TMI Blog1997 (5) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Ltd. was concerned was ₹ 5,61,23,37,434 that of Faith Investments Ltd. was ₹ 10, 39,76,223 and that of the transferee company, Eveready Industries India Ltd., was ₹ 2,99,90,48,000. 2. Mr. Mukherjee then submitted that Faith Investments Ltd., is a wholly owned subsidiary company of Mcleod Russel (India) Ltd., and the transferor companies and the transferee company were all under the same manage-ment. According to Mr. Mukherjee, while Mcleod Russel (India) Ltd., is engaged in the business of sale of tea produced at its various tea estates in Assam and West Bengal, the business of Faith Investments Ltd., is that of an investment company and the transferee company is engaged in the manufacture, production, sale of electrical batteries, starters, lamps, mechanical devices and appliances of different kinds and agriculture- based products. The transferee company is also engaged in the mining, manufacture, use, production and sale of various kinds of metals and minerals and alloys. 3. Mr. Mukherjee submitted that, although the transferor and transferee companies were engaged in different trades and business activities, they were all under the same management a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned. 10. Opposing the proposed scheme of amalgamation on behalf of the Central Government, although, no affidavit had been filed on its behalf, Mr. Susanta Kundu firstly urged that the Chairpersons of the meetings of the Equity shareholders of the applicant Companies had not filed their reports in Form No. 39, as prescribed in Rule 78 of the Companies (Court) Rules, 1959 ('the Rule') and it was not, therefore, possible to ascertain as to which of the shareholders had voted for and against the proposed amalgamation. Referring to Shackleton on the Law and Practice of Meetings, 6th edition, Mr. Kundu referred to a passage relating to validity of meetings at Page 60, and urged that when the statute or rules required a motion to be carried by a two-thirds majority of the votes of rate-payers present at the meetings, the votes of less than two-thirds of the rate-payers present would be insufficient to comply with the statute. Mr. Kundu urged that a proper break-up, as envisaged in Form 39, would have given a clear picture if the requirements of section 391(2) of the Act, had been duly complied with or not. 11. Mr. Kundu then urged that the proposed scheme of amal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olved in the merger of the said company with the Transferee Company. 17. Mr. Kundu submitted that having regard to the above, no sanction should be given to the proposed scheme of amalgamation. 18. Replying to the several objections raised by Mr. Kundu on the materials available on record, Mr. Mukherjee submitted that Form No. 39 referred to in rule 73 of the Companies Rules, were in the nature of guidelines and it was a duty cast on the Chairperson of the meeting to abide by such guidelines. The failure of the Chairperson to strictly follow the proforma prescribed could not invalidate the resolution adopted at the meeting. Mr. Mukherjee submitted that from the reports submitted it was, however, quite possible to ascertain the voting pattern and the number of shareholders present and voting at the meetings convened as per the order of this Court. 19. Mr. Mukherjee submitted that the views expressed by Shackleton and relied upon by Mr. Kundu were beyond reproach and, in fact, the meetings held were in keeping with such views, except that the requirement of section 391(2) was that the majority contemplated therein was not of the members present at the meeting, but of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the internal administra- tion of the transferor company and there was no necessity that there should be unison in the objects of the amalgamating Companies to enable such amalgamation. 25. Mr. Mukherjee than referred to and relied on a recent decision of the Hon'ble Supreme Court in the case of Hindusthan Lever Employees' Union v. Hindusthan Lever Ltd. [1994] 4 Comp. LJ 267, 2 SCL 157 where it was, inter alia, observed that a scheme of amalgamation must not be a device to evade the law and should satisfy the test of prudent business management. In a normal proposal for amalgamation, the Court was required to be satisfied only whether the provisions of the Act have been complied with or that the class or classes were fully represented and the arrangement was such as a man of business would reasonably approve. It was observed from an earlier decision of the Supreme Court in the case of Fertiliser Corpn. Kamgar Union v . Union of India [198l] (2) SCR 52, that it was not part of the judicial process to examine entrepreneurial activities to ferret out flaws. The scheme having been sanctioned almost unani-mously by the shareholders, debenture holders, secured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is also its subsidiary. Had Faith Investments Ltd. been under a different management, Mr. Kundu's submissions may have had some force. 33. Apart from benefiting the shareholders, who themselves, have almost unanimously approved the proposed scheme of amalgamation without any modification, there is nothing on record to suggest that the scheme is either intended to defraud or cause prejudice to the shareholders and creditors of the applicant companies or to the public. 34. The objections relating to rule 85 and section 391(2) have been adequately answered by Mr. Mukherjee. Rule 85 would not apply in a scheme of merger simpliciter where the assets and liabilities of the transferor Companies stand transferred as a whole to the transferee. As to the statutory majority contemplated in section 391(2), it is quite clear that the same refers to members not only present, but also voting at a meeting convened under section 391(1) thereof. 35. In my view, no serious ground has been made out on behalf of the Central Government for refusing sanction to the proposed scheme of amalgamation and there will, accordingly, be orders, as prayed for, in terms of prayers ( a ) to ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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