M. F. SALDANHA, J. ( 1 ) THESE petitions concern the proposed amalgamation of three companies by the name of veerarajendra Estates Limited, Charagni Limited, Coffee Lands Limited with Consolidated coffee Limited. The proposed scheme has been submitted to the court for approval or sanction and the reasons for the proposed amalgamation have also been set out. Broadly speaking, it was contended that the nature of the business activities carried on by the three transferor companies and the transferee-company are essentially similar and for the reasons set out in the proposed scheme, the contention is that the proposed amalgamation is in order to bring about a beneficial result by ultimately merging the business activities which would be mutually advantageous. The necessary notice had been issued and the Regional Director has raised certain objections which I shall deal with in the course of the order. There has been a contest of some consequence particularly with regard to one aspect of the case. One of the shareholders of the company, coffee Lands Limited, which happens to be among the transferor-companies by the name of arun Kumar Agrawal has filed Company Application No. 96 of 1999 along with Company application No. 98 of 1999 wherein he has requested that the delay in filing the earlier company application be condoned. Company Application No. 98 of 1999 is allowed and the delay is condoned because the petitioners' learned counsel himself rightly submitted that it would be far more desirable if the court were to consider the objections on merits and deal with them. The substratum of the objections that have been canvassed by Agrawal centres around the proposed allotment of shares by the transferee-company in the ratio of 1 : 1. According to Agrawal, Coffee lands Limited is a relatively smaller company and he seeks to say that both the intrinsic value of the shares as also their potential not to mention the earnings thereon both present and in the projected future have not been properly evaluated and it is his case that assuming the scheme is to be approved, it can only be done provided Agrawal and other similar shareholders of Coffee lands Limited are allotted two shares for every one of the shares held by them. I need to also mention that the applicant has made very sweeping allegations against the two firms of chartered accountants to whom the case was referred for purposes of evaluation and doing the computation regarding the share valuation and the recommendation with regard to the ratio of exchange or reallotment and the applicant has gone to the extent of stating that since these firms/companies are regularly retained to do the audit of the Tata companies to which group Consolidated Coffee belongs, that they have blindly and wrongly recommended the ratio of 1 : 1 only in order to fall in line with whatever their clients wanted to do. There is a subsidiary charge advanced by agrawal wherein he contends that in the overall context, the number of objectors, namely, he and eight other shareholders totally hold a very small percentage of the overall shares that are being considered and he projects the grievance that the rights of that entire class of minority shareholders, according to him, have been virtually brushed aside or bulldozed and he has made a strong plea to the court that this should not be permitted because this court is required to take into consideration the separate interests of all categories of shareholders who are before the court and the relief asked for by him is that the valuation aspect should be referred to an independent authority and that the scheme in its present form should not be sanctioned. The petitioners have seriously disputed the correctness of these charges and they have contended that an independent and correct evaluation has been done by professionals of sufficient standing and experience and that there is absolutely no warrant to uphold the allegations made that the procedure has not been correctly followed or for that matter that any form of injustice or prejudice has been caused to agrawal and the other shareholders whom he defines as minority shareholders. The other limb of the argument that has been put forward in response to the application is that the relief asked for by the applicant, Agrawal, namely, that the case be referred to the Securities and Exchange board of India (SEBI) is unheard of and that such an application is virtually unprecedented. The other limb of the argument that has been put forward in response to the application is that the relief asked for by the applicant, Agrawal, namely, that the case be referred to the Securities and Exchange board of India (SEBI) is unheard of and that such an application is virtually unprecedented. More importantly, relying on the settled legal position, the petitioners' learned counsel has submitted that the applicant has only levelled certain accusations and charges and stopped at that but that he has failed to substantiate those charges and furthermore that it was open to the applicant himself to have satisfied this court from whatever basic material he wanted to rely on to the contrary, assuming he was capable of doing so, that the formula advocated by him is superior or professionally more correct than the one adopted by the petitioner in which case alone, it may have been open to him to ask the court to refuse to rely on the recommendations of the two professional firms of chartered accountants and ANZ Grindlays Investment Division which company in turn has also supported the recommendations from the chartered accountants. The situation that has arisen in this group of petitions is one that could and does arise before the company courts from time to time and even though the various principles of law on the basis of which such situations are required to be dealt with are more or less well crystallised, to my mind, it would be necessary to briefly evaluate the points of dispute and record the findings of this court with regard to the present set of cases as also lay down the broad guidelines that would be applicable in similar situations. ( 2 ) IT is relevant to point out that the amalgamation scheme totally concerns the merger of four companies with Consolidated Coffee Limited but the registered office of the fourth one being within the jurisdiction of the Andhra Pradesh High Court, that petition is pending before the andhra Pradesh High Court. ( 2 ) IT is relevant to point out that the amalgamation scheme totally concerns the merger of four companies with Consolidated Coffee Limited but the registered office of the fourth one being within the jurisdiction of the Andhra Pradesh High Court, that petition is pending before the andhra Pradesh High Court. ( 3 ) UNDER the scheme of the Companies Act, the basic reason why the sanction and approval of the High Court is necessary even though there are supervisory authorities designated by the government is because the Legislature in its wisdom has prescribed that the High Court should apply its mind to such schemes and grant formal approval after considering the aspects of fairness and appropriateness, There are many aspects including the issue of overriding public interest which sometimes need to be considered and invariably, the court not only hears the petitioners and any other party who may want to oppose or support the scheme and the Regional director of the Company Law Board before according sanction. I need to mention here that as far as the present scheme is concerned, the companies are carrying on more or less similar business activities and it does appear that the managements of the companies and the shareholders who had occasion to consider the terms of the scheme were generally of the view that it would work towards the overall benefit of the companies that are involved and, consequently, the area of dispute as far as this head is concerned is almost non-existent. I have, however, independently appraised the overall merits and the intent of the scheme and to my mind, there is no ground on which this court should withhold sanction as far as the general business areas are concerned. ( 4 ) THE second aspect of the case that arises for determination is as to whether the requisite procedures have been complied with. The petitioners have filed before the court no objection from the secured creditors and as far as the shareholders are concerned, the requisite meeting was called. The reports of the chairman indicate that the shareholders have approved of the scheme unanimously, as far as the first two companies are concerned and as far as Coffee Lands is concerned, the voting was 6,48,399 votes in favour and 30,190 against. The reports of the chairman indicate that the shareholders have approved of the scheme unanimously, as far as the first two companies are concerned and as far as Coffee Lands is concerned, the voting was 6,48,399 votes in favour and 30,190 against. It was pointed out to me that there would always be some disapprovals particularly in large corporate bodies and that one of the considerations which the court would go by is the question as to whether the overwhelming majority of shareholders have approved of the scheme or whether there has been a relatively large vote against. I do concede that normally where a vote is taken, the verdict proceeds on the basis of majority but this need not always be the barometer because the very argument that has been canvassed before this court is that if in a given situation the majority of shareholders approve of the scheme, this should not be the ground on which the interests of the minority shareholders should be disregarded. There is considerable substance in this contention but the law only requires that the court should apply its mind to the grounds on which the dissent or decision has been put forward and unless those grounds are cogent and valid, it is inevitable that the objection will have to be overruled. As far as the present set of cases are concerned, one of the requirements which the Companies Act postulates is that there has got to be statutory compliance. As far as this aspect goes I do find that in the cases before me, all the requisite procedures have been duly and properly complied with and that there is no technical bar to the sanction of the scheme. ( 5 ) MR. Raghavan, learned counsel who appears on behalf of the petitioners, has taken me through the broad features of the scheme and he has pointed out that one of the overriding considerations which the court would be guided by is the question as to whether the scheme has been formulated for the greater benefit of the whole class of shareholders. I shall deal with the aspect of share valuation and the exchange ratio separately because that is the broader exchange area that is in dispute but the purpose of using this expression is in so far as learned counsel attempted to demonstrate that irrespective of the methods or the formula that Mr. I shall deal with the aspect of share valuation and the exchange ratio separately because that is the broader exchange area that is in dispute but the purpose of using this expression is in so far as learned counsel attempted to demonstrate that irrespective of the methods or the formula that Mr. Agrawal desires to put forward, even as far as the shareholders of Coffee Lands Limited are concerned, this scheme works to their benefit and not to their detriment. Having regard to the status of Consolidated coffee Limited, its track record and its assets, I have no hesitation in upholding this argument. ( 6 ) COMING to the main head of controversy, Mr. Raghavan demonstrated to me that on the question of comparative valuation of the shares and for purposes of obtaining requisite guidance and recommendations, the issue was referred to A. F. Ferguson and Company, chartered accountants, and to N. M. Ranji and Company, chartered accountants, and he has produced before me the joint report that has been submitted by these two firms. That the two firms in question are relatively old and established and that they are regarded as firms of considerable repute in the profession is required to be emphasised because Agrawal in his application has alleged that these firms regularly do the auditing of the various large corporate bodies including the Tata group of companies and it is his charge that since the professionals obviously benefit by rendering their services to these companies, they have obliged them by giving a favourable report. Before levelling accusations of this type to my mind, it would have been necessary for the applicant-Agrawal to demonstrate that the basis on which the valuation has been done was incorrect or that the results projected as a result of the evaluation are untenable. What is even more distressing is the fact that after a detailed written application and after generating considerable heat in the court room, the worthy gentleman neither engaged an advocate to represent himself nor did he extend to the court the courtesy of appearing and pointing out whatever his grievances were. The order sheet will indicate that because the Regional Director asked for time, the court despite opposition from the petitioners granted reasonable time to that party and fixed the date of hearing after a sufficient gap on a date that was indicated to all the parties. Mr. The order sheet will indicate that because the Regional Director asked for time, the court despite opposition from the petitioners granted reasonable time to that party and fixed the date of hearing after a sufficient gap on a date that was indicated to all the parties. Mr. Agrawal was present in the court room when this date was indicated and it was also made clear to him and to the learned advocates that the court would hear the parties or their learned advocates on that date and that no adjournment would be granted. Despite this, Mr. Agrawal was absent when the hearing started. Significantly enough, it is not as though he was unaware of the date of hearing because he had requested a learned advocate to ask for an adjournment on his behalf on the ground that he had gone away to Delh. Mr. Agrawal is anything but a pauper and I was rather surprised when he appeared in person though it is obvious to me from the application filed that he has the assistance of advocates behind the scenes and despite this, he did not engage an advocate to represent him nor did he appear before the court and argue the case though he was quite vociferous on the previous date of hearing. I am recording these aspects of the matter for the limited purpose of indicating that it does appear to me that the sole purpose of asking for the adjournment was only in order to sabotage the hearing and for no other purpose. I am reinforced in this view because learned counsel who argued the matter before me did take some time and the hearing was spread over a few days after which the case was fixed for orders and even up to the present point of time, Agrawal has not made his appearance. This would be some indication of the seriousness of the objection canvassed. ( 7 ) REGARDLESS of this position, I need to deal with the charge that has been levelled against the two professionals. Mr. Raghavan submitted that the court should evaluate the report which I have done, and ascertain from the report as to whether the well defined principles have been followed by the professionals while doing the evaluation. ( 7 ) REGARDLESS of this position, I need to deal with the charge that has been levelled against the two professionals. Mr. Raghavan submitted that the court should evaluate the report which I have done, and ascertain from the report as to whether the well defined principles have been followed by the professionals while doing the evaluation. The report does indicate that the professionals had taken into consideration everything from the history of the respective companies to the nature of business done by them to their working results, their assets and all other relevant factors and on the basis of the principles that are now well accepted, they have put forward the recommendation that a fair exchange rate as far as the shares are concerned would be 1 : 1. Thereafter, the issue was referred to A. N. Z. Investment Bank and we have on record a report from them dated August 7, 1998, whereby they have reviewed the valuation report submitted by the two firms of chartered accountants and it does appear that they have independently examined the issue on the basis of several queries addressed to the valuers and the representatives of the companies and their conclusion is that the share exchange recommended by the valuers is fair to the shareholders of Consolidated Coffee Limited and Coffee Lands limited. All this material was available to the shareholders. It has been referred to in the explanatory statement and, in my considered view, the respective shareholders thereby had more than a full opportunity of acquainting themselves with the reasons for the proposed exchange of shares in the ratio of 1 : 1. It is clear to me that this has not been done either arbitrarily nor has it been done on a cursory basis but the reference was made to as many as three of the best brains in the profession who have recommended this particular ratio. The reason for my having set out this procedure elaborately is in order to indicate that on the one hand, we have a careful scientific and professional consideration of all the crucial aspects of the evaluation whereas on the other hand, we have a bald charge levelled by Agrawal that the evaluation has been done by firms which are obligated to the petitioners and that the court must discard it. It is very necessary for me to not only deprecate the manner in which the allegations have been levelled, as also the behaviour of the person who has levelled these allegations and his behaviour about which I have referred to earlier, but more importantly for me to indicate that as far as the appraisal and the conclusions are concerned, even after a minute scrutiny as far as this aspect of the case is concerned, they are virtually faultless. I am more than reinforced in this view because of the fact that learned counsel informed me at the Bar that in the companion petition pending before the Andhra Pradesh High court where the very objection was raised, namely, that the figures of the working usually ought to have been made part of the report, the court has heard the parties and through a detailed speaking order, overruled this objection. The main thrust of Mr. Raghavan's argument under this head was two-fold. Firstly, he submitted that the law on the point is well settled in so far as the role of the High Court is relatively restricted to the extent that it is only an approving authority. The point made by learned counsel was that as long as the statutory procedures have been complied with and as long as there is enough material before the court to indicate that the decision is fair and correct but more importantly, as long as there is general approval from the body of shareholders, the court would normally not withhold sanction and in any event, this court is not an appellate authority unlike in other situations. ( 8 ) THE reason why learned counsel advanced the last argument is obvious in so far as even if there is opposition from some quarters as invariably happens in the corporate world, such opposition is oftentimes motivated, and merely because of this it is not essential for the court to dissect the material, approve it area by area and record conclusions in the matter of according sanction. I do concede that this generally reflects the correct position in law because the High court is only guided by the general rule of fairness and propriety and as long as the scheme passes these tests, the formal sanction will not be withheld. I do concede that this generally reflects the correct position in law because the High court is only guided by the general rule of fairness and propriety and as long as the scheme passes these tests, the formal sanction will not be withheld. ( 9 ) IN this context, learned counsel relied to a very large extent on several of the observations from the decision of the Supreme Court in Miheer H. Mafatlal v. Mafatlal Industries Ltd. 1996 VII AD (SC )260 , AIR1997 SC 506 , [1996 ]87 Compcas792 (SC ), JT1996 (8 )SC 205 , 1996 (6 )SCALE595 , (1997 )1 SCC579 , [1996 ]supp6 SCR1 , wherein the Supreme Court had the occasion to deal with the various angles relating to situations of this type and the court at page 520 (page 810 of 87 Comp Cas) of the judgment had occasion to even cull out an eight point formula. Mr. Raghavan was quick to point out that in his submissions, his clients have passed the eight-fold test. Learned counsel was not wrong in this regard. I do not need to elaborate the contents of that judgment or the principles enunciated by the Supreme court but in sum and substance, as far as the aspect of evaluation is concerned what needs to be seen is that it is not notional assessment of what the present or projected value or earning of a share is, taken in isolation as compared to the corresponding value worked out through a well-defined scientific formula but what the court is required to look into is the fact that a scheme of amalgamation is invariably a package deal or a totality of several factors that need to be viewed as a whole. The value is not be viewed in isolation and again, it is a well known fact that the methods followed for purposes of working out results, differ and like statistics figures could be twisted around to virtually support any argument. That is precisely the reason why the formula for evaluation has now been crystallised and the process is invariably entrusted to experts as in the present instance. There is nothing on record to call into question either the status or the competence of the experts to whom the valuation issue was referred except Mr. That is precisely the reason why the formula for evaluation has now been crystallised and the process is invariably entrusted to experts as in the present instance. There is nothing on record to call into question either the status or the competence of the experts to whom the valuation issue was referred except Mr. Agrawal's charge that they happen to be firms who are regularly auditing the accounts of the tata companies and, according to Mr. Agrawal, the job should have been entrusted to outsiders. He seems to imply that if the latter process were followed a different appraisal would have been done. He has even gone to the extent of praying in his application that the court should not only reject the valuation but that the court should direct the Securities and Exchange Board of India to do it. This suggestion to say the least is an absurd one because that body is not concerned with professional evaluations of this type which is a task that must necessarily be undertaken by a firm of competent chartered accountants. It is equally wrong to allege that such firms of professionals would undermine their reputation by submitting a false report merely because it is a case of their clients, when they are fully aware of the implications. The case is scrutinised by the supervisory authorities under the Companies Act and more importantly it is known that the matter comes up for approval before the High Court. What really clinches the issue is the fact that in my considered view the professionals have nothing to benefit by recommending a higher or a lower ratio and under these circumstances, the only correct way of appraising the situation would be to take cognisance of the fact that when it comes to the question of the time factor, the expediency and the expenditure involved, it is only best to entrust the simple job such as doing a calculation and evaluation of the share values to the firms who are most familiar with the working and all other relevant facts of the companies concerned rather than to outsiders who would have to start from scratch. I am of the view that the procedure followed was the correct one and the most appropriate one and that there is absolutely no infirmity as far as this aspect of the case is concerned. I am of the view that the procedure followed was the correct one and the most appropriate one and that there is absolutely no infirmity as far as this aspect of the case is concerned. ( 10 ) AS far as the minor objections that have been put forward on behalf of the Regional Director, department of Company Affairs, Southern Region, are concerned, I shall deal with them in passing because I do not consider any of them to be of consequence. It is significant that the regional Director has not disapproved of the exchange ratio of 1 : 1 as far as Coffee Lands limited and Consolidated Coffee Limited are concerned. What has been pointed out is that as a result of the merger, Consolidated Coffee Investment Limited will be holding 1,26,000 shares in consolidated Coffee Limited and that such holding will be in contravention of Section 22 of the companies Act which prohibits the holding of shares by a subsidiary company in its holding company. In response to this objection, Mr, Raghavan has pointed out to me that in an almost identical case in Himachal Telematics Ltd. and Himachal Futuristic Communications Ltd. , In re [1996] 86 Comp Gas 325 (Delhi), the Delhi High Court had occasion to observe that such an objection was inconsequential while considering a scheme of amalgamation. The court had occasion to consider the scheme of the Companies Act and to hold that the provisions that govern the scheme of amalgamation are independent provisions and that they are not limited by what is contained in Section 42 of the Companies Act in the matter of sanction of the scheme of amalgamation. Going by the principle of harmonious construction, the Delhi High Court overruled this objection. It is unnecessary for me to embark upon a detailed reasoning but suffice it to say that I am in agreement with the view canvassed by the Delhi High Court in so far as in matters of sanction of a scheme of amalgamation, this objection is liable to be overruled. The second objection is a rather strange one in so far as the Regional Director has pointed out that as far as the fourth company, Asian Coffee Limited, is concerned, since the registered office is situated in the State of Andhra Pradesh the company petition is pending before the High Court of andhra Pradesh for sanction. The second objection is a rather strange one in so far as the Regional Director has pointed out that as far as the fourth company, Asian Coffee Limited, is concerned, since the registered office is situated in the State of Andhra Pradesh the company petition is pending before the High Court of andhra Pradesh for sanction. In that case, one C. Rajendra Prasad, a minority shareholder, has filed a petition before the High Court objecting to the exchange ratio proposed to the scheme,. e. , allotment of one equity share of Rs. 10 in the transferee-company treated as fully paid up for a every six fully paid-up equity shares of Rs. 10 each held by the shareholders of Asian Coffee limited. It is contended that since more or less similar objections, namely, that this ratio is detrimental to the interest of the minority shareholders have been canvassed before the Andhra pradesh High Court, this High Court ought not to sanction the scheme until the Andhra Pradesh high Court disposes of that petition. I fail to see the rationality behind that objection in so far as if the Andhra Pradesh High Court had taken a particular view after hearing the case it would certainly have been open to the parties to bring that fact to the notice of this court but merely because a petition is pending before the other High Court, is no ground on which this court should be requested to defer the decision until that case is heard. I am rather surprised that such a submission was at all canvassed but even if it has been placed before this court, it is only required to be rejected more so because the companies are different, the ratio is different and the considerations are not necessarily identical. ( 11 ) THE last objection that was put forward was that Coffee Lands Limited holds 280 equity shares of Rs. 10 each in the transferee-company and that consequent on the amalgamation of the transferor-company with the transferee-company, these shares shall stand extinguished which amounts to reduction of share capital of the transferee-company. It was contended that the transferee-company is, therefore, required to comply with the requirements of sections 100 to 104 of the Companies Act regarding reduction of capital. In answer to these objections, Mr. It was contended that the transferee-company is, therefore, required to comply with the requirements of sections 100 to 104 of the Companies Act regarding reduction of capital. In answer to these objections, Mr. Raghavan pointed out to me that Rule 85 of the Companies (Court) Rules specifically excludes situations of the present type and that consequently, the objection itself is misconceived. He placed reliance on two decisions, the first of them is reported in Mcleod Russel (India) Ltd. , In re [1997] 4 Comp LJ 60 (Cal ). The Calcutta High Court, while considering this aspect of the case had occasion to observe that Rule 85 of the Companies (Court) Rules, 1959, is in relation to a proposed compromise or arrangement which involves. reduction of capital of the company and that in respect of the proposed scheme of amalgamation or merger where the transferor-companies merge their identities with the transferee-company, Rule 85 has no application where a scheme of amalgamation simpliciter is under consideration involving transfer of the entire assets and liabilities of the transferor-companies. I only need to add that the companies Act itself prescribes separate provisions and procedures for the process of amalgamation, that certain changes are inevit-able in such situations and that one of the overriding considerations that a court will look into is as to whether there has been substantial reduction in the capital and if as is obvious in the present case where only 280 equity shares of rs. 10 each are involved in relation to a company of substantial financial solvency, the objection itself becomes hypertechnical and inconsequential as it does not affect the capital base. Reliance was also placed on the decision of the Andhra Pradesh High Court in G. V. K. Hotels Ltd. , In re [1997] 88 Comp Cas 596 (C. P. No. 23 of 1995) wherein the Andhra Pradesh High Court while considering one aspect of the case relating to reduction of capital took into account the overall features of the scheme, the fact that there was general restructuring taking place, the pros and cons, the overall gains and going by the rule of substantial compliance with procedure held that despite the objection, the scheme was liable to be approved. The number of shares involved is of some consequence and the value thereof is also of some significance but having regard to the facts and the law in the present case, to my mind, this objection is not a ground on which the approval of the scheme can be held up. ( 12 ) HAVING regard to the aforesaid situation, the objections canvassed by Agrawal in Company application No. 197 of 1998 are overruled and the application is dismissed. The remaining petitions are allowed and this court accords approval of the proposed scheme of amalgamation. ( 13 ) I need to observe here that the official liquidator, the High Court, is represented before me. I have heard learned counsel who represents the official liquidator. On a consideration of this scheme, the official liquidator has filed his report indicating that he has no objection to the sanction of the scheme. ( 14 ) FOR the reasons indicated above, the court accords formal sanction to the scheme. The petitions accordingly succeed. No order as to costs. The office is directed to draw up individual orders in each of the four petitions in terms of the draft orders submitted to the court which have been scrutinised and approved by me and which have been signed. Two weeks time is granted for filing the schedule of assets to be incorporated in the drawn up order. ( 15 ) I would like to acknowledge the admirable assistance to the court both as far as the analysis of the relatively heavy record is concerned but more importantly the principles of law and the case law that has been received from Mr. Raghavan and his team of learned counsel who appeared on behalf of the petitioners.