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IN RE : BURAGOHAIN TEA COMPANY LIMITED

Scheme of amalgamation - Held that:- Court has no objection to sanction the scheme for amalgamation of Buragohain Tea Company (Transferor Company) with B & A Ltd. (Transferee Company).

However, having regard to the litigation history in the Transferee Company involving the Objector and other related developments and also having regard to the financial status of the Transferor Company as discussed above, objection raised by the Objector and by the Central Govt. through the Regional Dir .....

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perts keeping in view the discussions made above and submit the same to the Court in two months time.Thereafter Court may sanction the scheme with modification(s). - Company Pet. No.03/2013 - Dated:- 28-7-2015 - MR. UJJAL BHUYAN, J. For The Petitoner : Mr. R Banerjee, learned Senior Counsel For The Objector : Mr. J Saha, learned Senior Counsel This is an application under sections 391 (2) and 394 of the Companies Act, 1956, seeking sanction of the Court to the scheme of amalgamation of Buragohai .....

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The issued, subscribed and paid up share capital of the Transferor Company is ₹ 5,30,000.00 divided into 530 equity shares of ₹ 1,000.00 each fully paid up. The Transferor Company is engaged in the business of cultivation and sale of tea. It is stated that Transferor Company has maintained proper Books of Accounts as required by law and its annual accounts have been audited as on March 31, 2012. Value of the assets of the Transferor Company is ₹ 19,53,87,760.00 whereas, liabil .....

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existing public limited company within the meaning of the Act and is presently known as B & A Ltd. w.e.f. 06.12.2000. The registered office of the Transferee Company is situated at Indu Bhawan, MG Road, Jorhat. Authorized share capital of the Transferee Company is ₹ 10,00,00,000.00 divided into 50,00,000 equity shares of ₹ 10.00 each and 5,00,000.00 Redeemable Cumulative Preference Shares of ₹ 100.00 each. The issued, subscribed and fully paid up share capital of the Trans .....

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70,597.00. It is stated that since March 31, 2012, there has been no substantial change in the financial position of the Transferee Company except those arising out of the usual course of business. Transferee Company is a listed company with the stock exchanges. Both the Transferor Company and the Transferee Company have placed on record their Memorandum of Association and Articles of Association as annexures to the company petition. By the scheme of amalgamation, which has been placed on record .....

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on of 3.4 million kgs, there is surplus tea processing capacity of 4.6 million kgs, which is partly utilized at present by processing bought tea leaf. Transferee Company has been in the tea business for a long time and has considerable expertise and goodwill in such business. On the other hand, Transferor Company has a tea garden, namely, Govindapur Tea Estate in the district of Golaghat. The said tea estate was, however, shut down in the year 2005 following dispute with the workers. Rockland Re .....

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ion of the Govindapur Tea Estate resumed thereafter. It is stated that under the new management, the said tea estate has been able to achieve a turn around by producing 8.5 lakh kgs of tea in green leaf form. Business of the Transferor Company has revived and has stabilized. It has good potential now. However, the Transferor Company does not have a processing unit of its own and has to sell its tea leaf. It is stated that Govindapur Tea Estate is situated at a distance of 55 kms from Mokrung Tea .....

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g the larger quantities of its own production of green leaf, on the other hand, the amalgamation will benefit the Transferor Company as it will have direct access to in house tea processing capacity as well as the expertise, well established management set up, distribution and marketing network and goodwill of the Transferee Company. Amalgamation will facilitate consolidation of the two companies and enable the combined company to carry on its business in a more convenient and advantageous manne .....

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liabilities, duties and obligations of the Transferor Company were to be transferred to the Transferee Company. All the employees serving under the Transferor Company as on the effective date were to become employees of the Transferee Company with effect from the effective date on such terms and conditions, which would not be less favourable to them than those subsisting with reference to the Transferor Company as on the said date. All proceedings pending by or against the Transferor Company as .....

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any. Thus, the scheme envisages amalgamation of the Transferor Company with the Transferee Company in the above terms and conditions. Both the Transferor Company and the Transferee Company had earlier approached this Court by filing Company Petition No.2/2013 and this Court by order dated 11.02.2013 directed holding of separate meetings of the equity share holders of the Transferor Company and the Transferee Company on 23.03.2013 for the purpose of considering the said scheme of amalgamation. Th .....

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ther to 503 equity shares of ₹ 1,000.00 each fully paid up, the scheme was approved. Similarly, in the meeting of the equity share holders of the Transferee Company, which was attended by 19 equity share holders entitled together to 15,27,938 equity shares of ₹ 10.00 each fully paid up, the scheme was approved. Both the companies approved the scheme without any modification. Proceedings of the aforesaid two meetings were placed before this Court by the Court appointed Chairmen. Respe .....

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ered Accountants. Further, Microsec Capital Ltd., independent Merchant Bankers, have also confirmed that such ratio is fair. Transferor Company is an unlisted company, but the. Transferee Company being a company listed with the Bombay Stock Exchange Ltd., has duly filed the scheme with the stock exchange whereafter, Bombay Stock Exchange has given its no objection to the scheme. It is in this backdrop that prayer has been made for sanctioning the scheme by this Court. An affidavit has been filed .....

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ompany. With a view to divest the Objector from her claim to the said block of shares in the Transferee Company, TS No.41/2012 was filed by Hemendra Prasad Barooah in the Court of Civil Judge, Jorhat, wherein, it has been claimed that though the block of 8,61,918 shares are in the joint name of the plaintiff (Hemendra Prasad Barooah) and the Objector, for all intent and purpose, the plaintiff is the sole beneficial shareholder and the reason for introducing the Objector as the joint owner was fo .....

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l Procedure, 1908. Learned Civil Judge passed order dated 13.08.2012 directing the parties to maintain status quo in respect of the aforesaid block of shares lying in the demat account of HDFC Bank. Another title suit being TS No.47/2012 was filed by Hemendra Prasad Barooah and others against the Objector and 4 others in the Civil Court at Jorhat, questioning the transfer of 2,21,230 shares of ₹ 10.00 each of the Transferee Company by Late Usha Barooah, wife of Hemendra Prasad Barooah to t .....

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jector. However, the aforesaid order dated 29.08.2012 was modified by this Court in FAO No.19/2012 filed by the Objector. Vide order dated 09.11.2012, this Court directed release of the dividend to the Objector for the financial year 2011-2012 without prejudice to the rights of the plaintiff to claim temporary injunction for release of dividend in future. It is contended that in order to dilute the share holding of the Objector in the Transferee Company and to cover up their mismanagement and op .....

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uently because of certain disputes between the management and the Objector. Father Hemendra Prasad Barooah had filed company petition No.923/2012 before the Company Law Board, New Delhi Bench under section 111 A of the Act to have the name of the Objector deleted as a shareholder in respect of the joint share holding of 8,61,918 shares. This petition was dismissed by the Company Law Board on 31.07.2012. In this proceeding, the Company Law Board was never informed about any such scheme. According .....

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d Realty Pvt. Ltd. are Directors of the Transferee Company and sister-concern; therefore, the whole deception becomes apparent. Allegation as regard non-receipt of notice of the meeting of the Transferee Company held on 23.03.2013 has been made. It is alleged that notice was sent to the address not currently occupied by the Objector and was received after the meeting. Finally, it has been contended that the scheme is devoid of any justification and the exchange ratio of shares is wholly prejudic .....

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f of the Objector. It is stated that objector does not represent any class of shareholders and is not a bonafide shareholder of the Transferee Company. Personal and private disputes that existed between the Objector and her father and other persons cannot be a ground to oppose amalgamation of the two companies, which decision has been taken on the basis of sound business policy. It is stated that Objector was appointed as a whole time Director of the Transferee Company w.e.f. 01.06.2010. However .....

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t was sent to the address of the Objector, which is mentioned in the register of shareholders. Objector had never attended any of the Annual General Meetings of the Transferee Company in the past. Allegations made by the Objector have been denied. Share holding status of the Objector has been highlighted as under: - i) 94,970 numbers of shares (3.06%) are in the name of the Objector without any litigation. ii) 2,21,230 (7.14%) earlier in the name of her mother Lt. Usha Barooah. This block of sha .....

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nge on the date of the meeting itself i.e., on 25.05.2012. Regarding the SEBI circular dated 14.02.2013, it is stated that the scheme was filed in this Court on 21.01.2013. As such question of the SEBI circular dated 14.02.2013 being applicable does not arise. It is reiterated that the scheme will advance the business of the Transferor Company and the Transferee Company and would be to the benefit and advantage of both the company, their shareholders, employees and all concerned. Contending that .....

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andard applied in the scheme does not conform to the requirement of Accounting Standard 14 read with section 211 (3A) of the Act. However, the basic objection raised by the Regional Director is regarding the exchange ratio of shares between the Transferor Company and the Transferee Company. According to him, the provision to pay 786 equity shares of ₹ 10.00 each of the Transferee Company against one equity share of ₹ 1,000.00 of the Transferor Company is not at all justified consider .....

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act, his role has also been questioned. It is stated that the exchange ratio of shares has been fixed on the basis of the earning capacity of the Transferor Company and not on the basis of its net asset value or net worth as appearing from its balance sheet as alleged by the Regional Director. The exchange ratio has been fixed on the basis of profitability and earnings of the Transferor Company and not on basis of the net worth of the two companies. Value of assets and consequently re-evaluation .....

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wo companies and is for the benefit and advantage of the companies, their shareholders, employees and all concerned, petitioners have requested that objection raised on behalf of the Central Govt. should be overlooked. The Objector has filed a hard hitting supplementary affidavit on 19-03-2014. Referring to the affidavit earlier filed on her behalf opposing the scheme, she has stated that in her own name she has 3,16,200 equity shares in the Transferee Company which is equivalent to 10.2% of the .....

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d 38% of the shares in the Transferee Company. A malafide attempt has been made to deplete her share holding in the Transferee Company. The scheme has been devised as part of such a move. It is a ploy to deprive the Objector of her control over the company. According to the Objector, the Transferee Company has been traditionally a concern of the Barooah family. Her elder sister has been living abroad permanently alongwith her family since the last four decades. Her only brother Amit Barooah died .....

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feree Company. The scheme has been devised to dilute her share holding and control in the Transferee Company. When the scheme was devised, litigation was already pending before the Company Law Board, u/s 111 A of the Act instituted by the father seeking to de-register her name from the share register of the company in respect of 8,61,918 shares which stood jointly in the name of her father and herself. The said petition was dismissed by the Company Law Board. No notice of any share holders meeti .....

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s now pending for disposal wherein interim order was passed on 24.01.2014 directing maintenance of status-quo with regard to the existing paid up share capital of the company. Devising of the scheme has been projected in the company petition as an act of oppression against the Objector. It is contended that the scheme is not in the interest of the company and is in reality a mischievous and malafide design to commit further oppression and mismanagement against the Objector. It is also contended .....

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objection was raised on behalf of the petitioners regarding acceptance of the said supplementary affidavit filed by the Objector on 19-03-2014 on the ground that the same was not filed at least three days prior to the date of hearing. After hearing the parties and on due consideration, this Court passed order dated 20-03-2014 opining that having regard to the facts and circumstances of the case, the supplementary affidavit filed by the Objector on 19-03-2014 was required to be taken on record ex .....

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at the Objector has no right to 2, 21, 230 and 8, 61, 918 equity shares of the Transferee Company which are subject matters of pending litigation in the Civil Court. By reason of Article 45 of the Articles of Association of the Transferee Company, the block of 8, 61, 918 equity shares would have to be recorded in the name of the executor of the estate of Hemendra Prasad Barooah and the Transferee Company has recorded the name of Shri Somnath Chatterjee as the executor subject to orders passed in .....

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had disowned and dis-inherited the Objector from his estate. After denying and disputing the allegations made by the Objector, petitioners seek sanctioning of the scheme. Mr. R. Banerjee, learned Senior Counsel appearing on behalf of the petitioners submits that the scheme presented before the Court jointly by the two companies i.e. by the Transferor Company and by the Transferee Company whereby the Transferor Company would be merged with the Transferee Company, is in the best interest of both t .....

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of share holders. Inspite of notice, Objector did not attend the meeting. In both the meetings the share holders of the two companies approved the scheme. The Objector having not attended the meeting cannot now raise any objection against sanctioning of the scheme. Regarding the exchange ratio of shares i.e. one share of ₹ 1000.00 of Transferor Company being made equivalent to 786 shares of ₹ 10.00 each of the Transferee Company, it is submitted that the said exchange ratio has been .....

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e submits. In support of his submissions, learned Senior Counsel for the petitioners has placed reliance on a number of decisions which will be referred to and discussed in the succeeding part of the judgment. He finally submits that the objection raised by the Objector may be rejected and the scheme as proposed may be sanctioned by the Court. Per-contra, Mr. J. Saha, learned Senior Counsel for the Objector submits that the Objector is battling mismanagement and oppression in the Transferee Comp .....

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, civil suit was filed at Jorhat by the father claiming that the said block of shares belongs entirely to him. Another civil suit was instituted questioning the gift deed whereby a block of 2, 21, 230 shares were gifted to the Objector by her mother late Usha Barooah. Changes were made in the Articles of Association of the Transferee Company adversely affecting the interest of the Objector in respect of the joint share holding. It is in the light of these developments that the scheme is required .....

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at Govindapur tea estate, which is the only tea estate belonging to the Transferor Company, had stopped production in the year 2005. Comparing the financial and market standing of the two companies, learned Senior Counsel for the Objector submits that the exchange ratio of shares of the two companies proposed is totally absurd and has been worked out in such a manner that it would render the Objector irrelevant in the amalgamated company if only her undisputed share holdings are considered. He t .....

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hich have also been perused. Question for consideration in this petition is whether the Court should grant sanction to the scheme proposed by the petitioners in the face of objection raised by the Objector and the Central Government? To answer the aforesaid question, it would be apposite to first refer to the relevant provisions of the Act. Section 391 (1) of the Act provides that where a compromise or arrangement is proposed between a company and its creditors or any class of them or between a .....

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s, or members, or class of members, as the case may be, present and voting either in person or, where proxies are allowed, by proxy, at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the Court, be binding on all the creditors, all the creditors of the class, all the members, or all the members of the class, as the case may be, and also on the company, or, in the case of a company which is being wound up, on the Liquidator and contributo .....

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een filed with the Registrar of Companies. During the pendency of the application, the Court may stay the continuation of any suit or proceeding against the company on such terms as the Court thinks fit [sub-section (6)]. Section 392 of the Act deals with power of Court to enforce compromise and arrangement. As per sub-section (1), where the Court makes an order under section 391 sanctioning a compromise or an arrangement in respect of a company, it shall have power to supervise the carrying out .....

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motion or on the application of any person interested in the affairs of the company, make an order of winding up of the company. Section 393 of the Act lays down the procedure regarding holding of meeting under section 391, including issuance of notice etc. Section 394 deals with provisions for facilitating reconstruction and amalgamation of companies. As per sub-section (1), where an application is made to the Court under section 391 for the sanctioning of a compromise or arrangement proposed .....

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he order sanctioning the compromise or arrangement or by a subsequent order, make provision for matters enumerated therein, including allotment or appropriation by the Transferee Company of any shares etc. in that company, under the compromise or arrangement are to be allotted or appropriated by that company to or for any person. As per the first proviso, no compromise or arrangement proposed for the purpose of or in connection with a scheme for amalgamation of a company which is being wound up .....

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ovt. before passing any order under the said sections. In Hindustan Lever Employees Union Vs. Hindustan Lever Ltd. & Ors., reported in 1995 Supp. (1) SCC 499, the Hon ble Supreme Court examined the jurisdiction of the Court in the merger of two companies in the light of the aforesaid provisions. It was held that the jurisdiction of the Court in sanctioning a scheme of merger is not to ascertain with mathematical accuracy if the determination satisfied the arithmetical test. A Company Court d .....

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cy or unconscionable. The Apex Court examined in detail the provisions of sections 391 and 393 of the Act in Miheer H. Mafatlal Vs. Mafatlal Industries Ltd., reported in AIR 1997 SC 506. That was a case where Mafatlal Fine Spinning and Manufacturing Company Ltd. being the Transferor Company was to be amalgamated with Mafatlal Industries Ltd. being the Transferee Company. The appellant was one of the Directors of the Transferor Company. Since the registered office of the Transferor Company was at .....

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who was one of the shareholders of the Transferee Company filed his objection to the scheme of amalgamation. Basic objection raised was that the scheme as proposed was unfair to the minority shareholders represented by the appellant and that the exchange ratio of equity shares was ex-facie unreasonable and unfair to the shareholders of the Transferee Company. Learned Single Judge of the Gujarat High Court overruled the objections and sanctioned the scheme, which was confirmed by the Division Ben .....

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id provisions, the Apex Court held that on a conjoint reading of the relevant provisions of sections 391 and 393 of the Act, it becomes clear that the company Court which is called upon to sanction a scheme of amalgamation/merger has not merely to go by the ipse dixit of the majority of the shareholders or the creditors, who might have voted in favour of the scheme by requisite majority, but the Court has to consider the pros and cons of the scheme with a view to finding out whether the scheme i .....

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n unconscionable or an illegal scheme or is otherwise unfair or unjust to the class of shareholders or creditors for whom it is meant. Consequently it cannot be said that a Company Court before whom an application is moved for sanctioning such a scheme which might have got the requisite majority support of the creditors or members or any class of them for whom the scheme is mooted by the concerned company, has to act merely as a rubber stamp and must almost automatically put its seal of approval .....

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y of the scheme will have to be judged subject to the rider that a scheme sanctioned by majority will remain binding to a dissenting minority of creditors or members, as the case may be, even though they have not consented to such a scheme and to that extent absence of their consent will have no effect on the scheme. It can be postulated that even in case of such a Scheme of Compromise and Arrangement put up for sanction of a Company Court it will have to be seen whether the proposed scheme is l .....

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it that all the requisite statutory procedure for supporting such a scheme has been complied with and that the requisite meetings as contemplated by Section 391 (1) (a) have been held. 2. That the scheme put up for sanction of the Court is backed up by the requisite majority vote as required by Section 391, sub-section (2). 3. That the concerned meetings of the creditors or members or any class of them had the relevant material to enable the voters to arrive at an informed decision for approvin .....

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y the concerned applicant seeking sanction for such a scheme and the Court gets satisfied about the same. 6. That the proposed scheme of compromise and arrangement is not found to be violative of any provision of law and is not contrary to public policy. For ascertaining the real purpose underlying the Scheme with a view to be satisfied on this aspect, the Court, if necessary, can pierce veil of apparent corporate purpose underlying the scheme and can judiciously X-ray the same. 7. That the Comp .....

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class represented by them for whom the scheme is meant. 9. Once the aforesaid broad parameters about the requirement of a scheme for getting sanction of the Court are found to have been met, the Court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the Court there would be a better scheme for the company and its members or creditors for who .....

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for further deliberation on the above aspect of the matter. However, since the judicial pronouncements are being considered, it would be useful to briefly refer to the various judgments cited at the bar at this stage itself. In Hindustan Lever Employees Union (Supra), the Court examined the exchange ratio of shares of the two companies and posed the question as to what method should be adopted for arriving at a proper exchange ratio. Observing that there are three well accepted methods to arrive .....

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which can be appropriately left to the consideration of experts in the field of accountancy. In Bengal Tea Industries Ltd. & Ors. Vs. Union of India (Company Appeal No.418/1986 decided on 25.08.1987), a Division Bench of the Calcutta High Court held that in a scheme of amalgamation of two companies, it is not necessary in law to call for a meeting of the creditors and obtain their views on the scheme. Regarding objection raised by the Regional Director, Govt. of India that the exchange ratio .....

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mately a matter of expert opinion. There are more than one method of valuation of shares and valuation would vary if different methods are adopted. While observing that the shares are the properties of the shareholders and they are the ultimate and the best judge of the value which they would put on their shares, it was however stated that in the best interest of all concerned and to prevent controversy, a proper basis of valuation should be recorded. The Division Bench of the Calcutta High Cour .....

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interfere in the matter at the instance of the Regional Director. In Maknam Investments Ltd. & Ors., In Re 87 Company Cases 689, a Single Bench of the Calcutta High Court held that the Court is not supposed to set its seal upon a decision of the majority if it finds that the majority vote was not obtained honestly or that any financial or arithmetical jugglery was perpetrated. However, a note of caution was sounded by saying that the scheme is not to be scrutinized by the Court with the eye .....

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the other, the only inference that can be drawn prima facie, is that they have no objection to the scheme being approved. Similar is the view of the Delhi High Court in CRB Capital Markets Ltd. Vs. Reserve Bank of India, 135 Company Cases 86 (Del). In Meghal Homes (P) Ltd. Vs. Shree Niwas Girni KK Samiti & Ors., reported in (2007) 7 SCC 753, the Hon ble Supreme Court referred to the decision in Miheer H. Mafatlal (Supra) and held that while the Court will not sit in appeal over the commercia .....

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l Director of Company Affairs & Anr., reported in AIR 2009 SC 1278, the Hon ble Supreme Court held that section 391 (1) is not a sign-post but a check-post whereat it is the duty of the Court to examine the genuineness and the bonafides of the scheme for itself. While conceding that a scheme sanctioned by majority will remain binding on a dissenting minority, even though they had not consented to such a scheme and to that extent absence of their consent will have no effect on the scheme, non .....

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has been explained by stating that the Transferee Company is an established company operating seven tea gardens in Upper Assam, producing high quality black tea. It has three processing units with an annual capacity of 8 million kgs of black tea. However, the Transferee Company has its own leaf production of 3.4 million kgs only. There is thus shortfall of 4.6 million kgs to achieve optimum utilization of production capacity. For this purpose, the Transferee Company has to bring in bought tea le .....

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ate on which certified copy of the order of the High Court sanctioning the scheme is filed by the companies with the Registrar of Companies. As per the scheme, with effect from the date on which the scheme would come into force the entire business and whole of the undertaking of the Transferor Company, including all its assets and liabilities shall stand transferred and vested in the Transferee Company without any further act or deed and all debts, liabilities, contingent liabilities, duties and .....

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or interruption in their service and on the terms and conditions of their employment not less favourable than those subsisting with reference to the Transferor Company as on the said date. The scheme has been made conditional upon consent of the Central Government as may be necessary under the law, approval by the requisite majority of the members/creditors of both the Companies and sanction of the High Court under sections 391 and 394 of the Act. The scheme, as presented before the Court, appe .....

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ll this stage, the Court sees no hindrance or impediment in the sanction of the scheme. The only jarring clause of the scheme pertains to the issue of allotment of shares by the Transferee Company. As per Clause 4 (i) of Part-II of the scheme, 786 fully paid equity share of ₹ 10.00 each of the Transferee Company shall be issued and allotted for every one equity share of ₹ 1000.00 each held in the Transferor Company. In other words, for every thousand rupees value of shares in the Tra .....

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d exchange ratio proposed and in appropriate cases may lift the veil to see the real purpose. As already discussed above, the Company Court exercises jurisdiction which is founded on fairness. While exercising its jurisdiction, the Court is competent to examine the bonafides or fairness of the valuation of shares or the exchange ratio and whether the proposal conforms to commercial morality. The Calcutta High Court in Bengal Tea Industries Ltd. (Supra) held that when an objection is raised by a .....

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n Lever Employees Union (Supra) held that though there are three well accepted methods to arrive at the fair value of the shares i.e., i) yield method, ii) the asset value method and iii) market value method, the usual rule is that shares of the going concern must be taken at quoted market value. In this case, while the authorized share capital of the Transferor Company is ₹ 6,00,000.00 having 600 equity shares of ₹ 1,000.00 each, the authorized share capital of the Transferee Compan .....

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in so far the Transferor Company is concerned is ₹ 13,27,60,585.00. On the other hand, the excess of assets over liabilities in respect of the Transferee Company is ₹ 49,80,70,597.00. As per the Auditors Report of the Transferor Company dated 11.08.2012, the accumulated loss of the company was more than 50% of its net worth though the Company had earned cash profit during the financial year under audit. As per the Directors Report also dated 11.08.2012 that was the first year of oper .....

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ment and were reportedly destroyed by vandals. The operations of the Transferor Company were in lock out since 2005-2006 and accumulated loss resulted from the same. Transferor Company made cash profit only in the year under consideration and the management was hopeful that the accumulated loss would be written off within a reasonable period of time. It is stated in the company petition that prior to taking over of the Transferor Company by Rockland Realty Pvt. Ltd., a petition for voluntary liq .....

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lock out for long period with accumulated losses with petition filed in the High Court for voluntary liquidation perhaps cannot be valued in the manner projected in the scheme i.e. for every ₹ 1,000.00 value of shares in the Transferor Company, a shareholder in the Transferor Company would get ₹ 7,860.00 value of shares in the Transferee Company. When objections have been raised by the Objector and by the Regional Director about the exchange ratio, the explanation given by the petit .....

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Merchant Banker. I am afraid the explanation furnished by the petitioners do not inspire the confidence of the Court. Nothing has been placed on record beyond what has been stated above. No material has been disclosed either in the petition or in the affidavits as to how the particular exchange ratio has been worked out. While from the stand point of the commercial strength of the two companies, the exchange ratio does not appear to be sound, the same can also be examined in the light of the rec .....

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whom the Objector is at loggerheads. From the pleadings and the large volume of documents placed before the Court, the following facts could be culled out. At one point of time, Objector was a whole time Director of the Transferee Company. It appears that disputes, and differences, cropt up between the Objector and her father late Hemendra Prasad Barooah, who was the driving force behind the Transferee Company. She was removed from the Board of Directors of the Transferee Company on 19.09.2011. .....

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f the Act. In the meanwhile, the scheme was proposed and it was decided by the Transferee Company to approve the scheme. Also Articles of Association of the Transferee Company was altered which the Objector claims is to her detriment. Hemendra Prasad Barooah also filed a civil suit in the Court of Civil Judge, Jorhat being TS No.41/2012 wherein Objector has been made the principal defendant. The said suit pertains to the block of 8,61,981 shares jointly held in the name of Hemendra Prasad Barooa .....

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n passed in the said civil suit restraining payment of dividend to the Objector on account of the said block of shares and further restraining the Objector from exercising her voting rights in respect of the said block of shares as well as from alienating the said shares. On the other hand, Objector has filed Company Petition No.186/2013 before the Company Law Board, Kolkata under sections 397 and 398 of the Act alleging mismanagement and oppression by the present management of the Transferee Co .....

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vis the Transferee Company on the other hand that the exchange ratio presented before the Court does not appear to be just and fair. A conjoint and careful reading of sections 391 and 394A of the Act would indicate that the Registrar of Companies as well as the Central Govt. have a role to play in the case of amalgamation or merger of two companies, more so when one of the companies to the amalgamation or merger had earlier sought for voluntary liquidation. Since it is a case of valuation of the .....

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