TMI Blog1928 (5) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... three and a half crorers. Its industrial banking business had been so unprofitable that about a year before it had been given up, leaving the bank in possession of a considerable block of industrial securities largely depreciated and difficult to realise. There had been an agitation against the bank-partly patriotic-a bank built up with Indian money should be run by Indians-partly carried on by persons who had grievances, real or supposed, against the board, Amongst the disaffected was the first appellant, who, having been in the service of the bank, had had his employment terminated by the general manager without due cause, as he alleged. In consequence, so it was rightly or wrongly suggested, he adopted an attitude of hostility to the board. He had appeared at the general meeting of the shareholders on May 1, 1923, and having as he complained been then denied a bearing he instituted, with his brother, the second appellant, a suit against the bank for redress on that score-a suit which had been dismissed by Pratt J. in Juno (use 47 Bom. 915), in a judgment which gravely questioned the bona fides of the appellants in bringing it. It was stated in evidence that in July the bank was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liquidators to adopt the agreement and carry it into effect. It envisaged the increase of the nominal capital of the Central Bank to three and a half crores, so as to bring into existence shares of that bank sufficient in number for the service of the agreement. It provided for the transfer to the Central Bank of the entire undertaking of the Tata Bank, exclusive only of its uncalled capital, and here it may he observed in passing, that the assets to be transferred are expressed with a generality sufficient to include any misfeasance claims against the directors or officers of the Tata Bank, if any such there were. 5. Part of the consideration for the transfer was to be the discharge by the Central Bank of all the debts, liabilities and engagements of the Tata Bank. Here again, it may be observed that while these liabilities were by a separate clause to include all claims against the Tata Bank for compensation in respect of loss of office or employment, the directors of the Tata Bank were expressly excepted from the operation of this provision. A further part of the consideration was to be the payment of the costs and expenses incidental to the winding-up of the Tata Bank and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he circular then set forth the joint certificate of Messrs. Ferguson and Messrs. Billimoria as follow:- We have examined the accounts of the Central Bank of India Ltd. and of the Tata Industrial Bank Ltd. us at June 30, 1923, with a view to ascertaining their respective financial positions for the purpose of amalgamation. We are of opinion that a fair and equitable basis of amalgamation judged from our examination and in the light of the information and explanation we have received is that two shares of the Tata Industrial Bank are worth one share of the Central Bank. 9. The result of the amalgamation, it Was then pointed out, would be that the uncalled liability of ₹ 105, which existed on two shares in the Tata Bank, would be exchanged for an uncalled or liability of ₹ 25 in the Central Bank. The circular next referred to the conditional agreement of July 5, 1923, and Bank offered it for inspection at the bank's registered office; and it announced that if the proposed amalgamation were sanctioned it would be necessary for the Tata Bank to go into liquidation and for the liquidators to be authorized to adopt the agreement. The circular closed with a full refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kaikhusru Nusserwanji Chandabhoy of Messrs. Cbandabhoy Jaasnbhoy, Associated Accountants, and Shapurji Nowroji Quzdar the appointed liquidators in the winding up for the purpose of adopting the agreement of Bank July 5, 1923, and carrying the same into effect, with such, if any, modifications the Liquidators may think expedient, under the supervision of the Directors of the Central Bank of India Limited, and the Tata Industrial Bank Limited, the powers of the last mentioned of whom shall continue for the purpose of carrying the said agreement into effect and that the remuneration of the liquidators for their services be the sum of rupees five thousand. 13. Their Lordships have set forth now this resolution at length. Upon its terms they will have some comment to make hereafter. 14. On August 7, 1023, the conditional agreement of July 5, 1923, was by a supplemental agreement duly confirmed and made binding on both banks and the amalgamation so resolved upon has in fact been completely carried out and the Central Bank has been possessed of and has been carrying on the combined business as from July 1, 1923. 15. Such being its history in broad outline, their Lordships have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat on December 14, 1923, the suit was dismissed by the learned trial Judge, Pratt J. That dismissal was, on appeal, confirmed by order of the appellate Court on July 22, 1924. It is from that order that the present appeal is brought. 18. The second appellant did not appear before the Board. The appeal was argued in great detail by the first appellant in person alone, and it is his case only which now calls for consideration. 19. It is the desire of their Lordships to deal, seriatim, with such of the many points raised by that appellant as survive for discussion. It is convenient, however, at once to advert to the extremely special character of the suit. In it the individual rights of the plaintiffs as shareholders in the Tata Bank are alone being asserted. It may, indeed, be doubted whether there are any other members of that bank who are not now bound by the scheme either by acceptance or by dissent, Certain it is, that of the two shareholders called as witnesses by the plaintiffs one of them had accepted the scheme and the other had duly dissented there from. The plaintiff's' competent claims were therefore narrowly circumscribed. They had, to be valid, to be in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ient information as to its real effect was not given to the shareholders by the directors' circular and notice of July 5, 1923. Here the fact that the action is personal to the appellant is unfortunate for him. He at least knew before the first meeting everything about the scheme that was to be known. Indeed, on July 14, 1923, he addressed to the shareholders of the Tata Bank the open letter already referred to occupying ten pages of the Appendix and discussing the whole scheme with a particularity of detail which has hardly since been amplified. No possible complaint of the notice or circular on the ground of insufficiency is, therefore, open to him. But their Lordships do not desire it to be supposed that in their judgment either the notice or the circular of July 5, was in any way questionable. Elaborate detail in such a public circular, while it would not be informing to the Tata Bank shareholders, might well be detrimental to the interests of their undertaking, which was still to continue, Doubtless it was for this reason, possibly it may, be at the instance of the directors of the Central Bank, that the Lord circular was focussed upon the accountants' certificate, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld acquire in the like proportion an interest in the original assets of the Central Bank. In their Lordships' judgment the amalgamation on the basis on which it was rested could not, with justice, have taken any other form than in this respect it did take. The provision, on the accepted figures, was eminently fair, and it was open to no technical objection. 23. The next points taken by the appellant related to the proceedings at the meeting of July 19, 1923. In the Courts in India he had objected that two amendments then moved by him had been ruled out of order by the Chairman as incompetent. This point he did not raise before the Board, and the incident is only now relevant by reason of the fact that the appellant's first amendment was a reasoned statement against the proposed amalgamation and was in fact read in extenso to the meeting. This fact is of importance with reference to the appellant's remaining complaint that the shareholders present refused to hear him when he sought to address them and set forth his reasons for opposition to the resolution for amalgamation. 24. The situation at this stage cannot, their Lordships think, be judged accurately unless t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the directors they desired to inspect the books and inquire into the transactions of the bank, Their Lordships think it right to say that a form of appointment which was relied upon even as partly instructing such a result is much to be deprecated. They hope that it has not been generally followed in India; and they think that the form should never again be used. 27. So great was the importance at one time attached in England to the consideration that arrangements of a company's affairs should not when made effective preclude all proper inquiry into the past that the Court, in cases where its sanction to the arrangement was necessary, used to insist, as a condition of its sanction, on the insertion in the scheme of provisions for meeting the expense of any such inquiry. That practice no longer obtains and where, as in a scheme like the present, the amalgamation becomes effective without judicial sanction, no opportunity of imposing any such condition is given to the Court. But the counterpart of that old practice, as applied to amalgamations like this is, that the Court, when, as in this case, it has the opportunity of doing so, will always cause it to be clearly underst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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