SHINGHAL, J.—These two petitions have been filed under sec.391 and 394 of the Companies Act (1 of 1956), and as they relate to a scheme for the amalgamation of the two companies, they are being dealt with together. The Cotton Agents (Rajasthan) Limited, hereinafter called the transfer or company, and Shree Vijay Laxmi Trading Company Limited, hereinafter called the transferee company, were both private companies at the time of their registration. They however became public companies by virtue of sec. 43 A of the Companies Act. Both they companies have a share capital of Rs. 5,000/- each, with shares of Rs. 100/- each. In the case of the transferor company, the shares have been paid to the extent of Rs. 50/- each, so that its subscribed capital is Rs. 2\ lakhs. The shares of the transferee company have been fully paid up and its subscribed capital is therefore Rs. 5 lakhs. The articles of association of both the companies prohibit an invitation to the public to subscribe to any shares or debentures or debenture stocks of the companies and they also prohibit the transfer of the shares to a person who is not a member so long as any member or any person selected by the directors, as one who should be admitted to the membership of the company, is willing to purchase them. There is of course no such prohibition for the transfer of shares by a member to his family. Both the companies have been carrying on their business, and their balance-sheets have been placed on the record. It also appears that the nature of the business of the two companies is not dissimilar. It has been urged in this court that both the companies deal in shares and securities and they are mainly financiers and investors. 2. As has been stated, both the companies have prayed for their amalgamation under a scheme of amalgamation (Ex.2). Under it, all the properties, rights and powers of the transferor company are to be transferred to and vest in the transferee company. So also, all the liabilities and duties of the transferor company are to be transferred to the transferee company. The scheme provides further that the transferee company shall allot to every member or nominee or nominees of every member of the transferor company who shall require it so to do, 2 fully paid up equity shares of Rs. So also, all the liabilities and duties of the transferor company are to be transferred to the transferee company. The scheme provides further that the transferee company shall allot to every member or nominee or nominees of every member of the transferor company who shall require it so to do, 2 fully paid up equity shares of Rs. 100/- each for every 3 equity shares of Rs. 100/- each paid up to Rs. 50/- per share held by him. The shares so allotted are to rank pari passu with the existing equity shares of the transferee company. While presenting this scheme of amalgamation, the petitioners have made it clear that there are no debenture holders of the two companies and that there are no creditors of the transferor company. It has also been stated that there are a few creditors of the transferee company, but they have no objection to the scheme of amalgamation. Lists of share-holders of the two companies have been filed. There are only 6 share-holders of the transferor company, while there are 8 share-holders of the transferee company. , 3. On the presentation of the petitions, this court made a detailed order for the holding of meetings of the members of the two companies directing, inter alia, that notices of the meetings shall be given personally to all share-holders and advertised in the newspapers Notices were also ordered to be given to the Registrar of Companies and the Central Government. The chairman of the meetings has made his reports. It appears that 5 out of 6 share-holders of the transferor company representing 4,200 shares, of the value of Rs.2,10,000/- attended the meeting. Four share-holders representing 850 shares of the value of Rs. 85,000/- attended the meeting of the transferee company. Both the meetings have unanimously approved the scheme of amalgamation. On receipt of the chairmans report, the petition was ordered to be advertised for hearing in this court and notices were also given to the Official Liquidator and the Central Government. No objection has been filed by any shareholder or creditor. It may also be mentioned that the Official Liquidator has, on scrutiny of the books and papers of the company, made a report under the second proviso to sub-sec. (1) of sec. No objection has been filed by any shareholder or creditor. It may also be mentioned that the Official Liquidator has, on scrutiny of the books and papers of the company, made a report under the second proviso to sub-sec. (1) of sec. 394 that the affairs of the transferor company have not been conducted in a manner prejudicial to the interest of its members or the public. 4. The Central Government however made a representation on August 30, 1967 to the effect that the scheme for the allotment of the shares in the transferee company was unduly favourable to the members of the transferor company because the fair price of a share of the transferor company was Rs. 25/- per share of the face value of Rs. 100/- paid up to the extent of Rs. 50/- while it was Rs. 60/- in the case of a fully paid up share of the transferee company of the face value of Rs. 100/-. It has therefore been represented that the proper rate of exchange should be 5 shares of the transferee company for 12 shares of the transferor company. 5. The learned counsel for the petitioners filed a representation on November 8,1967, challenging the computation of the values of the shares by the Central Government and praying that it may be asked to disclose the basis of its calculation. On a further notice from the Court, the Central Government has made an additional representation on January 22, 1968, pointing out the reasons for its representation that the method of calculation adopted by the petitioners was not correct and giving the basis on which the Government had suggested the exchange ratio of the shares of the two companies in its earlier representation. It may be mentioned that the Central Government has further pointed out that even according to the break-up value method of computation adopted by the petitioner-companies a sum of Rs. 50,670/- has to be deducted from the value of the assets of the transferor company since the value of its quoted investments has gone down by that amount. It may be mentioned that the Central Government has further pointed out that even according to the break-up value method of computation adopted by the petitioner-companies a sum of Rs. 50,670/- has to be deducted from the value of the assets of the transferor company since the value of its quoted investments has gone down by that amount. The Registrar of Companies appearing on behalf of the Central Government has cited In re The Electric Power Act and Amendments Thereto : In re West Canadian Hydro Electric Corp Ltd. (1), for the observation at page 357 that under the English and Canadian law, the proper method of valuing a commercial enterprise is upon a commercial basis, which would require, among other things, a consideration of its demonstrated and prospective ability to make profits, to which should be added any special value the property has to the owner. 6. The learned counsel for the petitioners has admitted that the deduction of Rs. 50,670/- proposed by the Central Government is justified because of a fall in the value of the quoted investments of the transferor company, but otherwise there is no agreement between the learned counsel for the petitioners and the Registrar of Companies appearing on behalf of the Central Government. It is not in dispute, however, that the deduction of Rs. 50,670/- will not materially alter the share for-share value worked out by the petitioners, 7. In order to appreciate the controversy, it may be mentioned that while the petitioner companies have adopted the break-up value of the shares as the basis for determining the exchange ratio of the shares and have based their calculation on the balance-sheet for the period ended December 31, 1965, as also the average of the balance sheets of the preceding three years, the Central Government has suggested that such a method of calculation is not proper or satisfactory because the buyers or sellers in the open market are more directly influenced by the apparent earning power of the shares than by calculation with reference to the net assets of a company. It has therefore been proposed that while the value of the assets of the companies may be regarded as generally relevant, such value should not be made the sole or paramount basis of calculation and that the earning power of the companies and the degree of safety of their capital assets should also be taken into consideration. On this basis, after deducting the amount of Rs. 50,670/- referred to above, the Central Government has stated that while Rs. 25/- would be the fair value of a share of the transferror company, Rs. 60/- would be the fair value of a share of the transferee company. Details of the calculation have been shown in Annexure A filed with the additional representation of the Central Government. As has been stated, the petitioners have relied on the balance-sheets for the purpose of determining the net worth of each share. It has further been pointed out that while almost all the funds of the transferor company have been invested in quoted shares and that investment is more safe and sound, the investment of the funds of the transferee company is in un-quoted shares which yield no dividends or in money-lending transactions which are not equally safe. It has also been pointed out that the low yield on the investments of the transferor company is due to recession, which is a temporary phase and that the suggestion of the Central Government for valuation of the shares on the basis of their earning power will not be suitable. 8. It would thus appear that the dispute before me is regarding the method of valuation of the shares of two companies, and the only question for decision is whether I should with-hold my sanction to the scheme of amalgamation on the ground that the proposed valuation is unfair. 9. While providing for the requirement the courts sanction in respect of a scheme of amalgamation referred to in sec. 391 and 394 of the Companies Act, the Legislature has not thought it necessary to indicate the grounds on which the court should give or withhold the sanction. 9. While providing for the requirement the courts sanction in respect of a scheme of amalgamation referred to in sec. 391 and 394 of the Companies Act, the Legislature has not thought it necessary to indicate the grounds on which the court should give or withhold the sanction. It cannot however be doubted or disputed that in such a case the method of valuation should be the one most calculated to place a fair value on the shares For the same reason, it is also necessary that a common yard-stick should be adopted for the valuation of the shares of the two companies or, in other words, that the same factors should be taken into account in assessing the two sets of shares. 10. Valuations shares in an amalgamation or share-for-share take-over is made on a consideration of some or all of a number of relevant factors. Thus, the stock exchange prices of the shares of the two companies, the dividends paid on the shares, the relevant growth prospects of the companies, the ratio of distributable earnings to dividends paid during the year, the values of the net assets of the two companies etc. are factors on which the valuation is often rested. The answer to the question whether some or all of these factors can be applied in the case of a given scheme of amalgamation, depends on the circumstances of each case. For instance, the usual and the convenient factor of the stock exchange prices of the shares of the companies may not be available for consideration in a case like the present, as it is admitted that the shares of the two petitioner-companies are not, and have not been, quoted at the stock exchange. The other difficulty is that, as has been mentioned, while almost the whole of the investment of the transferor company is in quoted shares of which the stock exchange prices are available, the transferee company has no such assets as it has been functioning mainly as a financier to private parties. It is true that the transferee company has shown a better yield, but its earning capacity may not be safe criterion of the valuation of its shares because there is always an element of risk in the case of advances to private parties. It is true that the transferee company has shown a better yield, but its earning capacity may not be safe criterion of the valuation of its shares because there is always an element of risk in the case of advances to private parties. The transferor company is not exposed to such a risk and its investment is therefore more safe, though less profitable. As regards the relative growth prospects of the two companies, nothing has been stated by the petitioners or the Central Government, and it seems that this factor cannot also be availed of in the present case. 11. It would thus appear that quite a few of the usual factors for assessing the relative values of the shares of the companies are not helpful for settling the present controversy. There is also a great deal of dispute regarding the ratio of distributable earnings to dividends paid during the prior years, and the weight to be attached to the value of the net assets. But I feel that it is not really necessary for me t6 take any serious notice of the controversy, for I am inclined to think that even if it is assumed that the valuation proposed in the scheme is open to criticism, that by itself will not necessarily justify the conclusion that should withhold my sanction in the circumstances of the present case on the ground that the valuation is unfair. The reason is that in such cases it is for the objector to show why the court should exercise its discretion to reject the scheme; and this is quite a heavy onus. Such a view was taken by Maugham J., In re Hoare & Ltd. (2), and it has been approved and followed in several other cases. While rejecting the argument regarding expropriation, the learned Judge made the following well known observations on the question of the fairness of the scheme for the transfer of shares: "The other conclusion I draw is this, that again prima facie the court ought to regard the scheme as a fair one inasmuch as it seems to me impossible to suppose that the court, in the absence of very strong grounds, is to be entitled to set up its own view of the fairness of the scheme in opposition to so very large a majority of the shareholders who are concerned. Accordingly, without expressing a final opinion on the matter, because there may be special circumstances in special cases, I am unable to see that I have any right to order otherwise in such a case as I have before me, unless it is affirmatively established that, notwithstanding the views of a very large majority of shareholders, the scheme is unfare." This view was followed In re Evertite Locknuts (1938) Ltd. (3), and it was also accepted by Somervell L.J. in the other well known case of In re Press Gaps, Ltd. (4), where the criterion of Maugham J., was accepted and followed for there was nothing to doubt the bona fides of the recommendation of the directors. Again in In re Sussex Brick Co. Ltd. (5), the view of Maugham J., was quoted at length and followed by Vaisey, J. If I may say so with all humility, these decisions are based on a sound reasoning and I have no hesitation in following them myself. 12. When therefore it appears that in spite of a personal notice to all the shareholders, and a general notice to all concerned, the scheme of amalgamation has been unanimously approved by the meetings of the two companies, and no objection at all has been filed by any of the share holders or creditors, the court should regard the scheme and the valuation of shares proposed in it as fair to all concerned. It is also a fact that no allegation of fraud or undue influence has been made and there is no reason to doubt the bona fides of the recommendation made by the two companies. So also, there is no allegation that the books of account of the companies are unreliable, or that different or discriminating methods of valuation have been adopted in respect of the shares of the two companies. To add to all this is the fact that both the companies practically function under a restricted membership and have a very limited number of shareholders. In such a closely knit membership, the members have opportunities to know all about the affairs of their respective companies and it is a matter of much significance that even then they have not challenged the valuation of the shares proposed in the scheme and have, on the other hand, approved it. I have therefore no reason to think that the valuation is unfair. I have therefore no reason to think that the valuation is unfair. In fact it appears to me good enough in all the circumstances, and I have no hesitation in according my sanction to it. A formal order may be drawn up in the prescribed form and a certified copy thereof filed with the Registrar of Companies within fourteen days. There, will be no order as to the costs.