looked upon by Yogindra, Rajesh and late
\nHemant as an elder in the family and respected.
\nOn 16th August 1971, Hemant Mafatlal died at the young
\nage of 36 years leaving behind him his widowed mother, his
\nwife, his son Miheer (then aged 13) and his two daughters
\n(then aged 11 and 6). At that time, the Mafatlal family,
\ni.e., the families of Navinchandra and Bhagubhai were
\nrunning 3 apex companies (1) Mafatlal Gagalbhai & Company
\nPrivate Limited, (2) Surat cotton Spinning and Weaving Mills
\nPrivate Limited and (3) Pransukhlal & Company Private
\nLimited.
\nIt is the case of Miheer that when his father expired,
\nthe New Shorrock Spinning and Manufacturing Co. Limited was
\nbeing controlled and managed by Mafatlal Gagalbhai & Co.
\nLimited in which his father and his family had 46.47% shares
\nvis-a-vis 43.66% shares held by the family of Navinchandra
\nMafatlal. After the death of his father, when Miheer was
\nminor, it was decided to amalgamate Mafatlal Gagalbhai & Co.
\nLimited on 24th January 1974 and the name of the company was
\nchanged to present name i.e. MIL.
\nAccording to the appellant Miheer in or around 1979,
\nthere were certain disputes and differences amongst Arvind
\nMafatlal, Yogindra Mafatlal and Rajesh Mafatlal and it was
\nfelt that some arrangement should be worked out, whereby
\nthere would be a separation and division of the family
\nbusiness concerns amongst the four branches viz. Miheer
\nBranch known as MHM Group, family of Arvind Mafatlal known
\nas ANM Group, family of Yogindra Mafatlal known as RNM
\nGroup. It is this further case that Shri C.C. Chokshi, a
\nreputed chartered accountant was requested to prepare a
\nScheme for division of family business concerns. According
\nto the appellant, Shri C.C. Chokshi prepared Note dated 23rd
\nFebruary 1979 making six suggestions for the division of
\nMafatlal Group of Industries into four Groups as there were
\nfour family groups. The appellant contends that as per the
\naforesaid family arrangement the transferee-company, i.e.
\nMIL was agreed to be put his share and the other groups
\nwhich were holding shares in the said transferee-company
\nwere to transfer their share-holdings in favour of the
\nappellant. The appellant contends that however because of
\nsome family disputes the appellant fell from the grace of
\nShri Arvind Mafatlal who was the eldest male member
\nmonitoring all these industries belonging to all the groups
\nof the same family, and consequently the family arrangement
\nwas not given effect to and that the transferee-company was
\nnot handed over in management to the appellant. On the other
\nhand the case of the other group headed by Shri Arvind
\nMafatlal was to the effect the said family arrangement of
\n1979 was given a go-by and the appellant himself agreed to
\nsell his share-holding in the transferee-company MIL in
\nfavour of Arvind Mafatlal’s Group. Number of litigations
\ntook place between the parties in the second half of 1980.
\nThat on 6th April 1987 Arvind Mafatlal filed suit No.10 of
\n1987 in the High Court of Judicature at Bombay for a
\ndeclaration that there was a valid, subsisting and binding
\ncontract to sell shares Rajesh Mafatlal, Yogindra Mafatlal,
\nthe appellant herein, groups to Shri Arvind Mafatlal’s group
\nand for a direction that they should sell the shares at a
\nprice to be determined by the arbitrator. In the said suit
\nthe appellant Miheer filed a counter-claim praying that the
\nfamily arrangement of 1979 should be enforced and the share-
\nholding of Shri Arvind Mafatlal’s group and other groups in
\nthe transferee-company MIL should be sold by way of specific
\nperformance to the appellant. The aforesaid suit by Arvind
\nMafatlal and the counter-claim by the appellant are pending
\nfor adjudication in the High Court of Judicature at Bombay.
\nIt is in the background of the aforesaid history of family
\nfeud between these warring groups descended from the common
\nancestor Shri Mafatlal Gagalbhai that the grievance voiced
\nby the appellant in these proceedings has to be
\nappreciated.
\nRival Contentions
\nAs noted earlier though a battle royal was fought
\nbetween the contesting parties before the learned Single
\nJudge wherein nine objections were raised for adjudication
\nby the appellant, at this stage, the dispute centered round
\na limited number of contentions which were canvassed for our
\nconsideration by learned senior counsel for the appellant.
\nFour-fold submissions for opposing the Scheme were canvassed
\non behalf of the appellant before us by Shri Shanti Bhushan,
\nlearned senior counsel. In the first place he contended that
\nthe respondent-company while putting the scheme for approval
\nof the equity shareholders in their meeting did not disclose
\nthe interest of the directors, namely, Shri Arvind Mafatlal
\nand Shri Hrishikesh Mafatlal belonging to the camp of Arvind
\nMafatlal in the explanatory statement supporting the Scheme
\nand consequently the shareholders were misled and could not
\ncome to an informed decision regarding the approval of the
\nsaid Scheme with the result that the approval by the
\nmajority of equity shareholders to the said Scheme was got
\nvitiated (2) The Scheme as proposed was unfair to the
\nminority shareholders represented by the appellant and
\nconsequently it ought to have been sanctioned by the Court;
\n(3) The Scheme was otherwise unfair to the equity
\nshareholders as the exchange ratio of equity shares of the
\ntransferor and transferee companies was ex facie
\nunreasonable and unfair to the shareholders of the
\ntransferee-company MIL in so far as it provides under the
\nScheme that two equity shares of the transferee company will
\nbe allotted against five equity shares of the transferor-
\ncompany at their respective face value of Rs. 100\/- per
\nshare; and (4) That the appellant represented a distinct
\nclass of equity shareholders so far as the respondent
\ntransferee-company is concerned and consequently separate
\nmeeting so far as his group is concerned should have been
\nconvened by the Company Court and as that has not been done
\nthe Scheme is liable to be rejected.
\nAs a corollary to the aforesaid contention Shri M.J.
\nThakore, learned counsel appearing for the appellant in
\naddition submitted that voting pattern as adopted in the
\nmeeting of equity shareholders which had approved the
\nScheme by Majority, resulted in coercing the minority
\nrepresented by the appellant and that has rendered the
\nScheme unfair and unreasonable and consequently it is
\nrequired to be rejected.
\nOn the other hand learned senior counsel Shri Sorabjee
\nappearing for the respondent transferee-company contended
\nthat there was no illegality either procedural or
\nsubstantive vitiating the Scheme and that there was no
\nsuppression of relevant material from the shareholders when
\nthe Scheme was put to vote. That the personal disputes
\nbetween the warring groups of the family, namely, Arvind
\nMafatlal on the one hand the appellant on the other and
\nwhich were subject matter of the pending litigation in
\nBombay High Court had nothing to do with the question of
\nsanctioning the Scheme for its better economic viability
\nwith which the shareholders were concerned and that as the
\ntransferor-company and the transferee-company were juristic
\npersons and corporate bodies, while considering the question
\nof approving the said Scheme such personal disputes between
\nthe directors of the transferee-company and the director of
\nthe transferor-company were completely irrelevant and were
\nout of consideration of the equity shareholders who were not
\nat all concerned with this type of internal feuds and in any
\ncase non-disclosure of such disputes had no adverse effect
\non the decision of the majority shareholders who had
\napproved the Scheme with a thumping majority of about 95%
\nand the appellant who was objecting to the Scheme was in
\nmicroscopic minority of 5% of the total voting strength. It
\nwas also contended by learned senior counsel for the
\nrespondent that it is wrong to assume that the transferee-
\ncompany was a family concern and was managed by families.
\nThat Shri Arvind Mafatlal and Hrishkesh Mafatlal were only
\ntwo directors out of thirteen directors of respondent-
\ncompany. These eleven directors did not belong to his
\nfamily. That even shareholding of Arvind Mafatlal’s group in
\nthe respondent-company was not substantial and on the
\ncontrary about 40% shares were held by outside financial
\ninstitutions. Even otherwise there was no question of any
\nunfairness underlying the proposed Scheme or that in any way
\nit was unfair to the appellant who never cared even to
\nremain present personally at the time of the meeting of the
\nequity shareholders to put forward his objections and he
\nonly sent proxies who had no right to speak at the meetings.
\nThat therefore all these Court were an afterthought. It was
\nalso contended that there was nothing wrong with the
\nexchange ratio as C.C. Chokshi & Co., a firm of reputed
\nchartered accountants, had considered all the pros and cons
\nunderlying the Scheme and had suggested the exchange ratio
\nand such an expert opinion was endorsed by another financial
\ninstitution ICICI. That the appellant had not chosen to in
\nrebuttal by any other expert in the field who could have
\nsuggested the exchange ratio differently. That the
\nappellant’s contention that exchange ratio should have been
\none share of transferee company against six shares of the
\ntransferor company was in the realm of mere conjecture and
\nipse dixit. It was not supported by any expert opinion.
\nConsequently the High Court was justified in taking the view
\nboth at the stage of learned Single Judge as well as in
\nappeal by the Division Bench that the exchange ration could
\nnot be said to be unfair or unreasonable especially when by
\nan overwhelming majority the equity shareholders approved
\nthe said Scheme along with said exchange ration and had no
\nobjection to the allotment of two equity shares of the
\ntransferee-company in exchange of for five equity shares of
\ntransferee-company. It was also contended that the
\nappellant himself who was the director of the transferor-
\ncompany had approved the same exchange ratio while he acted
\non behalf of the transferor-company. He was, therefore,
\nplaying hid and seek when it came to the enforcement of the
\nvery same exchange ratio at the end f the transferee-company
\nwherein he was not a director but only shareholder of merely
\n5% shares.
\nIt was next contended that the appellant was also an
\nequity shareholder and so far as the other equity
\nshareholders were concerned they constitute the same class
\nas the appellant. That there was no inter se conflict
\nbetween the rest of the equity shareholders representing 95%
\nof the voting strength which approved the Scheme and the
\nappellant who represented dissenting 5% votes and
\nconsequently there was no appellant was concerned. Even
\notherwise such a separate meeting would not have made any
\nimpact on the voting pattern projected by the equity
\nshareholders approving the said Scheme by overwhelming
\nmajority. Repelling the additional contention canvassed by
\nlearned counsel for the appellant it was submitted by Shri
\nSorabjee learned senior counsel for the respondent that
\nthere was no question of coercing any minority by the
\nmajority as in the meeting of the equity shareholders the
\nappellant had not thought fit even to remain present
\npersonally and had only got represented through proxy for
\nsubmitting his objection by voting against the Scheme
\nwithout having any right to address the meeting. Thus the
\ncontention regarding alleged suppression by the majority was
\npurely an afterthought especially when in the meeting the
\ngroup of Arvind Mafatlal had not represented an absolute
\nmajority and 40% of the voting was by financial institutions
\nwho had no axe to grind against the appellant and who had
\nvoted by keeping in view purely commercial and economic
\ninterests of equity shareholders and had approved the Scheme
\nin that light, It was, therefore, submitted that the
\ncontention raised on behalf of the appellant deserve to be
\nrejected and the appeal consequently also deserves to be
\ndismissed.
\nIn view of the aforesaid rival contentions the
\nfollowing points arise for our determination :
\n1. Whether the respondent-company was guilty of hiding the
\nspecial interest of its director Shri Arvind Mafatlal from
\nthe shareholders while circulating the explanatory statement
\nsupporting the Scheme and whether thereby the voting by the
\nequity shareholders got vitiated.
\n2. Whether the Scheme is unfair and unreasonable to the
\nminority shareholders represented by the appellant.
\n3. Whether the proposed Scheme of Amalgamation was unfair
\nand amounted to suppression of minority shareholders
\nrepresented by the appellant and hence liable to be
\nrejected.
\n4. Whether separate meeting of minority shareholders
\nrepresented by the appellant was required to be convened on
\nthe basis that the appellant’s group represented a special
\nclass of equity
\nshareholders.
\n5. Whether the exchange ratio of two equity shares of MIL
\nfor five equity shares of MFL was ex facie unfair and
\nunreasonable to the equity shareholders of MIL and
\nconsequently the Scheme of Amalgamation on that account was
\nliable to be rejected.
\nHowever before we deal with the aforesaid points for
\ndetermination seriatim, it will be necessary in view the
\nlimited scope of the jurisdiction of the Company Court which
\nis called upon to sanction the Scheme of Amalgamation as per
\nthe provisions of Section 391 read with Section 393 of the
\nAct.
\nScope of interference by the Company Court in sanction
\nproceedings The relevant provisions of the Companies Act,
\n1956 are found in Chapter V of Part VI dealing with
\n‘Arbitration, Compromises, Arrangements and
\nReconstructions’. In the present proceedings we will be
\nconcerned with the Sections 391 and 393 of the Act. The
\nrelevant provisions thereof read as under :
\n“391.(1) where a compromise or
\narrangement is proposed –
\n(a) between a company and its
\ncreditors or any class of them ; or
\n(b) between a company and its
\nmembers or any class of them ;
\nthe Court may, on the application
\nof the Company or of any creditor
\nor member of the company, or in
\nthe case of to company which is
\nbeing wound up, of the liquidator,
\norder a meeting of creditors or
\nclass of creditors, or of the
\nmembers or class of members, held
\nand conducted in such manner as
\nthe Court directs.
\n(2) If a majority in number
\nrepresenting three-fourths in value
\nof the creditors, or class of
\ncreditors, or members, or class of
\nmembers, as the case may be, where
\nproxies are allowed under the rules
\nmade under section 643, by proxy,
\nat the meeting, agree to any
\ncompromise or arrangement, the
\ncompromise or arrangement, shall,
\nif sanctioned by the Court, be
\nbinding on all the creditors, all
\nthe creditors of the class, all the
\nmembers, or all the members of the
\nclass, as the case may be, and also
\non the company, or, in the case of
\na company which is being wound up,
\non the liquidator and
\ncontributories of the company :
\nProvided that no order sanctioning
\nany compromise or arrangement shall
\nbe made by the Court unless the
\nCourt is satisfied that the company
\nor any other person by whom an
\napplication has been made under
\nsub-section (1) has disclosed to
\nthe Court, by affidavit or
\notherwise, all material facts
\nrelating to the company, such as
\nthe latest financial position of
\nthe company, the latest auditor’s
\nreport on the accounts of the
\ncompany, the pendency of any
\ninvestigation proceedings in
\nrelation to the company under
\nsections 235 to 251, and the like.
\n393.(1) Where a meeting of
\ncreditors or any class of
\ncreditors, or of members or any
\nclass of members, is called under
\nsection 391, –
\n(a) with every notice calling the
\nmeeting which is sent to a creditor
\nor member, there shall be sent also
\na statement setting forth the
\nterms of the compromise or
\narrangement and explaining its
\neffect : and in particular,
\nstating any material interests of
\nthe directors, managing director,
\nmanaging agent, secretaries and
\ntreasurers or manager of the
\ncompany, whether in their capacity
\nas such or as members or creditors
\nof the company or otherwise, and
\nthe effect on those interests, of
\nthe compromise or arrangement, if,
\nand in so far as, it is different
\nfrom the effect on the like
\ninterests of other persons; and
\n(b) in every notice calling the
\nmeeting which is given by
\nadvertisement, there shall be
\nincluded either such a statement as
\naforesaid or a notification of the
\nplace at which and the manner in
\nwhich creditors or members entitled
\nto attend the meeting may obtain
\ncopies of such a statements
\naforesaid.”
\nThe aforesaid provisions of the Act show that
\ncompromise or arrangement can be proposed between a company
\nand its creditors or any class of them or between a company
\nand its members or any class of them. Such a compromise
\nwould also take in its sweep any scheme of
\namalgamation\/merger or one company with another. When such a
\nscheme is put forward by a company for the sanction of the
\nCourt in the first instance the Court has to direct holding
\nof meetings of creditors or class of creditors or members or
\nclass of members who are concerned with such a scheme and
\nonce the majority in number representing three-fourths in
\nvalue of creditors or class of creditors or members or class
\nof members, as the case may be, present or voting either in
\nperson or by proxy at such a meeting accord their approval
\nto any compromise or arrangement thus put to vote, and once
\nbinding to all creditors or class of creditors or members or
\nclass of members, as the case may be, which would also
\nnecessarily mean that even to dissenting creditors or class
\nof creditors or dissenting members or class of members such
\nsanctioned scheme even though approved by a majority of the
\nconcerned creditors or members the Court has to be satisfied
\nthat the company or any other person moving such an
\napplication for sanction under sub-Section (2) of Section
\n391 has disclosed all the relevant matters mentioned in the
\nprovision to sub-section (2) of that Section. So far as the
\nmeetings of the creditors or members, or their respective
\nclasses for whom the Scheme is proposed are concerned, it is
\nenjoined by Section 391(1) (a) that the requisite
\ninformation as contemplated by the said provision is also
\nrequired to be placed for consideration of the concerned
\nvoters so that the parties concerned before whom the scheme
\nis placed for voting can take an informed and objective
\ndecision whether to vote for the scheme or against it. On a
\nconjoint reading of the relevant provisions of Sections 391
\nand 393 it becomes at once clear that the Company Court
\nwhich is called upon to sanction such a scheme has not
\nmerely to go by the ipse dixit of the majority of the
\nshareholders or creditors or their respective classes who
\nmight have voted in favour of the scheme by requisite
\nmajority but the Court has to consider the pros and cons of
\nthe scheme with a view to finding out whether the scheme is
\nfair, just and reasonable and is not contrary to any
\nprovisions of law and it does not violate any public policy.
\nThis is implicit in the very concept of compromise or
\narrangement which is required to receive the imprimatur of a
\ncourt of law. No court of law would ever countenance any
\nscheme of compromise or arrangement arrived at between the
\nparties and which might be supported by the requisite
\nmajority if the Court finds that it is an unconscionable or
\nan illegal scheme or is otherwise unfair or unjust to the
\nclass of shareholders or creditors for whom it is meant.
\nConsequently it cannot be said that a Company Court before
\nwhom an application is moved for sanctioning such a scheme
\nwhich might have got requisite majority support of the
\ncreditors or members or any class of them for whom the
\nscheme is mooted by the concerned company, has to act
\nmerely as rubber stamp and must almost automatically put its
\nseal of approval on such a scheme. t is trite to say that
\nonce the scheme gets sanctioned by the Court it would bind
\neven the dissenting minority shareholders or creditors.
\nTherefore, the fairness of the scheme qua them also has to
\nbe kept in view by the Company Court its sanction. It is,
\nof course, true that so far as the Company Court is
\nconcerned as per the statutory provisions of Sections 391
\nand 393 of the Act the question of voidability of the scheme
\nwill have to be judged subject to the rider that a scheme
\nsanctioned by majority will remain binding to a dissenting
\nminority of creditors or members as the case may be, even
\nthough they have not consented to such scheme and to that
\nextent absence of their consent will have to effect the
\nscheme. It can be postulated that even in case of such a
\nScheme of Compromise and Arrangement put up for sanction of
\na Company Court it will have to be seen whether the proposed
\nscheme is lawful and just and fair to the whole class of
\ncreditors or members including the dissenting minority to
\nwhom it is offered for approval and which has been approved
\nby such class of persons with requisite majority vote.
\nHowever further question remains whether the Court has
\njurisdiction like an appellate authority to minutely
\nscrutinise the scheme and to arrive at an independent
\nconclusion whether the scheme should be permitted to go
\nthrough or not when the majority of the creditors or members
\nor their respective classes have approved the this aspect
\nthe nature of compromise or arrangement between the company
\nand the creditors and members has to be kept in view. It is
\nthe commercial wisdom of the parties to the scheme who have
\ntaken an informed decision about the usefulness and
\npropriety of the scheme by supporting it by the requisite
\nmajority vote that has to be kept in view by the Court. The
\nCourt certainly would not act as a court of appeal and sit
\nin judgment over the informed view of the concerned parties
\nto the compromise as the same would be in the realm of
\ncorporate and commercial wisdom of the concerned parties.
\nThe Court has neither the expertise nor the jurisdiction to
\ndelve deep into the commercial wisdom exercised by the
\ncreditors and members of the company who have ratified the
\nScheme by the requisite majority. Consequently the Company
\nCourt’s jurisdiction to that extent is peripheral and
\nsupervisory and not appellate. The Court acts like an umpire
\nin a game of cricket who has to see that both the teams play
\ntheir according to the rules and do not overstep the
\nlimits. But subject to that how best the game is to be
\nplayed is left to the players and not to the umpire. The
\nsupervisory jurisdiction of the Company Court can also be
\ncalled out from the provisions of Section 392 of the Act
\nwhich reads as under :
\n“392, (1) Where a High Court makes
\nan order under section 391
\nsanctioning a compromise or an
\narrangement in respect of a
\ncompany, it –
\n(a) shall have power to supervise
\nthe carrying out of the compromise
\nor arrangement ; and
\n(b) may, at the time of making such
\norder or at any time thereafter,
\ngive such directions in regard to
\nany matter or make such
\nmodifications in the compromise or
\narrangement as it may consider
\nnecessary for the proper working or
\nthe compromise or arrangement.
\n(2) If the Court aforesaid is
\nsatisfied that a compromise or
\narrangement sanctioned under
\nsection 391 cannot be worked
\nsatisfactorily with or without
\nmodifications, it may, either on
\nits own motion or on the
\napplication of any person
\ninterested in the affairs of the
\ncompany, and such an order shall be
\ndeemed to be an order under section
\n433 of this Act.
\n(3) The provisions of this shall,
\nso far as may be, also apply to a
\ncompany in respect of which an
\norder has been made before the
\ncommencement of this Act under
\nsection 153 of the Indian Companies
\nAct, 1913 (7 of 1913), sanctioning
\na compromise or an arrangement.”
\nOf course this Section deals with post-sanction
\nsupervision. But the said provision itself clearly earmarks
\nthe field in which the sanction of the Court operates. It is
\nobvious that the supervisor cannot ever be treated as the
\nauthor or a policy maker. Consequently the propriety and the
\nmerits of the compromise or arrangement have to be judged by
\nthe compromise or arrangement have to be judged by the
\nparties who as sui juris with their open eyes and fully
\ninformed about the pros and cons of the Scheme arrive at
\ntheir own reasoned judgment and agree to be bound by such
\ncompromise or arrangement. The Court cannot, therefore,
\nundertake the exercise of scrutinising the scheme placed for
\nits sanction with a view to finding out whether a better
\nscheme could have been adopted by the parties. This exercise
\nremains only for the parties and is in the realm of
\ncommercial democracy permeating the activities of the
\nconcerned creditors and members of the company who in their
\nbest commercial economic interest by majority agree to give
\ngreen signal to such a compromise or arrangement. The
\naforesaid statutory scheme which is clearly discernible from
\nthe relevant provisions of the Act, as seen above, has been
\nsubjected to a series of decisions of different High Courts
\nand this Court as well as by the Courts in England which had
\nalso occasion to consider schemes under pari material
\nEnglish Company Law. We will briefly refer to the relevant
\ndecisions on the point. But before we do so we may also
\nusefully refer to the observations found in the oft-quoted
\npassage in Bucklay on the Companies Act 14th Edition.
\nThey are as under :
\n“In exercising its power of
\nsanction the Court will see, first
\nthat the provisions of the statute
\nhave been complied with, second,
\nthat the class was fairly
\nrepresented by those who attended
\nthe meeting and that he statutory
\nmajority are acting bona fide and
\nare not coercing the minority in
\norder to promote interest adverse
\nto those of the class whom they
\npurposed to represent, and thirdly,
\nthat the arrangement is such as
\nintelligent and honest man, a
\nmember of the class concerned and
\nacting in respect of his interest,
\nmight reasonably approve.
\nThe court does not sit merely to
\nsee that the majority are acting
\nbona fide and thereupon to register
\nthe decision of the meeting, but at
\nthe same time, the court will be
\nslow to differ from the meeting,
\nunless either the class has not
\nbeen properly consulted, or the
\nmeeting has not considered the
\nmatter with a view to the interest
\nof the class which is empowered to
\nbind, or some blot is found in the
\nScheme.”
\nIn the case of Re. Alabama, New Orleans Texas and
\nPacific Junction Railway Company reported in 1891 (1)
\nChancery Division 213 the relevant observations regarding
\nthe power and jurisdiction of the Company Court which is
\ncalled upon to sanction a scheme of arrangement or
\ncompromise between the company and its creditors or
\nshareholders were made by Lindley, L.J. as under :
\n“What the court has to do is to
\nsee, first of all, that the
\nprovisions of that stature have
\nbeen complied with; and, secondly,
\nthat the minority has been acting
\nbona fide. The court also has to
\nsee that the minority is not being
\noverdone by a majority having
\ninterests of its own clashing with
\nthose of the minority whom they
\nseek to coerce. Further than that,
\nthe Court has to look at the scheme
\nand see whether it is one as to
\nwhich persons acting honestly, and
\nviewing scheme laid before them in
\nthe interests of those whom they
\nrepresent, take a view which can
\nreasonably be taken by businessman.
\nThe court must look at the scheme,
\nand see whether the Act has been
\ncomplied with, whether the Act has
\nbeen complied with, whether the
\nmajority are acting bona fide, and
\nwhether they are coercing the
\nminority in order to promote
\ninterests adverse to those of the
\nclass whom they purport to
\nrepresent; and then see whether the
\nscheme is a reasonable on or
\nwhether there is any reasonable
\nobjection to it, or such an
\nobjection to it as that any
\nreasonable man might say that he
\ncould not approve it.”
\nTo the Similar effect were the observations of Fry,
\nL.J., which read as under
\n“The next enquiry is Under what
\ncircumstances is the court to
\nsanction a resolution which has
\nbeen passed approving of a
\ncompanies or arrangement ? I shall
\nnot attempt to define what elements
\nmy enter into the consideration of
\nthe Court beyond this, that I do
\nnot doubt for a moment that the
\nCourt is bound to ascertain that
\nall the conditions required by the
\nstatute have been complied with; it
\nis bound to be satisfied that the
\nproportion was made in good faith;
\nand, further, it must be so far
\nfair ad reasonable, as that an
\nintelligent and honest man, who is
\na member of that class, and acting
\nalone in respect of his interest as
\nsuch a member, might approve of it.
\nWhat other circumstances the court
\nmay take into consideration I will
\nnot attempt to forecast.”
\nIn Anglo-continental Supply Co. Ltd. Re. (1992) 2 Ch.
\n723, Asthury, J., a century later reiterated the very same
\npropositions as under :
\n“Before giving its sanction to a
\nscheme of arrangement the court
\nwill see firstly that the
\nprovisions of the statute have been
\ncomplied with; secondly that the
\nclass was fairly represented by
\nthose who attended the meeting and
\nthat the statutory majority are
\nacting bona fide and are not
\ncoercing the minority in order of
\nthe class whom they purport to
\nrepresent; and, thirdly, that the
\narrangement is such as a man of
\nbusiness would reasonably approve.”
\nLearned Single Judge of the Calcutta High Court in the
\ncase of Re. Mankam Investments Ltd. and others (1995) 4 Comp
\nLJ 330 (Cal.) relying on a catena of decisions of the
\nEnglish Courts and Indian High Courts observed as under on
\nthe power and jurisdiction of the company Court which is
\ncalled upon to sanction a scheme of merger and amalgamation
\nof companies.
\n“It is a matter for the
\nshareholders to consider
\ncommercially whether amalgamation
\nor merge is beneficial or not. The
\ncourt is really not concerned with
\nthe commercial decision of the
\nshareholders until and unless the
\ncourt feels that proposed merger is
\nmanifestly unfair or is being
\nproposed unfairly and\/or to defraud
\nthe other shareholders. Whether the
\nmerged companies will be ultimately
\nbenefitted or of expenses is a
\nmatter for the shareholders to
\nconsider. If three there will be
\nsome economies in the matter of
\nexpenses is a matter for the
\nshareholders to consider,
\ncertainly, there will be some
\neconomies in the matter of
\nmaintaining accounts, filing of
\nreturns and various other matters.
\nHowever, the court is really not
\nconcerned with the exact details of
\nthe matter and if the shareholders
\napproved the scheme by the
\nrequisite majority, then the court
\nonly looks into the scheme as to
\nfind out that it is not manifestly
\nunfair and\/or is not intended to
\ndefraud or do injustice to the
\nother shareholders.”
\nWe may also in this connection profitably refer to the
\njudgment of this Court in the case of Hindustan Lever
\nEmployees’ Union v. Hindustan Lever Ltd. and others 1995
\nSupp. (1) SCC 499 wherein a Bench of three learned judges
\nspeaking through Sen, J. on behalf of himself and
\nVenkatachaliah, CJ., and with which decision Sahai, J.,
\nconcurred Sahai, J., in his concurring judgment in the
\naforesaid case has made the following pertinent observations
\nin this connection in paras 3 and 6 of the Report :
\n“But what was lost sight of was
\nthat the jurisdiction of the Court
\nin sanctioning a claim of merger is
\nnot to ascertain with mathematical
\naccuracy if the determination
\nsatisfied the arithmetical test. A
\ncompany court does not exercise an
\nappellate jurisdiction ………..
\nSection 394 casts an obligation on
\nthe court to be satisfied that the
\nscheme for amalgamation or merger
\nwas not contrary to public
\ninterest. The basic principle of
\nsuch satisfaction is none other
\nthan the broad and general
\nprinciples inherent in any
\ncompromise or settlement entered
\nbetween parties that it should not
\nbe unfair or contrary to public
\npolicy or unconscionable. In
\namalgamation of companies, the
\ncourts have evolved, the principle
\n“prudent business management test”
\nor that the scheme should not be a
\ndevice to evade law. But when the
\ncourt is concerned with a scheme of
\nmerger with a subsidiary of foreign
\ncompany then test is not only
\nwhether the scheme shall result in
\nmaximising profits of the
\nshareholders or whether the
\ninterest of employees was protected
\nbut it has to ensure the merger
\nshall not result in impeding
\npromotion of industry or shall not
\nresult in impeding promotion of
\nindustry or shall obstruct growth
\nof national economy. Liberalised
\neconomic policy is to achieve this
\ngoal. The merger, therefore, should
\nnot be contrary to this objective.
\nReliance on English decisions Hoare
\n& Co. Ltd. Re 1933 All ER Rep 105,
\nCh. D and Bugle Press Ltd. Re. 1961
\nCh 270 that the power of the court
\nis to be satisfied have complied
\nwith or that the classes were fully
\nrepresented and the arrangement was
\nsuch as man of business would
\nreasonably approve between two
\nprivate companies may be correct
\nand may normally be adhered to but
\nwhen the merger is with a
\nsubsidiary of a foreign company
\nthen economic interest of the
\ncountry may have to be given
\nprecedence. The jurisdiction of the
\ncourt in this regard is
\ncomprehensive.”
\nSen, J. Speaking for himself and Venkatachaliah, CJ.,
\nalso towed the line indicated by Sahai, J., about the
\njurisdiction of the Company Court while sanctioning the
\nScheme and made the following pertinent observations in
\nparagraph 84 at page 528 of the Report :
\n“An argument was also made that as
\na result of the amalgamation, a
\nlarge share of the market will be
\ncaptured by HLL.
\nBut there s nothing unlawful or
\nillegal about this. The Court will
\ndecline to sanction a scheme of
\nmerger, if any tax fraud or any
\nother illegality is involved. But
\nthat is not the case here. A
\ncompany may, on its own, grow up to
\ncapture a large share of the
\nmarket. But unless it is shown that
\nthere is some illegality or fraud
\ninvolved in the scheme, the Court
\ncannot decline to sanction a scheme
\nof amalgamation. It has to be borne
\nin mind that this proposal of
\namalgamation arose out of a sharp
\ndecline in the business of TOMCO.
\nDr Dhavan has argued that TOMCO is
\nnot yet a sick company. That may be
\nright, but TOMCO at this rate will
\nbecome a sick Company, unless
\nsomething can be done to improve
\nits performance. In the last two
\nyears, it has sold its investments
\nand other properties. If this
\nproposal of amalgamation is not
\nsanctioned, the consequence for
\nTOMCO may be very serious. The
\nshareholders, the employees the
\ncreditors will all suffer. The
\nargument that the Company has large
\ncotton mills and jute mills in
\nIndia have become sick and are on
\nthe verge of liquidation, even
\nthough they have large assets. The
\nScheme has been sanctioned almost
\nunanimously by the shareholders,
\nunsecured creditors and preference
\nshareholders of both the Companies.
\nThere must exist very strong
\nreasons for withholding of sanction
\nmay turn out to be disastrous for
\n60,000 shareholders of TOMCO and
\nalso a large number of its
\nemployees.
\nIn view of the aforesaid settled legal position,
\ntherefore, the scope and ambit of the jurisdiction of the
\nCompany Court has clearly got earmarked. The following broad
\ncontours of such jurisdiction have emerged :
\n1 The sanctioning court has to see to it that all the
\nrequisite statutory procedure for supporting such a scheme
\nhas been complied with and that the requisite meeting as
\ncontemplated by Section 391(1) (a) have been held.
\n2. That the scheme put up for sanction of the Court is
\nbacked up by the requisite majority vote as required by
\nSection 391 sub-section (2).
\n3. That the concerned meetings of the creditors or members
\nor any class of them had the relevant material to enable the
\nvoters to arrive at an informed decision for approving the
\nscheme in question. That the majority decision of the
\nconcerned class of voters is just fair to the class as whole
\nso as to legitimately blind even the dissenting members of
\nthat class.
\n4. That all the necessary material indicated by Section
\n393(1)(a) is placed before the voters at the concerned
\nmeetings as contemplated by Section 391 sub-Section (1).
\n5. That all the requisite material contemplated by the
\nprovision of sub-Section (2) of Section 391 of the Act is
\nplaced before the Court by the concerned applicant seeking
\nsanction for such a scheme and the Court gets satisfied
\nabout the same.
\n6. That the proposed scheme of compromise and arrangement
\nis not found to be violative of any provision of law and is
\nnot contrary to public policy. For ascertaining the real
\npurpose underlying the Scheme with a view of to satisfied on
\nthis aspect, the Court, if necessary, can pierce the veil of
\napparent corporate purpose underlying the scheme and can
\njudiciously X-ray the same.
\n7. That the Company Court has also to satisfy itself that
\nmembers or class of members or creditors or class of
\ncreditors as the case may be, were acting bona fide and in
\ngood faith and were not coercing the minority in order to
\npromote any interest adverse to that of the latter
\ncomprising of the same class whom they purported to
\nrepresent.
\n8. That the scheme as a whole is also found to be just,
\nfair and reasonable from the point of view of prudent men of
\nbusiness taking a commercial decision beneficial to the
\nclass represented by them for whom the scheme is meant.
\n9. Once the aforesaid broad parameters about the
\nrequirements of a scheme for getting sanction of the Court
\nare found to have been met, the Court will have no further
\njurisdiction to sit in appeal over the commercial wisdom of
\nthe majority of the class of persons who with their open
\neyes have given their approval to the scheme even if in the
\nview of the Court there would be a better scheme for the
\ncompany and its members or creditors for whom the scheme is
\nframed. The Court cannot refuse to sanction such a scheme on
\nthat ground as it would otherwise amount to the Court
\nexercising appellate jurisdiction over the scheme rather
\nthan its supervisory jurisdiction.
\nThe aforesaid parameters of the scope and ambit of the
\njurisdiction of the Company Court which is called upon to
\nsanction a Scheme of Compromise and Arrangement are not
\nexhaustive but only broadly illustrative of the contours of
\nthe Court’s jurisdiction.
\nIn the light of the aforesaid settled legal position we
\nwill now proceed to deal with the main points for
\ndetermination indicated hereinabove.
\nPoint No. 1
\nSo far as this point is concerned it was vehemently
\ncontended by learned senior counsel Shri Shanti Bhushan that
\nthe explanatory statement placed for consideration of the
\nmeeting of equity shareholders was not a complete statement
\nand relevant material indicating the interest of the
\ndirector of MIL Shri Arvind Mafatlal was not placed before
\nthe voters with the result that the majority vote supporting
\nthe scheme got vitiated. The explanatory statement which
\ncame to be circulated to the voters, namely, the equity
\nshareholders of the transferee-company MIL alleged as under
\n“It is proposed to amalgamate MF
\nwith MIL so as to enable the
\ncarrying on of the combined
\nbusiness more economically and more
\neconomically and advantageously.
\nAmalgamation of both the companies
\nwould lead to substantial
\noperations. The amalgamation of
\nboth the companies would give
\nimproved capital structure which
\nwould lend better flexibility in
\ncapital gearing which would enable
\nthe amalgamated company to raise
\nrequired finance at better terms. A
\nlarger company would generate
\nterms, confidence in the investors
\nand with persons dealing with the
\ncompany and will afford access to
\nresources easily and at with MIL
\nwill pave the way for better, more
\nefficient and economic control in
\neconomy in the administrative and
\nmanagement cost resulting in
\nimproving profitability. The
\namalgamated company will have a
\nstrong and large resource funds.
\nThe combined technological
\nManagerial and financial resources
\nwould enhance the capability of the
\namalgamated company to invest in
\nlarger and sophisticated projects
\nto ensure rapid growth. The
\namalgamated company’s Textiles
\nDivision with five operative units
\nat its disposal will have
\nflexibility in its operations.”
\nSo far as the aforesaid explanatory statement is
\nconcerned it gives sufficient indication regarding the
\npliability and usefulness of the proposed Scheme of
\nAmalgamation of transferor-company MFL with the transferee-
\ncompany MIL. However the special grievance of the appellant
\nvoiced by his learned counsel is to the effect that the real
\ninterest underlying the scheme of merger was that of the
\ndirector Shri Arvind Mafatlal and his group who were at this
\nhelm of affairs of the transferee-company. Learned senior
\ncounsel Shri Shanti Bhushan in this connection submitted
\nthat under Section 393(1) (a) of the Act the company is
\nenjoined to mention in the statement material interest of
\nthe director Shri Arvind Mafatlal in the Scheme which is of
\na special nature as compared to the interest of other
\nshareholders compromise and arrangement on such special
\ninterest of Shri Arvind Mafatlal and as that was not
\nmentioned in the explanatory statement along with which the
\ncopy of the Scheme was circulated to the members the
\nmajority vote became vitiated. New a mere look at Section
\n393(1)(a) shows that the special interest of the director
\nwhich is required t be brought home to the voters must
\nsatisfy the following requirements of the Section before it
\ncan treated to be relevant special interest of the director
\nwhich is required to be communicated to the voters :
\n1 The director’s interest must be a special interest
\ndifferent from the interest of other members who are the
\nvoters at the meeting.
\n2. The compromise or arrangement which is put to vote must
\nhave an effect on such special interest of the director.
\n3. Such effect must be different from the effect of
\ncompromise and arrangement on similar interest of other
\npersons who are called upon to vote at the meeting.
\nWhen we enquired of Shri Bhushan, learned senior
\ncounsel for the appellant as to which special interest,
\naccording to him, of director Arvind Mafatlal was required
\nto be communicated to the voters as per Section 393(1)(a),
\nhe stated that there was a pending litigation between the
\nappellant on the one hand and Shri Arvind Mafatlal on the
\nother in Bombay High Court. That Shri Arvind Mafatlal had
\nsought a declaration in a pending suit against the appellant
\nthat the latter was required to sell of his share-holding in
\nthe transferee-company MIL to the plaintiff Arvind Mafatlal
\nwho was director of MIL. In this very suit the appellant had
\nfiled a counter-claim to the effect that Shri Arvind
\nMafatlal and his group was required to transfer their share-
\nholding in the transferee-company in favour of the appellant
\nas per the Family Arrangement of 1979. Shri Shanti Bhushan
\nin this connection submitted that though the learned Single
\nJudge had taken the view that this type of special interest
\nof director Arvind Mafatlal was not relevant and germane to
\nthe requirement of Section 393(1)(a), the Division Bench in
\nappeal had taken a contrary view and held that such a
\nspecial interest was required to be communicated to the
\nequity shareholders in their meeting as per the said
\nprovision. In this connection our attention was invited by
\nShri Shanti Bhushan to the observation of the Division Bench
\nof the High Court at page 325 of the paper book wherein the
\nDivision Bench observed as under :
\n“Mihir H. Mafatlal was to get
\nexclusive control to MIL to the
\nexclusion of Arvind N. Mafatlal and
\nhis two brothers. Under the
\nproposed family arrangement M. Fine
\nwas to be hived off from MIL and
\nthe control and management of the
\nM. Fine was to be held by Arvind N.
\nMafatlal and that of MIL was to be
\nhanded over to objector Mihir H.
\nMafatlal. This family arrangement
\nhas suffered rough weather. Suit
\nNo. 1010 of 1987 was filed by
\nArvind N. Mafatlal against Mihir H.
\nMafatlal and others before the
\nBombay high Court alleging that
\nanother agreement subsequent to the
\nsaid family arrangement has come
\ninto existence under which Mihir H.
\nMafatlal and other brothers of
\nArvind had agreed to transfer all
\ntheir holdings in MIL to A.N.
\nMafatlal, drawing a curtain on the
\nfamily arrangement of 1979. The
\nsaid dispute and the outcome
\nthereof will have direct effect on
\nthe respective interests of the
\nshares held by A.N. Mafatlal, Mihir
\nH. Mafatlal and other members of
\nthe Mafatlal family, and trusts
\nunder them.”
\nHe also invited our attention to the observation of the
\nDivision Bench at page 328 of the paper book to the effect
\nthat having considered the rival contentions and closely
\nexamined the scheme of Section 393, they were unable to
\nsustain the conclusion that the facts about the interests
\nunder the alleged family arrangements and the effect of
\nproposed arrangement for amalgamation on such interests were
\nnot required to be disclosed under section 393(1)(a).
\nIn our view the aforesaid observations of the Division
\nBench are not quite apposite in the light of the proposed
\nScheme of Compromise and Arrangement which was sought to be
\ngot sanctioned by the Court. On the other hand the learned
\nSingle Judge was quite justified in taking the view that
\nthis type of interest which was personal nature so far as
\ndirector Arvind Mafatlal on the one hand and appellant on
\nthe other hand were concerned was not at all germane to the
\nquestion relating to sanctioning of the Scheme of Compromise
\nand Arrangement with which the Court was concerned. It is
\nobvious that when a Scheme of Compromise and Arrangement
\nwhich involves two companies, namely, the transferor-company
\nand the transferor-company and their shareholders and
\ncreditors is on the anvil of scrutiny before the sanctioning
\nCourt, the Court has to see that the interest of the class
\nof creditors or shareholders to whom the Scheme is offered
\nfor approval is any way likely to be affected by the
\nsuppression of special interest of the director in
\nconnection with such a scheme which is on the anvil. Two
\nindependent bodies which are represented by their
\nshareholders or creditors as a class, as the case may be
\nhave to take commercial decisions strictly with a view to
\nseeing that the concerned Scheme of Compromise or
\nArrangement is beneficial to the shareholders or creditors
\nas a class vis-a-vis the company which is a corporate entity
\nin so far as the company’s relations with these class of
\ncreditors and shareholders are concerned. If the special
\ninterest which the director has is in any way likely to be
\naffected by the Scheme and if non-disclosure of such an
\ninterest is likely to affect the voting pattern of the class
\nof creditors or shareholders who are called upon to vote on
\nthe scheme, then only such special interest of the director
\nis required to be communicated to the voters as per Section
\n393(1)(a). We fail to appreciate how the personal family
\ndispute between the appellant on the one hand and Arvind
\nMafatlal, director of the transferee-company MIL on the
\nother regarding the right to hold shares in the company can
\nhave any linkage or nexus with the Scheme of Amalgamation of
\nthese two companies which was put to vote before the equity
\nshareholders. It is easy to visualize that if the suit filed
\nby Arvind Mafatlal against the appellant succeeds would
\nhappen is that the appellant will have to sell his share-
\nholding which is only 5% in the transferee-company to the
\nplaintiff Arvind Mafatlal. That has nothing to do with the
\nequity shareholders as a class which was called upon to
\ndecide whether the scheme of merging the transferor-company
\nMFL with the scheme of merging the transferor-company MFL
\nwith the transferee-company was for the benefit of the
\nshareholders as a class. The equity shareholders of the
\ntransferee-company had to decide in their commercial wisdom
\nwhether it is worthwhile to have a larger body of
\nshareholders on account of the merger so that apart from the
\nshare-holding of the transferee-company its objects would
\nalso get diversified and its field of operation would be
\nenlarged with the prospect of hike in the dividend available
\nto these shareholders after the economic and industrial
\nactivities of both the companies so amalgamated would get
\nelongated and whether the value of their shares in such
\nconsolidated companies were likely to get a boost in the
\nstock market. This was the commercial decision which the
\nequity shareholders of the transferee-company had to take.
\nFor taking this informed decision they were least concerned
\nwhether 5% share-holding of appellant in the company
\nremained or did not remain with him in future. Consequently
\nf Arvind Mafatlal’s suit ultimately succeeded before the
\nBombay High Court and the appellant lost in his counter-
\nclaim that would have no effect whatsoever on the informed
\ndecision which the equity shareholders were called upon to
\ntake while approving the scheme in question.
\nConversely if the appellant succeeded in his counter-
\nclaim and director Arvind Mafatlal lost in his suit then all
\nthat would happen is that Arvind Mafatlal will have to
\ntransfer his share-holding and share-holding of his group in
\nfavour of appellant so far as the transferee-company is
\nconcerned. That future possibility would have no impact on
\nthe decision making process which had to undertake at this
\nstage while approving the Scheme. Consequently such an
\neventuality was totally irrelevant for being brought to the
\nnotice of the equity shareholders before whom the scheme was
\nput to vote. While deciding whether transferor-company
\nshould be merged with the transferee-company and the
\ntransferee-company’s economic and industrial activity should
\nbe permitted to be enlarged as a result of such merger the
\nequity shareholders were least concerned whether the
\nappellant would purchase in future the share of the present
\ndirector Arvind Mafatlal or vice versa. That was entirely
\ntheir personal dispute which was still not adjudicated upon
\nand its decision one way or the other had no impact on the
\npattern of voting of the equity shareholders of the
\nrespondent-company as a class of prudent businessmen and
\ninvestors so far as the Scheme was concerned. The Scheme of
\nCompromise and Arrangement which was put to vote was of such
\na nature that it had no impact or effect on the personal
\ninterest of the director Arvind Mafatlal in connection with
\nhis present share-holding in the transferee-company.
\nConsequently it must be held that mention about such an
\ninterest was outside the statutory requirements of Section
\n393(1)(a) as rightly held by the learned Singly Judge whose
\nview was erroneously upset by the Division Bench. However in
\nany case we are in entire agreement with the subsequent
\nreasoning of the Division Bench for approving the decision
\nof the learned Single Judge on this aspect, namely, that
\nsuch non-disclosure of interest had no impact on the voting
\npattern adopted at the meeting by the equity shareholders
\nwho are called upon to approve the scheme. It may also be
\nnoted in this connection that the resolution of the equity
\nshareholders approving the Scheme of Amalgamation was passed
\nwith overwhelming majority by members including through
\nproxies, present and voting. It projected the following
\npicture :
\nIn favour Against Total
\n(i) No.of Members 5,298 143 5,441
\n(ii) No of valid 19,36,964 86061 20,23,025
\nvotes
\nFrom the pattern of voting it became apparent that out
\nof 100% of the Share capital 75.75 per cent in value
\nparticipated of which 95.75 per cent voted in favour of the
\nproposed Scheme. Out of 95.75 per cent of the votes in
\nvalue, a paltry 8.43 per cent votes had been attributed to
\nArvind Mafatlal group consisting of individuals and trust.
\n39.45 per cent were the votes attributable to financial
\ninstitutions which can be said to have no interest other
\nthan their own interests as men of business in considering
\nthe proposed Scheme. Over 23 per cent votes have been
\nattributed to public limited companies or private limited
\ncompanies which held the shares of MIL and in which Arvind
\nMafatlal was also alleged to have interests. Thus non-
\nmentioning of the private dispute between Arvind Mafatlal
\nand objector in connection with the holding of shares in the
\ntransferee-company had in fact no impact on the voting
\npattern of equity shareholders including the financial
\ninstitutions which had nothing to do with this personal feud
\nbetween the warring groups. Consequently the non-mentioning
\nof the pending dispute between the appellant on the one hand
\nand Arvind Mafatlal on the other which was pending
\nadjudication in the Bombay High Court had in fact no impact
\nwhatsoever on the result of the voting undertaken by the
\nequity shareholders in their class meeting. Thus the
\nrequisite statutory majority of votes approving the scheme
\ncould not have been adversely affected by the non-mentioning
\nof this pending litigation in the explanatory note even
\nassuming that the Division Bench was right in holding that
\nit was required to be informed to the voters as per the
\nrequirements of Section 393(1)(a). In either view of the
\nmatter, therefore, the non-mentioning of the pending
\nlitigation between the director of the transferee-company
\nArvind Mafatlal on the one hand and the appellant on the
\nother, had no vitiating effect on the majority decision of
\nthe equity shareholders who approved Scheme with
\noverwhelming majority of 95.75 per cent of votes and when
\nthe dissenting vote on behalf of the appellant’s group was
\nin microscopic minority of less than 5%. It is also
\npertinent to note in this connection that the appellant who
\nbeing a party to the civil litigation before the Bombay High
\nCourt and who was very much keen to get more share-holding
\nin transferee-company and who had already filed his counter-
\nclaim for enforcing the family arrangement of 1979, had not
\nthought it fit to remain present in the meeting of equity
\nshareholders and on the contrary he got himself represented
\nthrough proxy who had no right to speak. Thus in substance
\nthe appellant himself never though that information about
\nthe pendency of the litigation between Arvind Mafatlal,
\ndirector of the respondent-company and himself was so
\nimportant that it was required to be brought to the voters
\nnotice even though he had opportunity to do so by remaining
\npersonally present in the meeting for that purpose. It,
\ntherefore, clearly appears to be an afterthought when he put
\nforward such an objection for the sake of it at the time of
\nopposing the Scheme which was put for sanction of the Court.
\nIt may also be kept in view that the explanatory
\nstatement no way emphasised that it is the management of the
\ntransferee-company by Shri Arvind Mafatlal which is going to
\nbe better monitored and managed by him after the merger in
\nquestion. In other words management of the company is not at
\nall a germane consideration for the Scheme. Consequently
\nwhether the management remains with Arvind Mafatlal or in
\nfuture may get changed and go in the hands of the appellant
\nis not a consideration which has any linkage or nexus with
\nScheme. Consequently the interest of Arvind Mafatlal in the
\nshare-holding or likely future impact thereon by the
\nlitigation was de hors the Scheme in question and was not
\nrequired to be placed before the voters. The first point for
\ndetermination is, therefore, answered in the negative.
\nPoint No. 2
\nSo far as this point is concerned Shri Shanti Bhusan,
\nlearned senior counsel for the appellant, submitted that in
\nmodern days corporate bodies even though public limited
\ncompanies are mostly controlled by big, influential and
\neconomically powerful families which have inherited
\nentrepreneurial skill and expertise from earlier generations
\nwhich had controlled such enterprise in past. That in the
\npresent case also the director the respondent-company Shri
\nArvind Mafatlal, the eldest male member of the family, had
\ndescended from the common ancestor Mafatlal Gagalbhai who
\nhad established this empire and which has further grown
\nwith passage of years. That when such a powerful director
\nwho is the eldest male member of the family is at the helm
\nof affairs the minority interest of the appellant who,
\naccordant to him was entitled to 50% share in the family
\nconcerns as per the 1979 family settlement was likely to be
\nvoted out and cornered by the influence of such a towering
\npersonality as Arvind Mafatlal in the meeting of equity
\nshareholders. Therefore unfairness of the Scheme has to be
\njudged also from the point of view of its impact on the
\nminority shareholder who has a common ancestor Mafatlal
\nGagalbhai and who is sought to be cornered and deprived of
\nhis just share in the family concerns by the machinations of
\nShri Arvind Mafatlal. The Court has, therefore, to see
\nwhether the Scheme of Amalgamation which is sought to be put
\nthrough at the behest of the director of respondent-company
\nis fair to the minority group of the appellant who claims
\n50% share in the family concerns against the director of the
\nrespondent-company Shri Arvind Mafatlal and his group. So
\nfar as this submission is concerned Shri Sorabjee, learned
\nsenior counsel for respondent joined issues and submitted
\nthat factually there is no basis for such a contention as
\nrespondent-company is not controlled by Shri Arvind Mafatlal
\nwho is one of the directors along with his son Hrishikesh
\nbut there are eleven outside directors and the share-holding
\nof Arvind Mafatlal and his group is not even 50% even
\nincluding the share-holding of other subsidiary companies in
\nwhich also Arvind Mafatlal and his group may be
\nshareholders. We find considerable force in the aforesaid
\ncontention of learned senior counsel for the respondent. The
\nevidence produced in the case shows that out of total
\nmajority vote of 95.75 per cent which supported the Scheme
\nat the meeting of equity shareholders even according to the
\npattern disclosed by the appellant himself individual trust
\ncontrolled by Arvind Mafatlal and private companies
\naccounted to only 16% of the shares voted in the meeting,
\nabout 44% of the shares were represented by financial
\ninstitutions, employees and public taken together and two
\ncompanies stated to be from Mafatlal group had only 15%
\nshares. Consequently it is too much to contend that the
\nvoting pattern was dominated by the share-holding of Arvind
\nMafatlal and his group when about 40% of the shares are held
\nby financial institutions which had nothing to do with the
\ninternal feuds of director Arvind Mafatlal on the one hand
\nand the appellant-objector on the other. It could not be
\nsaid that the scheme as put to vote was in any way unfair to
\nappellant or that the majority shareholders acting as a
\nclass had not behaved in a bona fide manner for protecting
\nthe interest of the class as whole and were n any way
\ninimical to the appellant. While considering the question of
\nbona fides of the majority voters and whether they were
\nunfair to the appellant it has to be kept in view that bona
\nfides of the majority acting as a group has to be examined
\nvis-a-vis the Scheme in question and not the bona fides of
\nthe person whose personal interest might be different from
\nthe interests of the voters as a class. Bona fide of person
\ncan only be relevant if it can be established with
\nreasonable certainty that he represents majority or is
\ncontroller of majority. Arvind Mafatlal cannot be visited
\nwith such a charge. In this connection we may usefully refer
\nto a decision of English Court in the case of Hellenic and
\ngeneral Trust Limited reported in 1976 (1) WLR 123. In that
\ncase the court was concerned with a Scheme of Arrangement
\nwhereunder all the ordinary shares of the company were to be
\ncancelled and new shares were to be issued to Hambros which
\nwould make the company as wholly owned subsidiary of
\nHambros. Holders of such cancelled shares were to be paid by
\nHambros at 48 pennies. In short it was an arrangement for
\ntaking over of the company by Hambros. 53% shares of the
\nHellenic Company were held by another company MIT. MIT
\nitself was a wholly owned subsidiary company of Hambros.
\nThis situation led the court to conclude that the subsidiary
\ncompany of Hambros which was holding such large number of
\nshares placed itself vis-a-vis Hambros in the position of
\nvendor and the lifted vail of transaction showed it to be
\none of acquisition than of transaction showed it to be one
\nof acquisition than of amalgamation. The aforesaid decision
\nis a pointer to the fact that what was required to be
\nconsidered while sanctioning the scheme was bona fides of
\nthe majority acting as a class and not of one single person.
\nIt is, therefore, not possible to agree with the contention
\nof learned senior counsel for the appellant that the
\nmajority had acted unfairly to the appellant and had not
\nprotected his interest of minority shareholders falling in
\nthe same class along with the majority. It is not contention
\nin favour of the Scheme the majority had acted with any
\nfavour of the Scheme the majority had acted with any oblique
\nmotive to fructify any adverse commercial interest qua him
\nand his group when it consisted of outsiders like financial
\ninstitutions or that there was any possibility of their
\nsurrendering their economic interest in the Scheme at the
\ndictates of shareholder-director Arvind Mafatlal and his
\ngroup. It is also to be kept in view that the Board of
\nDirectors of the respective companies, namely, the
\ntransferor-company as well as the transferee-company had
\napproved the Scheme of Amalgamation before it was put to
\nvote. The appellant was himself was one of the directors of
\nthe transferor-company who had no objection to the Scheme of
\nAmalgamation from the point of view of the transferor-
\ncompany. So far as the transferee-company is concerned
\nthough appellant was not a director he was 5% shareholder
\nwho did not think fit to personally remain present at the
\ntime of voting and simply relied upon proxy. If he was
\nfeeling that the Scheme was unfair to him or was not going
\nto protect his interest as shareholder in the respondent-
\ncompany nothing prevented him from remaining present and
\nvoicing his grievance before the General Body of the equity
\nshareholders and to apprise them of the alleged pernicious
\neffect of the Scheme. It is, therefore, too late in the day
\nfor him to contend that the Scheme was unfair to him and
\nthat the family of Arvind Mafatlal has tried to dominate and
\nengineer any adverse pattern of voting at the meeting of
\nthe equity shareholders.
\nIn this connection we tried to know from Shri Shanti
\nBhushan, learned senior counsel for the appellant as to how
\nthe appellant felt that the Scheme was unfair to him. He
\nsubmitted that under the Scheme the transferor-company was
\nlosing its identity an was getting merged in the transferee-
\ncompany. That in the pending litigation between the parties
\nin the Bombay High Court if the appellant succeeded in his
\ncounter-claim he was likely to get larger share-holding in
\nthe transferee-company and if that was not possible he could
\nhave got the complete of the transferor-company as per the
\nfamily arrangement. Now once the transferor-company loses
\nits identify then his counter-claim was likely to be
\ninfructuous as the subject-matter of the counter-claim will
\nstand withdrawn from the possible operation of the decree if
\nat all granted in his favour in the counter-claim. This
\nsubmission was countered by learned senior counsel for the
\nrespondent by pointing out that it had no factual basis.
\nThat as earlier noted in the suit pending in Bombay High
\nCourt if Arvind Mafatlal succeeded then appellant will have
\nto transfer his even remaining 5% share-holding in
\ntransferee-company in favour of Arvind Mafatlal. If on the
\nother hand the appellant succeeded in this counter-claim and
\nArvind Mafatlal’s suit was dismissed then the appellant may
\nget the shares which are at present held by Arvind Mafatlal
\nand his group in the transferee-company. But there is no
\nquestion appellant getting any exclusive control of the
\ntransferor-company. Therefore, impact of that litigation one
\nway or the other is going to be totally negative so far as
\nthe existence of the transferor-company or otherwise is
\nconcerned. We find considerable force in the contention of
\nlearned counsel for the respondent. It is also pertinent to
\nnote that if the appellant felt that the Scheme was unfair
\ninasmuch as he was likely to lose his future interest, if
\nany, and control, if any, in the transferor-company by its
\nmerger and loss of identify on account of the Scheme it
\npasses one’s comprehension how he as sitting director of the
\ntransferor-company approved of the Scheme did not object to
\nthe Scheme and on the contrary was a party to the resolution
\nof the Board of Directors of transferor-company to propose
\nthe Scheme of its amalgamation with the transferee company.
\nNot only that but even when that Scheme was put for sanction
\nbefore the Bombay High Court on behalf of the transferor-
\ncompany the appellant did not object meaning thereby
\nappellant had no objection to the transferor-company losing
\nits identity and getting merged in the transferee-company
\npursuant to the proposed Scheme. the appellant’s own
\nconduct, therefore, belief his apprehension that the Scheme
\nas proposed was in any way unfair to him or that there were
\nany mala fide behind the Scheme attribute to Shri Arvind
\nMafatlal who is the director of the transferee-company. The
\nsecond point for determination, therefore, also is found to
\nbe factually not sustainable. It is, therefore, held that
\nthe Scheme of Compromise and Arrangement is neither unfair
\nnor unreasonable to the minority shareholders represented by
\nthe appellant.
\nBefore parting with the discussion on this point it is
\nalso worthwhile to note that apart from the pattern of
\nvoting at the meeting of the equity shareholders, even the
\nshare-holding pattern of the respondent-company belies the
\nsubmission put forward on behalf of the appellant that
\nArvind Mafatlal’s group dominated the constitution of the
\ncompany and could control the decisions of the shareholders.
\nThe evidence on record shows that the share-holding of
\nfinancial institutions and MHM group in MIL would work out
\nto 39.03%. Hence it cannot be said that Arvind Mafatlal is
\nat the helm of affairs of the respondent-company or in the
\ndriver’s seat or that his family is the virtual master of
\nrespondent-company. This is not a case where it can be urged
\nwith any emphasis that the respondent-company is an alter
\nego of Arvind Mafatlal who is one of the directors of the
\ncompany and that he could create a show of the Scheme being
\napparently be beneficial to the shareholders but was in fact
\nconcealing any convert and hidden device of augmenting his
\npersonal interest and interest of his family which was
\nadverse to the interest of innocent investors and other
\nequity shareholders including the appellant. It is also
\npertinent to note that financial institutions and statutory
\ncorporations held substantive percentage of shares in
\nrespondent-company. This class of shareholders who are
\nnaturally well informed about the business requirements and
\neconomic needs and the requirements of corporate finance
\nwholly approved the Scheme if it was contrary to the
\ninterest of shareholders as class. Individual personal
\ninterest of a minority shareholder like the appellant is
\nabsolutely to of consideration when such class meeting
\nacting for the benefit to the whole class of equity
\nshareholders take up the consideration of the Scheme for its
\napproval Consequently it could not be said that the majority
\nshareholders had sacrificed the class interest of appellant
\nminority shareholders when they voted with overwhelming
\nmajority in favour of the Scheme. Point No.2 is accordingly
\nanswered in the negative. That takes us to the consideration
\nof Point No.3 for determination.
\nPoint No.3
\nIn a way the answer to point no.2 necessarily results
\nin negativing this point also. Even that apart we fail to
\nappreciate how the Scheme of Amalgamation can be said to be
\nunfair and amounting to suppression of minority shareholders
\nrepresented by the appellant. it has to be kept in view by
\nthe proposed Scheme of Amalgamation the transferor-company
\nwas getting merged in the transferee-company. Now even if it
\nis held that the appellant succeeds in his counter-claim in
\nthe suit pending in Bombay High Court and if he is to get
\nthe share-holding of Arvind Mafatlal and his group
\ntransferred to him so far as transferee-company is
\nconcerned, the transferee-company because of the
\namalgamation will then be having more diversified activities
\nand if at all according to the appellant because of this
\nfuture success, if any, in the counter-claim he is going to
\nreplace Arvind Mafatlal and his group in the management of
\nthe respondent-company he would have larger field to operate
\nand larger company to mange. We fail to appreciate as to how
\nsuch a scheme from any point of view can amount to
\nsuppression of appellant’s minority interest in the share-
\nholding of the company. This interest is not going to be in
\nany way adversely affected. If at all, his share-holding is
\ngoing to increase in the respondent-company is his counter-
\nclaim succeeds. If his counter-claim fails he will have to
\nget out lock, stock and barrel from the respondent-company
\nand he will have to wash his hands off the same. In either
\ncase the Scheme of Amalgamation will have no adverse impact
\non the appellant’s interest in the respondent-company. On
\nthe other hand the Scheme of Amalgamation is likely to have
\na more beneficial effect on the appellant’s share-holding in
\nthe respondent-company if he succeeds in his counter-claim
\nin Bombay High Court. It has to be kept in vies that the
\nquestion of bona fide of the majority shareholders or the
\nalleged suppression by them of the minority shareholders or
\ntheir attempt to suffocate their interest has to be judged
\nfrom the point of vie of the class s whole. Questions
\nwhether the majority equity shareholders while acting on
\nbehalf of the class as a whole had exhibited any adverse
\ninterest against the appellant’s minority shareholders also
\nhaving similar interest as members of the same class, while
\napproving the Scheme or had acted with any oblique motive to
\nwhittle down such a class interest of the minority. As we
\nhave seen earlier no such situation ever existed both at the
\ntime when the Scheme of Compromise and Arrangement was
\ncleared and proposed by the Board of Directors of both the
\ntransferor and transferee companies and also at the stage
\nwhen the Scheme was put to vote before the meeting of equity
\nshareholders forming common class of which the appellant was
\nalso a member though a minority member. Consequently point
\nno.3 will also have to be answered in the negative on the
\nsame lines and for the same reasons on the basis of which
\npoint no.2 is answered.
\nPoint No.4
\nSo far as this point is concerned the relevant provi
\nsions of the Companies Act to which we have made a reference
\nearlier indicate that the Court has to order under Section
\n391(1) a meeting of creditors or class of creditors or
\nmembers or class or class of members to whom the creditors
\nor members or class of members to whom the Scheme of
\nCompromise or Arrangement is offered by the company. The
\npresent controversy centers round a meeting of members.
\nMembers of the company are shareholders. Part IV of the
\ncompanies Act deals with ‘Share Capital and Debentures’.
\nSection 82 provides that ‘shares or other interest of any
\nmember in a company shall be movable property, transferable
\nin the manner provided by the articles of the company’. As
\nper Section 86 the share capital of a company limited by
\nshares formed after the commencement of this Act, or issued
\nafter such commencement, shall be of two kinds only, namely,
\nequity share capital and preferences share capital. So far
\nas the Articles of Association of respondent-company are
\nconcerned they also contemplate two classes of
\nshareholders. No separate class of equity shareholders is
\ncontemplated either by the Act or by the Articles of
\nAssociation of respondent-company. Appellant is admittedly
\nan equity shareholder. therefore, he would fall within the
\nsame class of equity shareholders whose meeting was convened
\nby the orders of the Company Court. However it is vehemently
\ncontended by learned counsel for the appellant that because
\nof the family arrangement of 1979 on which he relies he was
\na special class of minority equity shareholder who had
\nseparate rights against the director of the company and
\nwhose special interest because of the pending litigation
\nbetween him and the director Shri Arvind Mafatlal was likely
\nto be adversely affected by the Scheme, therefore, a
\nseparate meeting had to be convened as he represented a
\nclass within the class of equity shareholders. It is
\ndifficult to agree with this contention. Even though the
\nCompanies Act or the Articles of Association do not provide
\nfor such a class within the class of equity shareholders, in
\na given contingency it may be contended by a group of
\nshareholders that because of their separate and conflicting
\ninterests vis-a-vis other equity shareholders with whom they
\nformed a wider class, a separate meeting of such separately
\ninterested shareholders should have been convened. But such
\nis not the case of the appellant. It is not his case that
\nhis interest as an equity shareholder in respondent-company
\nis in any way conflicting with the general interest of the
\nequity shareholder in respondent-company is in any way
\nconflicting with the general interest of the equity
\nshareholders as a class. Consequently it could not be urged
\nby him with any emphasis that the General Body of equity
\nshareholders acting as a class while considering the
\nquestion of approval of the Scheme was likely to take
\ndecision which would adversely affect the commercial
\ninterest of the appellant as an equity shareholder. His
\npersonal conflict of interests with the director was totally
\nforeign to the scope of class meeting which was convened to
\nconsider the Scheme in question as we have seen earlier
\nwhile considering earlier points for determination. It is
\nalso to be kept in view that the appellant would have urged
\nwith some justification his contention for convening a
\nseparate meeting representing for him and his group of
\ndissenting equity shareholders if it was his case that the
\nScheme of Companies and Arrangement as offered to him and
\nhis group was in any way different from the Scheme of
\nCompromise and Arrangement offered to other equity
\nshareholders who also belonged to the same class in the
\nwider sense of the term. On the express language f Section
\n391(1) it becomes clear that where a compromise or
\narrangement is proposed between a company and its members or
\nany class of them a meeting of such members or class of them
\nhas to be convened. This clearly presupposes that if the
\nScheme of Arrangement or Compromise is offered to the
\nmembers as a class and no separate Scheme is offered to any
\nsub-class of members which has a separate interest and a
\nseparate meeting of such a sub-class would at all survive.
\nEven otherwise it becomes obvious that as minority
\nshareholders if the appellant has to dissent from the Scheme
\nhis dissent representing 5% equity share-holding would have
\nbeen visible both in a separate meeting, if any, of his sub-
\nclass or in the composite meeting where also his 5% dissent
\nwould get registered by appellant either remaining present n
\nperson through proxy. Consequently when one and the same
\nscheme is offered to the entire class of equity shareholders
\nfor their consideration and when commercial interest of the
\nappellant so far as the Scheme is concerned is in common
\nwith other equity shareholders he would have a common cause
\nwith them either to accept or to reject the Scheme from
\ncommercial point of view. Consequently there was no
\noccasion for convening a separate class meeting of the
\nminority equity shareholders represented by the appellant
\nand his group as tried to be suggested. It is also to be
\nkept in vies that it is not he case of the appellant that
\nany different terms of compromise were offered to persons
\nholding equity shares who were covered by the family
\narrangement of 1979 or otherwise. In fact the entire
\nproposal of the Scheme of Arrangement was one affecting
\nequally and in the like manner all the existing equity
\nconnection it is profitable to refer to what the learned
\nauthor Palmer in this Treatise Company Law 24th Edition, he
\nsay :
\n“What constitutes a class :
\nThe Court does not itself consider
\nat this point what classes of
\ncreditors or members should be made
\nparties to the scheme. This is for
\nthe company to scheme purports to
\nachieve. The application for an
\norder for meetings is a preliminary
\nstep the applicant taking the risk
\nthat the classes which are fixed by
\nthe judge, unusually on the
\napplicant’s request, are sufficient
\nfor the ultimate purpose of the
\nsection, the risk being that if in
\nthe result, and we emphasis the
\nwords ‘in the result’ they reveal
\ninadequacies, the scheme will not
\nbe approved’. If e.g. rights of
\nordinary shareholders are to be
\naltered, but those of preference
\nshares are not touched, a meeting
\nof ordinary shareholders will be
\nnecessary but not of preference
\nshareholders. If there are
\ndifferent groups within a class the
\ninterests of which are different
\nfrom the rest of the class, or
\nwhich are to be treated differently
\nunder the Scheme, such groups must
\nbe treated as separate class for
\nthe purpose of the scheme.
\nMoreover, when the Company has
\ndecided what classes are necessary
\nparties to the scheme, it may
\nhappen that one class will consist
\nof a small number of persons who
\nwill all be willing to bound by the
\nscheme. In that case it is not the
\npractice to hold a meeting of that
\nclass, but to make the class a
\nparty to the scheme and to obtain
\nthe consent of all its members to
\nbe bound. It is however, necessary
\nfor at least one class meeting to
\nbe held in order to give the Court
\njurisdiction under the Section.”
\nIt is, therefore, obvious that unless a separate and
\ndifferent type of Scheme of Compromise is offered to a sub-
\nclass of a class of creditors or shareholders otherwise
\nequally circumscribed by the class no separate meeting of
\nsuch sub-class of the main class of members or creditors is
\nrequired to be convened. On the facts make out a case for
\nholding a separate meeting of dissenting minority equity
\nshareholders represented by him. The fourth point for
\ndetermination, therefore, is answered in the negative. That
\ntakes us to the consideration of the last point for
\ndetermination placed for our consideration by the learned
\nsenior counsel for appellant.
\nPoint No.5
\nIt was submitted that the exchange ratio of equity
\nshareholders so far as the transferee-company is concerned
\nworks very unfairly and unreasonably to them. As per the
\nproposed Scheme 5 equity shares of transferor-company. So
\nfar a this contention is concerned it has to be kept in view
\nthat before formulating the proposed Scheme of Compromise
\nand Amalgamation and expert opinion was obtained by the
\nrespondent-company as well as the transferor-company,
\nnamely, MFL on whose Board of Directors appellant himself
\nwas a member. M\/s C.C. Chokshi & Co., a reputed firm of
\nChartered Accountants, having considered all the relevant
\naspects suggested the aforesaid exchange ration keeping in
\nview the valuation of shares of respective companies. It
\nmust at once be stated that valuation of shares is a
\ntechnical and complex problem which can be appropriately
\nleft to the consideration of experts in the field of
\naccountancy. Pennington in his ‘Principles of the Company
\nLaw’ mentions four factors which had to be kept in mind in
\nthe evaluation of shares :
\n“(1) Capital Cover,
\n(2) Yield
\n(3) Earning Capacity, and
\n(4) Marketability
\nFor arriving at the fair of share,
\nthree well known methods are
\napplied :
\n(1) The manageable profit basis
\nmethod (the Earnings Per Share
\nMethod)
\n(2) The net worth method or the
\nbeak value method, and
\n(3) The market value method,”
\nSo many imponderables enter the exercise of valuation
\nof shares. M\/s C.C. Chokshi & Co. considering all the
\nrelevant aspects and obviously keeping in view the
\naccounting principles underlying the valuation of shares
\nsuggested the said ratio which was found acceptable both by
\nthe Board of Directors of the transferor-company. That the
\nappellant himself as a director of the transferor-company
\ngave green signal to the Scheme and to this very ratio of
\nexchange of shares. But Shri M.J. Thakore appearing for the
\nappellant submitted that from the point of view of the
\ntransferor-company it was very profitable to have two shares
\nof transferee-company against five shares of transferor-
\ncompany. But the difficulty arises only from the point of
\nview of transferor-company shareholders. According to Shri
\nThakore the proper exchange ratio would be one share f
\ntransferee-company to six shares of transferor-company. It
\nis difficult to appreciate this contention of the appellant.
\nIt has to be kept in view that appellant never bothered to
\npersonally remain present in the meeting of equity
\nshareholders for pointing out the unfairness of this
\nexchange ratio to his brother equity share who were likely
\nto be affected by the very same ratio as the appellant. His
\ninterest at least to that extent was entirely common and
\nappellant. His interest at least to that extent was entirely
\ncommon and parallel to that of other equity shareholders.
\nBut he had no time to remain personally present. He sent his
\nproxy only to record his dissent vote which was in
\nmicroscopic minority of 5% as compared to 95% majority vote.
\nNot only that even before the Court he did not submit any
\ncontrary expert opinion regarding the valuation of shares of
\ntransferor and transferee companies for supporting his ipse
\ndixit that the correct ratio would be 6:1 so far as
\ntransferor and transferee companies were concerned. Shri
\nShanti Bhushan, learned senior counsel for the appellant
\nhaving realised this difficulty submitted that at least
\nthese proceedings are continuation of proceedings before the
\nHigh Court, therefore, this Court may now in order to
\nsatisfy itself send for the opinion of an expert. It is
\ndifficult to agree. The appellant who was propounding this
\ntheory of correct exchange ratio had nothing to offer in
\nsupport of his contention both before the learned Single
\nJudge as well as before the High Court. It has to be kept in
\nview that the matter was fiercely contested on all
\npermissible points before learned Single Judge. The
\nproceedings were pending before the High Court for more than
\ntwo years from 8th February 1994 till 12th July 1996 when
\nthe Division Bench disposed of the appeal. For all these
\nyears neither before the learned Single Judge nor before the
\nHigh Court in appeal the appellant thought it fit to request
\nthe Court to either call for the of any other expert on
\nvaluation of shares nor did he himself get such report for
\nplacing for consideration of the Court in support of his
\nsupposed better ratio. It has also to be kept in view that
\nwhich exchange ration is better is in the realm of
\ncommercial decision of well informed equity shareholders. It
\nis not the Court to sit in appeal over this value judgment
\nof equity shareholders who are supposed to be men of the
\nworld and reasonable persons who know their own benefit and
\ninterest underlying any proposed scheme. With open eyes they
\nhave okayed this ratio and the entire Scheme. 40% of the
\nmajority shareholders were financial institutions who were
\nsupposed to be well versed on the aspect of valuation of
\nshares. They had no objection to the exchange of 2 shares of
\ntransferor-company for 5 shares of transferor company. As
\nstated earlier it was a sort of package duly considering all
\nimponderables and implicit factors which the shareholders
\nhad to keep in view for deciding whether to approve the
\nScheme of Amalgamation or not. The exchange ratio was only
\none of the items. They thought it fit in their commercial
\nwisdom to accept the Scheme as whole along with the exchange
\nratio presumably in expectation of better profits in years
\nto come when the amalgamated companies would operate and
\nwhen the amalgamated companies would operate and when there
\nwould be, according to the shareholders, better prospects of
\nearning greater dividends. They willingly agreed to give in
\nexchange two shares of transferor-company for five shares of
\ntransferor-company and made them available to the
\nshareholders of the transferor-company. The appellant was
\nrepresenting only 5% dissenting shareholders and his
\nobjection was almost a voice in the wilderness, which did
\nnot appeal to the majority of his brother shareholders. Shri
\nShanti Bhushan, learned senior counsel for the appellant in
\nthis connection invited our attention to the observation of
\nthe Division Bench in its judgement at page 375 wherein it
\nhas been observed that “if one were to examine the
\nexactitude of exchange ratio that may be offered fairly on
\nthe arithmetic scale by taking into consideration various
\ndetails, there is some force in what were suggested by Mr.
\nB.R. Shah on behalf of the appellant. However, keeping in
\nview the scope of enquiry which the court is required to
\nundertake and with those findings we are concerned, it will
\nnot be permissible for us in law to undertake this exercise
\nin the facts and circumstances of present case in absence of
\nbona fides”. We fail to appreciate how this observation can
\nbe of any avail to learned senior counsel for the appellant
\nas all that Court wanted to suggest was that even assuming
\nthat some another exchange of ratio can be suggested to be
\nbetter one, it was for the equity shareholders who acted
\nbona fide in the interest of their class as a whole to
\naccept even a less favourable ratio considering other
\nbenefits that may offset such less favourable ratio once an
\namalgamation goes through. We wholly concur with this view.
\nIn this connection we may also refer to a decision of
\nMoughm, J. in Re Hoare & Co. (No.2) case (1933) ALL ER 105
\nwherein it was laid down that where statutory majority had
\naccepted the offer the onus must rest on the applicants to
\nsatisfy the court that the price offered is unfair. In this
\nconnection following pertinent observations were made by the
\nlearned Judge:
\n“The other conclusion I draw is
\nthis X X X X X the court ought to
\nregard the scheme as a fair one as
\nmuch as it seems me impossible to
\nsuppose that the court, in the
\nabsence of any strong grounds, is
\nto be entitled to set up its own
\nview of fairness of the scheme in
\nopposition to so very large a
\nmajority of shareholders who are
\nconcerned. Accordingly, without
\nexpressing a final opinion on the
\nmatter because there may be special
\ncircumstances in special cases, I
\nam unable to see that I have any
\nright to order otherwise in such a
\ncase as I have before me, unless t
\nis affirmatively established that
\nnotwithstanding the views of a very
\nlarge majority of shareholders, the
\nscheme is unfair.”
\nWe may also refer to a decision of the Gujarat High
\nCourt in Kamala Sugar Mills Limited 55 Company Cases P.308
\ndealing with an identical objection about the exchange ratio
\nadopted in the Scheme of Compromise and Arrangement. The
\nCourt observed as under :
\n“Once the exchange ratio of the
\nshares of the transferee-company to
\nbe allotted to the shareholders of
\nthe transferor-company has been
\nworked out by a recognised firm of
\nchartered accountants who are
\nexperts in the field of valuation
\nand if no mistake can be pointed
\nout in the said valuation, it is
\nnot for the court to substitute its
\nexchange ratio, especially when the
\nsame has been accepted without
\ndemur by the overwhelming majority
\nof the shareholders of the two
\ncompanies or to say that the
\nshareholders in their collective
\nwisdom should not have accepted the
\nsaid exchange ratio on the ground
\nthat it will be determined to their
\ninterest.”
\nThese observations in our view represent the correct
\nlegal position on this aspect. We may also keep in view that
\nin the present case not only expert like M\/s C.C., Chokshi &
\nCo. had suggested the ratio but another independent body
\nICICI Security & Finance Company Limited reached the same
\nconclusion which was conveyed by its letter dated 10th
\nNovember 1993 to the company approving of the entire Scheme
\nalong with the suggested ratio. A mere look at the report of
\nthe Chartered Accountants M\/s C.C. Chokshi & Co. shows that
\nvarious factors underlying the Scheme of Compromise and
\nArrangement were taken into consideration while suggesting
\nthe exchange ratio by the said reputed firm of chartered
\naccountants. The said opinion had taken into account the
\nfact that on amalgamation shares have to be cancelled.
\nIncrease in share premium account in equity capital of the
\nMIL will have to be taken into account as a result of final
\ncall made in respect of Bond 1992 issue. It has also taken
\ninto account significant increase in the paid-up equity of
\nMIL as a result of issue of its Bond in the international
\nmarket. It has undertaken exercise ratio on the basis of
\nearning per share of the two companies by taking into
\naccount five years’ working results of the two companies
\nmaking certain adjustments. Apart from taking into
\nconsideration the past result of the two companies, the
\nchartered accountants have taken into account the
\npotentiality of the two companies to earn profit in future,
\nconsidering existing expansion and modernisation of
\nprojected and planned expenditure by the MIL as well as
\nsubsidiary and sister concern in hand. It has also taken
\ninto account the market price of equity shares of past 24
\nmonths, declared dividend by the two companies, the overall
\neffect of security scan in the market price, realisable
\ninvestment and their market value. Taking into consideration
\nmultifarious considerations detailed in the report, note was
\nalso taken of the fact that MIL held substantial shares of
\nMFL, which shall have to be cancelled on the merger of MFL
\nwith MIL. Two fully paid up equity shares of MIL of Rs. 100
\neach for every five unfair and unacceptable as the appellant
\nwould like to have it.
\nUndeterred by this position Shri Thakore, learned
\ncounsel for the appellant in support of his contention that
\nthe exchange ratio was ex facie unfair to the shareholders
\nof the transferee-company, invited our attention to the
\nstatement showing the working results of both the transferor
\nand transferee companies as found at Annexures M and N of
\nVol. II of the Paper Book at pages 534 and 535. He submitted
\nthat these statements showing the working results of the
\ncompany for the last five years ended 31st March 1993 showed
\nthat the earning per equity share after depreciation and tax
\nso far as the respondent-company was concerned was Rs. 30\/-
\nwhile earning of transferor-company Mafatlal Fine Spg. &
\nMfg. Company Limited was only Rs. 7\/- for the relevant five
\nyears. He also invited our attention to the break-up value
\nof the shares of company on the basis of the Balance Sheet
\nas on 31st March 1993 so far as respondent-company was
\nconcerned. Annexure ‘Q’ at page 538 showed value per equity
\nshare of Rs. 100\/- each at Rs. 1,515\/- while so far as the
\ntransferor-company was concerned the break-up value per
\nequity share was Rs. 259\/-. That may be so. But as a package
\ndeal when the Scheme as whole is examined and found to be
\nadvantageous to the economic and commercial interest of
\nshareholders as a class only one or two item simpliciter for
\ndeciding the exchange ratio cannot tilt the balance as so
\nmany factors and aspects would enter that exercise. It was
\nundertaken by expert body of chartered accountants like M\/s
\nC.C. Chokshi & Co. Before parting with discussion on this
\npoint it would be apposite to refer to the decision of this
\nCourt in Hindustan Lever Employees’ Union (supra). In
\nparagraph 41 of the Report of Justice Sen speaking for
\nhimself and Venkatachaliah, CJ, and to which Sahai J.
\nconcurred has observed that the problem of valuation in the
\ncase of amalgamation of two companies has been dealt with by
\nWeinberg and Blank in the book ‘Take-overs and Mergers’ in
\nwhich it is stated that some or all of the 8 listed factors
\nwill have to be taken into account in determining the final
\nshare exchange ratio. The Court has also approved the
\nfixation of exchange ratio of the shares of the companies on
\nthe basis of adoption of combination of two or more well-
\nknown methods of valuation of shares out of many such
\nmethods. In para 37 of the Report it has been observed that
\nthe question is what method should be adopted for arriving
\nat a proper exchange ratio. The usual rule is that shares of
\nonly on 27th August 1996. Therefore, ex facie his written
\nsubmissions are not required to be considered. However in
\norder to see that the appellant may not suffer on account of
\nnon-consideration of these written submissions we have gone
\nthrough them and have considered them in the interest of
\njustice. But having repetition of the main contentions
\ncanvassed before us during oral arguments by their learned
\nsenior counsel Shri Shanti Bhushan and by their counsel
\nShri M.J. Thakore. Some additional points also appear to
\nhave been raised in the written submissions pertaining to
\nadditional objections which were not pressed before us at
\nthe time of oral hearing and, therefore, they obviously
\ncannot be considered in support of the contentions on which
\nthe appeal was pressed before us. The written submissions in
\nconnection with the points which were already pressed before
\nus are already dealt with by us while considering the main
\npoints for determination in the earlier part of this
\njudgment and, therefore, it is not necessary to deal with
\nthe same once again.
\nThese were the only contentions canvassed in support of
\nthe points for determination which have all been answered in
\nthe negative. The inevitable result is that the appeal fails
\nand is dismissed. In the facts and circumstances of the
\ncase, however, there will be no order as to costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
PETITIONER: MIHEER H. MAFATLAL Vs. RESPONDENT: MAFATLAL INDUSTRIES LTD. DATE OF JUDGMENT: 11\/09\/1996 BENCH: MAJMUDAR S.B. (J) BENCH: MAJMUDAR S.B. (J) SINGH N.P. (J) CITATION: JT 1996 (8) 205 ACT: HEADNOTE: JUDGMENT: J U D G M E N T S.B. Majmudar, J. Leave granted. By consent of learned advocates of parties this appeal was … Read more<\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":""},"categories":[4928],"tags":[],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/30100"}],"collection":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/comments?post=30100"}],"version-history":[{"count":2,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/30100\/revisions"}],"predecessor-version":[{"id":137467,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/30100\/revisions\/137467"}],"wp:attachment":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/media?parent=30100"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/categories?post=30100"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/tags?post=30100"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}