Judgment KOCHAR R.J., J.:---The petitioners, the transferror companies, have prayed for sanction of the scheme of arrangement for amalgamation of the petitioners with the transferee company, the A.P.I.L., under sections 391 to 394 of the Companies Act, 1956, with effect from 31-3-2001. The A.P.I.L. the transferee company, has also sought sanction of the said scheme in the Company Petition No. 338 of 2002. 2. In the present petition the scheme envisages the merger of:- a) ALSTOM TRANSPORT LTD. b) ALSTOM SYSTEMS LTD. c) ALSTOM POWER BOILERS; and In Company Petition No. 338 of 2002 the scheme envisages the merger of ALSTOM POWER INDIA LTD. 2-A. Pursuant to the prescribed notices, the Regional Director by his affidavit dated 7th August, 2002 has stated that the scheme is not prejudicial to the interest of the creditors and shareholders. Similarly, the official liquidator has also under section 394(1) of the Companies Act, 1956 conveyed his no objection to the scheme and has categorically made a statement that the affairs of the company were not conducted in a manner prejudicial to the interest of their members and general public. 3. Pursuant to the orders and directions of the Delhi High Court, a meeting was held by the ALSTOM Systems Ltd. to consider the scheme by the shareholders/ members and the members of the said company voted for the scheme. 4. Pursuant to the public notices, one Mrs. Darshana Kenia holding 5 shares in the transferee company A.P.I.L. and her father Shri Damji Ghalla holding 353 shares and her husband Mr. Prafulkumar Kenia holding 100 shares have opposed the scheme by filing an affidavit before this Court. They, however, did not attend the meeting of the shareholders personally or by proxy. Mr. P.R. Kenia appears to have acquired 100 shares of the A.P.I.L. after the date of the meeting. 5. The State Bank of India which is a shareholder in the A.P.I.L. and it is a secured creditor of A.P.B.L. have opposed the scheme by filing their affidavits, though the S.B.I. also did not attend the shareholders meeting of A.P.I.L. or cast vote personally or by proxy. The S.B.I., however, attended the meeting of the secured creditors of the A.P.B.L. and voted for the scheme. 6. The I.D.B.I., being equity shareholder of the A.P.I.L. attended the meeting of the A.P.I.L. shareholders but did not vote. The S.B.I., however, attended the meeting of the secured creditors of the A.P.B.L. and voted for the scheme. 6. The I.D.B.I., being equity shareholder of the A.P.I.L. attended the meeting of the A.P.I.L. shareholders but did not vote. The I.D.B.I. is neither a shareholder nor a creditor of the A.P.B.L. The I.D.B.I., however, have opposed the scheme by filing their affidavit in the present proceedings. 7. The Government of India, which is also an equity shareholder of the A.P.B.L. did not attend the meeting nor did it vote by the proxy. The Government of India which is a preferential shareholder did not attend or vote by proxy. It has also not appeared before this Court to oppose the scheme. 8. As far as the other voting pattern is concerned, it is as under:- i) 22 shareholders/Corp. Reps. holding 2,53,94,990/- equity shares attended out of which vote of one shareholder holding 654 shares was declared invalid. All voted in favour of the scheme. Out of 22 members attending 17 belonged to ALSTOM group. While the remaining five members voting were not from ALSTOM group. ii) At the meeting of the preferential shareholders holding 373,00,000/- shares attended and voted for the scheme. They belonged to ALSTOM group. The scheme was approved by 100% of the preferential shareholders. iii) At the meeting of the secured creditors of value Rs. 9.04 crores voted. All the creditors present including the S.B.I. voted for the scheme which was approved by 100%. iv) At the meeting of the unsecured creditors of A.P.B.L., 86 unsecured creditors of value Rs. 30.79 crores attended. 85 unsecured creditors of value Rs. 30.74 crores voted for the scheme. One unsecured creditor of value Rs. 4.48 lakhs voted against. The scheme was approved by 99.85% of unsured creditors in value and 98.84% in number from those present. 9. The voting pattern of A.P.I.L., the transferee company is as under :- a) 196 share holders/Corp. Reps. holding 236,00,785/- equity shares attended. 189 shareholders holding 235,99,924 shares voted for the scheme. Two equity shareholders holding 501 shares voted against. Five equity shareholders holding 360 shares cast invalid votes. b) Out of 196 members who attended only two belonged to the ALSTOM group while 194 were other members. c) Neither the S.B.I. as a shareholder attended or voted by proxy nor the I.D.B.I. as an equity shareholder voted against the scheme though they attended the meeting. Five equity shareholders holding 360 shares cast invalid votes. b) Out of 196 members who attended only two belonged to the ALSTOM group while 194 were other members. c) Neither the S.B.I. as a shareholder attended or voted by proxy nor the I.D.B.I. as an equity shareholder voted against the scheme though they attended the meeting. d) The scheme was approved by 98.95% in number and 99.99% in value. e) 115 unsecured creditors of value 38.35 crores attended. 114 unsecured creditors of value 38.32 crores voted for the scheme. One vote of unsecured creditor of value Rs. 312,040/- was declared invalid. There was no vote cast against the scheme. 10. Shri Aspi Chinoy the learned Senior Counsel has given the salient features of the scheme and other relevant particulars which are as under :- Under the scheme the name of A.P.I.L. is to be changed to "Alstom Projects Indian Ltd.". As per the scheme holders of :- i) Every 85 eq. shares of Rs. 10 in Alstom Transport Ltd. will get 50 new equity shares in Alstom Projects India Ltd. ii) Every 85 equity shares of Rs. 10 in Alstom Power Boilers Ltd. will get 78 new equity shares in Alstom Projects Indian Ltd. iii) Every 85 equity shares of Rs. 10 in Alstom Power Boilers Ltd. will get 2.2 new equity shares in Alstom Projects India Ltd. iv) Every 85 preference shares of Rs. 100 in Alstom Power Boilers Ltd. will get 22 new equity shares in Alstom Projects India Ltd. The swap ratio is based on a valuation of the shares of the said four companies as on 31st March, 2001 by Ms. A.F. Ferguson Co. a reputed firm of Chartered Accountants who have utilised methodologies including "discounted cash flow methodology", "capitalised maintainable earnings methodology" and "market value methodology" to the extent considered appropriate by them. The report states that it has relied on audited financial statements along with the companies statutory auditors reports thereon, unaudited management accounts projected financial information i.e. estimates of future financial performance. The report is annexed as Exhibit I to the affidavit of the petitioners/Mrs. Naina Desai dated 28th June, 2002. The scheme are (i) Alstom Transport Ltd. (ii) Alstom Systems Ltd. both of which are registered in Delhi, has already been approved by the Delhi High Court. Alstom Transport is wholly owned by the Alstom Group. The report is annexed as Exhibit I to the affidavit of the petitioners/Mrs. Naina Desai dated 28th June, 2002. The scheme are (i) Alstom Transport Ltd. (ii) Alstom Systems Ltd. both of which are registered in Delhi, has already been approved by the Delhi High Court. Alstom Transport is wholly owned by the Alstom Group. Facts regarding Alstom Power Boilers Ltd. (A.P.B.L.):- i) A.P.B.L. was incorporated as A.C.C. Vickers Babcock. In 1982 its name was changed to A.C.C. Babcock Ltd. A.P.B.L. was closed for 20 months during 1986-1988. ii) Subsequently through the B.I.F.R. it was brought under the supervision/control of the Ministry of Power, Government of India and was reopened in 1988. Under the B.I.F.R. scheme for rehabilitation, the Government brought in an interest free loan of Rs. 26 crores and the FIS/SBI advanced a term loan of Rs. 13 crores which was guaranteed by the Government. iii) However, the scheme failed essentially as Government of India did not fulfil its commitment to procure orders for power boilers as envisaged in the scheme. This led to A.P.B.L. making substantial cash losses and there was no likelihood of it being able to repay the loans or carry on business. As on 31-3-1994, its accumulated losses were 109 crores and its cash losses for that year were Rs. 107 crores. At that juncture survival of the company and recovery of the Bank/FIS dues from A.P.B.L. was clearly in jeopardy. iv) In the circumstances, in the B.I.F.R. proceedings efforts were made to find a promoter who would infuse fresh equity, pay of the loans due to the FIS /SBI and revive the company. After considering the offers made, the B.I.F.R. invited the A.B.B. group to take management control, repay the principal sums due to the FIS/SBI and provide funds for the operations of A.P.B.L. In 1995 the ABB group acquired management and control of A.P.B.L. under a B.I.F.R. scheme/order dated 30th May, 1995. As per the scheme of 1995 :- ABB group was required to induct Rs. 60 crores-24 crores as equity 28 crores as preference share capital and Rs. 8 crores as loans. ABB would have 76% equity capital. The ABB group were to pay of the principal sums due to the FIS/SBI approximately Rs. 45 crores (Rs. 30 crores to SBI and 15 crores to FIS.) The FIS/SBI waived their overdue interest : approximately Rs. 60 crores-24 crores as equity 28 crores as preference share capital and Rs. 8 crores as loans. ABB would have 76% equity capital. The ABB group were to pay of the principal sums due to the FIS/SBI approximately Rs. 45 crores (Rs. 30 crores to SBI and 15 crores to FIS.) The FIS/SBI waived their overdue interest : approximately Rs. 20 crores which was guaranteed by the Government of India. Government's existing loan of Rs. 26 Crores was converted to Rs. 4.6 crores equity shares and the balance Rs. 21.4 crores was converted to 10% cumulative preference shares redeemable in 2005. The Governments guarantee for the outstanding loans was to be released. The Government agreed to transfer dividend on the preference shares to the extent of 7.5% to the FIS/SBI and further agreed to assign the redemption proceeds of the 21.4 crores preference shares to the extent of Rs. 19.51 crores to the FIs/SBI against their waived interest. v) ABB group brought in the requisite amount of Rs. 60 crores and paid off the principal sums due to the FIs/SBI in accordance with the instalments stipulated in the scheme. Accordingly under the scheme the FIs/SBI received back their entire principal sum due and the Government was released from its obligations under its guarantees. vi) Due to the infusion of funds and its improved performance A.P.B.L's. net worth turned positive i.e. it was no longer a sick company under the S.I.C.A. By an order dated 7th February, 1997 the B.I.F.R. recorded that as A.P.B.L. was no longer a sick industrial company it "no longer requires to be dealt with by the Board. The case is therefore closed. The special director last appointed by us stands discharged". Copies of the order were forwarded by the B.I.F.R. inter alia to the S.B.I., I.D.B.I., and the Government of India. Having regard to the said order neither the B.I.F.R. nor the operating agency have thereafter (i.e. after 1997) in any manner dealt with A.P.B.L. vii) 1997-2002 : A.P.B.L. suffered mounting losses due to the depressed power sector, cancellation of existing orders and the policy for giving preference to public sector undertakings. Till 1999 the losses had mounted to Rs. 249 crores. To cope with this situation, the promoters/Alstom Group, have, to date, brought in an additional Rs. 345 crores in the form of additional preference share capital. Till 1999 the losses had mounted to Rs. 249 crores. To cope with this situation, the promoters/Alstom Group, have, to date, brought in an additional Rs. 345 crores in the form of additional preference share capital. Accordingly of the total preference share capital of Rs. 394.4 crores, the Government of India holds Rs. 21.4 crores and the Alstom Group hold 373 crores. In the absence of profits no dividend has to date been declared or paid by A.P.B.L. on any of the preference shares. viii) In January 2000 (vide its letter dated 7-1-2000) the Alstom Group/A.P.B.L. requested the Government to take back A.P.B.L., but there was no response. ix) Even after such infusion of funds A.P.B.L's. losses kept increasing by March 2001 A.P.B.L's. capital base was Rs. 426 crores against a net worth of only Rs. 24 crores i.e. more than 90% of its capital base has been eroded. This erosion in value/capital base is reflected in the swap ratio for shareholders of A.P.B.L. x) If the merger/arrangement does not go through A.P.B.L. has a very bleak future. There appears to be no prospect of it recouping its accumulated losses, or of ever being in a position to redeem its preference shares. In fact absent such a scheme of merger with a healthy company A.P.B.L. would be faced with a real prospect of liquidation. Facts re : A.P.I.L. A.P.I.L. was incorporated in 1992 and with effect from 5-9-2000 its name was changed to Alstom Power Indian Ltd. A.P.I.L. is engaged in the design, engineering, manufacturing, procurement, supply and commissioning, servicing and renovating and modernisation of power plants for utility and industrial users. Facts re : Alstom Transport Limited :- A.T.L. was set up in 1997 is engaged in the designing, manufacturing, supplying and supporting large scale transportation systems including traction, signalling and train control. Alstom Transport had been making losses but has now turned profitable by virtue of having secured and executed orders for the Delhi Metro. Facts Re : Alstom Systems Limited : A.S.L. is engaged in the business of Transmission Systems Energy management markets. A.S.L. has always been a profit making company. 11. Alstom Transport had been making losses but has now turned profitable by virtue of having secured and executed orders for the Delhi Metro. Facts Re : Alstom Systems Limited : A.S.L. is engaged in the business of Transmission Systems Energy management markets. A.S.L. has always been a profit making company. 11. Shri Tulzapurkar, the learned Counsel appearing for the S.B.I., I.D.B.I., the creditors has strongly opposed the proposed scheme of amalgamation on the grounds that; A) the scheme does not meet the statutory requirements under Companies Act and is also contrary to the sanctioned scheme of the B.I.F.R. under the S.I.C.A. and that it is not bona fide scheme and the same is violative of public policy. Shri Tulzapurkar accused the petitioners of suppressing the fact of the B.I.F.R. scheme which according to him, is still in force and has not become non est. The learned Counsel submitted that as the scheme has not been abrogated and is still in force, the petitioner company is bound to comply with its obligations thereunder and if the petitioner company desired to have any modification in the scheme, it should approach the B.I.F.R. and not seek to substitute the said scheme by another scheme to be sanctioned by this Court under the Companies Act. Shri Tulzapurkar further submitted that the order passed by the B.I.F.R. on 7th February, 1997 which is relied upon by the petitioners cannot be interpreted to the effect that the earlier scheme had become non est and that it was not in force. According to the said order, the B.I.F.R. had only observed that the company's net worth had become positive and that it had ceased to be a sick industrial company and that it did not require to be dealt with and supervised by the board. Shri Tulzapurkar further submitted that the company had ceased to sick not because of its own efforts but because of the sacrifice made by the S.B.I., I.D.B.I., and Government of India by waiving huge amounts of interest payable by the company over the loans granted by the I.D.B.I. and the S.B.I. and giving up of the guarantee by the Government of India. Shri Tulzapukar further submitted that since the company got benefits under the B.I.F.R. scheme it must also discharge its obligations under the scheme, which on sanction has the force of law and is binding on company. Shri Tulzapukar further submitted that since the company got benefits under the B.I.F.R. scheme it must also discharge its obligations under the scheme, which on sanction has the force of law and is binding on company. The company, therefore, must discharge is obligations to pay dividend on the redeemed preference shares issued to Government of India under the said scheme. The learned Counsel further submitted that the financial implications of the proposed scheme on the opponents would be drastic. The petitioners having taken benefits under the B.I.F.R. scheme was trying to evade its obligations under the sanctioned scheme of the B.I.F.R. and, therefore, the economic interest of the opponents as the public financial institutions and the banks would be jeopardised if the proposed scheme which is in violation of the provisions of the S.I.C.A. and contrary to the public policy is sanctioned. Shri Tulzapurkar while elaborating the illegality in the scheme, submitted that the petitioners did not convene the meeting of separate classes of the shareholders, members, secured and unsecured creditors, who were distinctly and adversely affected. According to the learned Counsel, a separate meeting of the preferential shareholders viz., the S.B.I. and the I.D.B.I. ought to have been convened as a separate and distinct class. Shri Tulzapukar pointed out that since the opponents had not received the dividend, they became creditors under the law and, therefore, a separate meeting of this class ought to have been convened by the petitioners for approval of the proposed scheme. He pointed out that the petitioner company had, under the B.I.F.R. scheme, allotted to the Government of India 21,40,000 10% cumulative preference shares of Rs. 100 each on 3rd August, 1995. Out of these the redemption proceeds of the preference shares of the value of Rs. 14.18 crores were assigned in favour of the S.B.I. and value of Rs. 5.33 crores in favour of the I.D.B.I. aggregating to Rs. 19.61 crores. The dividend on these shares were also partly assigned to them. Since the company has not paid any dividend to the opponents, there is an outstanding liability and pending payment by the company which is also liable to pay future preference shares dividend to the Government of India and to the opponents. Shri Tulzapurkar submitted that the different preference share holders formed a separate class and their meeting ought to have been separately convened for seeking approval of the scheme. Shri Tulzapurkar submitted that the different preference share holders formed a separate class and their meeting ought to have been separately convened for seeking approval of the scheme. Shri Tulzapurkar pointed out that there were distinct classes of preference shareholders viz., A. Government of India, which was allotted cumulative preference shares with assigning of redemption proceeds and dividend in favour of the opponents under the scheme sanctioned by the B.I.F.R. B. The promotors who contributed to the preference share capital of the company under the B.I.F.R. scheme. C. Subsequent allottees of other preference shares issued by the company decide the B.I.F.R. scheme. 12. According to the learned Counsel, the interest of all the three categories was different and they were adversely affected in the scheme and, therefore, their meeting ought to have been separately convened. Shri Tulzapurkar submitted that as this was not done, the proposed scheme runs counter to the law and, therefore, should not be sanctioned. 13. Shri Tulzapurkar also pointed out that since no dividends were paid by the company to the opponents they had become creditors of the company and, therefore, as creditors also they should have been separately called for the meeting. According to Shri Tulzapurkar, the petitioner company did not properly categorise the different classes of shareholders on the basis of different interests which differently affect the minds and their judgements and, therefore, they ought to have been divided into different classes. They did not form or constitute one single class as was erroneously and unlawfully done by the petitioners in convening the meeting. The learned Counsel further submitted that even the Government of India which was allotted cumulative preference shares, with assignment of redemption proceeds and dividend in favour of the opponents under the scheme sanctioned by B.I.F.R. form a distinct class to have been separately convened in the meeting. The learned Counsel further submitted that the promotors of preference share capital of the company and the subsequent allottees of the other preference shares issued by the company form different classes to be entitled to consider separately on the basis of their interests while considering the proposed scheme of amalgamation. The learned Counsel further submitted that the promotors of preference share capital of the company and the subsequent allottees of the other preference shares issued by the company form different classes to be entitled to consider separately on the basis of their interests while considering the proposed scheme of amalgamation. Shri Tulzapurkar also submitted that as the preference shareholders having not received dividend for two years, the Government of India became a distinct class under section 87(2)(b) of the Companies Act and as such the Government of India was entitled to vote on all matters affecting the company. The Government of India was entitled to voting rights even at the meeting of the equity shareholders of the company as preference shareholders to whom dividend had not been paid for over two years as contemplated under section 87(2)(a) and (b) of the Act. According to the learned Counsel, there was no commanality of interest of the other equity shareholders and the Government of India whose state of facts/rights are distinct and different but the petitioner company having not given notice to Government of India to attend meeting of a separate class of cumulative preference shareholders whose dividend remained unpaid for a period of not less than two years but who were entitled to vote in the scheme in that capacity as well. The failure to consider and classify the Government of India on the aforesaid basis attracts illegality under sections 391 to 394 of the Act. Shri Tulzapurkar further submitted that having not received dividend for two years on the preference shares, the Government of India also became unsecured creditor and, therefore, they form another class of unsecured creditors different from the trade creditors or other unsecured creditors of the company. The company ought to have treated the Government of India as a distinct class of unsecured creditors in that respect. According to the learned Counsel, the petitioner company has committed an illegality by treating the Government of India on par with the other unsecured creditors. 14. Shri Tulzapurkar further submitted that this Court has no jurisdiction to consider the scheme of amalgamation when the scheme framed by the B.I.F.R. is in force. According to the learned Counsel, the petitioner company ought to have approached the B.I.F.R. for modification of the scheme. 14. Shri Tulzapurkar further submitted that this Court has no jurisdiction to consider the scheme of amalgamation when the scheme framed by the B.I.F.R. is in force. According to the learned Counsel, the petitioner company ought to have approached the B.I.F.R. for modification of the scheme. Under the proposed scheme of amalgamation Shri Tulzapurkar points out that the opponents stand to lose funded interest and outstandings recoverable from the petitioners, guarantees of Government of India in favour of opponents securing the outstandings under the B.I.F.R. scheme, cumulative preference dividend of Rs. 11 crores accumulated till date in their favour and shown as liability by the petitioner, which were of 7.5% dividend in future till 2005 and redemption proceeds of Rs. 18.61 crores receivable on 3rd August, 2005. Shri Tulzapurkar submitted that under the amalgamation scheme the opponents are to get nothing at all and they end up losing everything even that which was secured to them under the B.I.F.R. scheme. He, therefore, emphatically submitted that the entire scheme is totally unfair, not bona fide and is grossly violative of the S.I.C.A. Shri Tulzapurkar accused the petitioner company of evading its obligations under the sanctioned scheme of B.I.F.R. after having taken the benefit thereof. Shri Tulzapurkar summarised that the economic interest of the opponents as public financial institutions/banks would be jeopardised if the proposed scheme which is in violation of the provisions of the S.I.C.A. and the Companies Act and is contrary to the public interest is sanctioned and hence it should not be sanctioned. Shri Tulzapurkar also submitted that the decision of the Calcutta High Court in the case of (Zuari Chemicals v. I.C.I.C.I.)1, delivered on August 8, 1995 in Matter No. 362 of 1995 is not applicable. The B.I.F.R. scheme still is in force qua the petitioner company and, therefore, it cannot wriggle out of the scheme having enjoyed the benefits of that scheme. He further submitted that the petitioner company has ceased to be a sick industrial company because of the sacrifices made by the opponents and on its own efforts. Shri Tulzapurkar concluded that in both the schemes, the opponents alone are the losers and, therefore, the amalgamation scheme should not be sanctioned by this Court. 15. There are three other opponents who have been already described by me at the outset hereinbefore. They are the individual equity shareholders. Shri Tulzapurkar concluded that in both the schemes, the opponents alone are the losers and, therefore, the amalgamation scheme should not be sanctioned by this Court. 15. There are three other opponents who have been already described by me at the outset hereinbefore. They are the individual equity shareholders. The opponent No. 1 is the wife of the Opponent No. 3 and she holds 5 equity shares of the petitioner company. Opponent No. 2 is the father of the opponent No. 1 holding 353 shares of A.P.I.L. and the opponent No. 3 holds 100 equity shares of A.P.I.L. which appear to have been acquired by him in April 2002. It is the allegation of these equity shareholders that the merger is only for the benefit of the parent company ALSTOM Group, the majority shareholder. The parent company controls the transferror company as well as the transferee company. 16. Net worth of the transferor companies and the transferee companies and its impact on the share exchange ratio (swap ratio) is not fair. For every 85 equity shares of face value of Rs. 10/- 2.2 shares of merged company while for 85 preferential shares of face value of Rs. 100/- 22 shares of the merged company is the swap ratio which according to these opponents is totally unfair. Shri Dwarkadas, the learned Senior Counsel appearing for these opponents has shown various calculations to establish how this swap ratio is totally unfair. Briefly, he has set out the effect of the scheme by totalling up the net worth of the transferor company and the transferee company i.e. A.P.I.L. The net worth of the transferor is said to be 35.36 crores while the market value of the shares of the A.P.I.L. is computed as Rs. 102.36 crores. Shri Dwarkadas has pointed out that the net worth of the A.P.I.L. is four times the net worth of the transferor company and, therefore, the exchange ratio is not at all proper. Shri Dwarkadas further submitted that the scheme is totally prejudicial to the minority shareholders of the company and the shareholders of the transferee company will not receive dividend on their shares, atleast for 3 to 4 years, although, according to the learned Counsel the company is likely to make profit for the year ended 31st March, 2002 to the tune of Rs. 25 crores. 25 crores. On account of carry forward losses of the transferor companies to the transferee company no dividend would be declared by the merged company. The opponents have further submitted that the resolution passed at the meeting of the shareholders of the transferor companies and transferee company are not for the benefit of the minority shareholders of the transferee company. Shri Dwarkadas seriously alleged that the appellant company was having a brute majority and was, therefore, successful in having the resolution passed in their own private interest and not in the interest of the other shareholders of the A.P.I.L. Shri Dwarkadas has raised objection in respect of the valuation conducted by M/s. A.F. Fergusson and by K.P.M.G. According to him, the valuation ought to have been conducted by the current auditors of the A.P.I.L. who were in the best position to assess the valuation of the A.P.I.L. The learned Counsel reiterated his objection that the swap ratio cannot be regarded as fair or equitable or for the benefit of the minority shareholders. Shri Dwarkadas finally submitted that the opponents were threatened and were tried to be pressurised to withdraw the opposition to the scheme. A very serious allegation is made by the learned Counsel that in fact the opponent No. 3 was even offered an illegal gratification of Rs. 7.50 lakhs for this purpose. In effect and the net result of the scheme is total loss for the minority shareholders of the A.P.I.L. I may mention here that in the written submissions on behalf of the opponents, very minute and detail calculations are given which I have not referred to in this judgement. 17. The learned Counsel for their respective parties have relied upon the following judgements in support of their contentions :- Shri A. Chinoy :- i) (Miheer H. Mafatlal v. Mafatlal Industries Ltd.)2, 1996 Company Cases Vol. 87 page. 792. ii) (Piramal Spinnng and Weaving Mills Ltd. In re.)3, 1980 Company Cases Vol. 50 page 514. iii) (Coimbatore Cotton Mills Ltd. and Lakshmi Mills Co. Ltd. In re.)4, 1980 Company Cases Vol. 50 page 623. iv) (Lalchand Surana and others v. Hyderabad Vanaspathy Ltd.)5, 1990 Company Cases Vol. 68 page 415. Shri Tulzapurkar :- i) Miheer H. Mafatlal v. Mafatlal Industries, A.I.R. 1997 S.C. 506. ii) (Sekseria Cotton Mills Ltd. v. Shri A.E. Naik and others)6, A.I.R. 1967 Bombay 341. Ltd. In re.)4, 1980 Company Cases Vol. 50 page 623. iv) (Lalchand Surana and others v. Hyderabad Vanaspathy Ltd.)5, 1990 Company Cases Vol. 68 page 415. Shri Tulzapurkar :- i) Miheer H. Mafatlal v. Mafatlal Industries, A.I.R. 1997 S.C. 506. ii) (Sekseria Cotton Mills Ltd. v. Shri A.E. Naik and others)6, A.I.R. 1967 Bombay 341. iii) (In the matter of Scheme of Compromise/Arrangement between the Creditor of Bedrock Ltd. and Bedrock Ltd.)7, 1998(4) Bom.C.R. 710 . iv) (Company Petition No. 451 of 2001 dated 7th September, 2001)8, (unreported Bombay High Court). v) (Wipro Finance Ltd. v. Suman Motels Ltd.)9, 1994(4) Bom.C.R. 1 ). Shri Dwarkadas:- i) (Bank of Baroda Ltd. v. Mahindra Ugine Steel Co. Ltd.)10, 1976 Company Cases Vo. 46 page 227. 18. The parameters of the jurisdiction of the Company Court under sections 391 to 394 are well established. The limitations put on this jurisdiction can be equated with the jurisdiction of the judicial review under Articles 226 and 227 of the Constitution of India. It is not an appellate jurisdiction. The application under section 391 for sanction of the scheme of amalgamation cannot be treated as an appeal. The scheme is to be examined by the Company Court within the limited scope of supervisory jurisdiction. I need not set out the parameters of supervisory jurisdiction of a Court of law conferred with the power of superintendence by any statute. The Supreme Court has once again reiterated the scope and limitations of the Company Court while dealing with the applications for sanction of the scheme of amalgamation under sections 391 to 394 in the case of Miheer Mafatlal (supra) The Supreme Court has summarised the principles as under:- "Sen, J., speaking for himself and Venkatachaliah, C.J., also toed the line indicated by Sahai, J., about the jurisdiction of the company Court while sanctioning the scheme and made the following pertinent observations in paragraph 84 at page 528 of the report. "An argument was also made that as a result of the amalgamation, a large share of the market will be captured by HLL. But there is nothing unlawful or illegal about this. The Court will decline to sanction a scheme of merger, if any tax fraud or any other illegality is involved. But that is not the case here. A company may, on its own, grow to capture a large share of the market. But there is nothing unlawful or illegal about this. The Court will decline to sanction a scheme of merger, if any tax fraud or any other illegality is involved. But that is not the case here. A company may, on its own, grow to capture a large share of the market. But unless it is shown that there is some illegality or fraud involved in the scheme, the Court cannot decline to sanction a scheme of amalgamation. It has to be borne in mind that this proposal of amalgamation arose out of a sharp decline in the business of TOMCO. Dr. Dhavan has argued that TOMCO is not yet a sick company. That may be right, but TOMCO at this rate will become a sick company, unless something can be done to improve its performance. In the last two years, it has sold its investments and other properties. If this proposal of amalgamation is not sanctioned, the consequence of TOMCO may be very serious. The shareholders, the employees, the creditors will all suffer. The argument that the company has large assets is really meaningless. Very many cotton mills and jute mills in India have become sick and are on the verge of liquidation, even though they have large assets. The scheme has been sanctioned almost unanimously by the shareholders, debenture holders, secured creditors, unsecured creditors and preference shareholders of both the companies. There must exist very strong reasons for withholding sanction to such a scheme. Withholding of sanction may turn out to be disastrous for 60,000 shareholders of TOMCO and also a large number of its employees." "In view of the aforesaid settled legal position, therefore, the scope and ambit of the jurisdiction of the company Court has clearly got earmarked the following broad contours of such jurisdiction have emerged :- (1) The sanctioning Court has to see to 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(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 approving the scheme in question. (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 approving the scheme in question. That the majority decision of the concerned class of voters is just and fair to the class as a whole so as to legitimately bind even the dissenting members of that class. (4) That all necessary material indicated by section 393(1)(a) is placed before the voters at the concerned meetings as contemplated by section 391(1). (5) That all the requisite material contemplated by the proviso to sub-section (2) of section 391 of the Act is placed before the Court by 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 the veil of apparent corporate purpose underlying the scheme and can judiciously x-ray the same. (7) That the Company Court has also to satisfy itself that members or class of members or creditors or class of creditors as the case may be, were acting bona fide and in good faith and were not coercing the minority in order to promote any interest adverse to that of the latter comprising the same class whom they purported to represent. (8) That the scheme as a whole is also found to be just, fair and reasonable from the point of view of prudent men of business taking a commercial decision beneficial to the class represented by them for whom the scheme is meant. (9) Once the aforesaid broad parameters about the requirements 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 could be a better scheme for the company and its members or creditors for whom the scheme is framed. The Court cannot refuse to sanction such a scheme on that ground as it would otherwise amount to the Court exercising appellate jurisdiction over the scheme rather than its supervisory jurisdiction. The aforesaid parameters of the scope and ambit of the jurisdiction of the company Court which is called upon to sanction a scheme of compromise and arrangement are not exhaustive but only broadly illustrative of the contours of the Court's jurisdiction." 18-A. My learned Brother Dr. Chandrachud, J., in the case of Ion Exchange (India) Ltd. (supra) has very rightly cited the observations of the learned Single Judge of the Gujarat High Court in (Sidhpur Mills)11, case, reported in A.I.R. 1962 Gujarat 305. The learned Judge indeed has very succinctly described the jurisdiction of the Company Court as under :- "It is not for the Court to scrutinise the scheme in the manner of a carping critic, a hair splitting expert, a meticulous accountant or a fastidious Counsel" for the effort is not to emphasise the loopholes, technical mistakes and the accounting errors. The perspective has to be that of the ordinary shareholder exercising his discretion in a reasonable and business like manner. Fundamentally, the point to be emphasised is that the discretion as to whether to sanction the scheme for amalgamation is one which the Court has the jurisdiction to exercise. This cannot be concluded on the supposed consideration that the scheme has the support of a large majority of shareholders. Majorities are not necessarily comprised individuals each of whom critiques the provision of the scheme with a measure of expertise. Lethargy is not unknown to collective bodies of shareholders and creditors. In these circumstances, the Court has to be alive to the duty which sections 391 and 394 cast upon it, before, the Court grants the seal of its approval upon the proposed amalgamation." (emphasis is given by me) 19. It is very pertinent and significant to note that none of the opponents attended the meeting convened by the company to place before the general body of the shareholders the view points which are being very vehemently canvassed before this Court by both the learned Counsel appearing for the opponents. It is very pertinent and significant to note that none of the opponents attended the meeting convened by the company to place before the general body of the shareholders the view points which are being very vehemently canvassed before this Court by both the learned Counsel appearing for the opponents. If they were so keen and serious about the objections to the scheme of amalgamation it was their fundamental duty and also responsibility to have attended the meetings convened for the purpose of approval of the scheme by the shareholders and creditors. The whole purpose of giving notice under the law is that the shareholders and the creditors attend the meeting and point out the difficulties or lacunae in the scheme and try to convince the management as well as the members in the meeting to not to approve the scheme. The failure of the opponents in doing so is serious one. As is observed in the case of Miheer Mafatlal as a shareholder did not attend the meeting and did not vote against the scheme. The Supreme Court has criticised the appellants as under :- "If he was feeling that the scheme was unfair to him or was not going to protect the interest as shareholder in the respondent company, nothing prevented him from remaining present and voicing his grievances before the general body of the equity shareholders and to appraise them of the alleged pernicious effects of the scheme. It is, therefore, too late in the day for him to contend that the scheme was unfair to him." 20. In our case neither the financial institutions which are opponents of the scheme before this Court nor the solitary Kenia family opposing the scheme very vehemently, through the learned Counsel have cared or bothered to remain present in the meetings. The financial institutions ought to have considered their duty to have voiced their objections by attending the meeting. It is only legal ingenuity of the learned Counsel to have very vociferously canvassed that the financial institutions ought to have been separately called in a separate meeting as they fell in a separate and distinct class as assigned preferential shareholders and unpaid dividend holders. It is only legal ingenuity of the learned Counsel to have very vociferously canvassed that the financial institutions ought to have been separately called in a separate meeting as they fell in a separate and distinct class as assigned preferential shareholders and unpaid dividend holders. If the management of the financial institutions were so conscious of such hair splitting of the matter, they ought to have written to the conveners of the meeting that they formed a distinct and separate class and that the meeting of such separate class should be convened separately. It is too late in the day to make submissions before the company Court that they ought to have been separately called at a separate meeting as they formed a separate and distinct class. As soon as they received the notice, they ought to have written to the convenors of the meeting that they did not form part of class of the shareholders or the creditors whose meetings were convened. In any case, they ought to have placed their objections in writing no sooner they came to know about the meetings for approval of the scheme of amalgamation. 21. Apart from the fact that the financial institutions which are objecting to the sanction of the scheme had not placed on record of the company their objections in respect of their being a separate and distinct class even before this Court no such specific pleading is taken in the affidavit filed by them. They have not substantiated how they formed a distinct and separate class. It is not possible for me to accept the submissions of Shri Tulzapurkar that they form a distinct and separate class and that since their meeting was not called separately and that the petitioners have violated the provisions of section 391 of the Act. The law only contemplates reasonable and proper classification of the members and the creditors of the company. The well accepted classification for convening the meetings has been properly followed by the petitioners and the transferee company. The meetings of the equity and preference shareholders, secured and unsecured creditors were properly convened. The opponent can not classify themselves to fall in any other category other than the aforesaid categories. If they did so, they ought to have communicated to the petitioners that they were a distinct class and that they did not fall in any of the four aforesaid categories. The opponent can not classify themselves to fall in any other category other than the aforesaid categories. If they did so, they ought to have communicated to the petitioners that they were a distinct class and that they did not fall in any of the four aforesaid categories. I fail to understand in what way the aforesaid financial institutions did not fall in any of the categories. The Government of India which was the preferential shareholders had assigned those shares to the financial institutions and, therefore, these institutions had stepped in the shoes of the Government of India as preferential shareholders. There was nothing separate or distinct in them. The class does not mean molecule of sub-sections. The classification has to be on the basis of broad interest of classes. The equity shareholders certainly fall in a separate and distinct class as they are entitled to get benefit of dividends as and when the company declares the same. The preference shareholders are entitled to get dividend in preference to the equity shareholders when the dividend is declared by the company. Similarly the class of creditors as secured and unsecured creditors has been properly carved out and meetings of all the four classes have been properly convened by the petitioners and also by the transferee company. I do not find any violation of law as contended by the financial institution. If we accept the contention of Shri Tulzapurkar in respect of the classification of the parties, it would be an endless affair as everyone would pose himself to be a separate and distinct class by himself. This is not what is contemplated by the class in section 391 of the Act. There is no other illegality which is pointed out by Shri Tulzapurkar appearing for the financial institutions as the opponents in the scheme. 22. In any case, both these institutions ought to have been more than anxious to safeguard their own interests by attending the meetings after receipt of the notices even without prejudice to their rights and contentions that they ought to have been separately and distinctly convened in a separate and distinct meeting. Having committed gross negligence in their duty to safeguard their own financial interests, hair splitting and technical contentions are tried to be raised by them before this Court. This is nothing but an after thought act of loophole or fault finding. 23. Having committed gross negligence in their duty to safeguard their own financial interests, hair splitting and technical contentions are tried to be raised by them before this Court. This is nothing but an after thought act of loophole or fault finding. 23. Let us now examine the pattern of the meetings and the voting which took place in the meetings properly convened by the petitioners pursuant to the directions of this Court. (i) The equity shareholders unanimously noted in favour of the scheme. ii) 22 shareholders/Corp. Reps. holding 253,94,990 equity shares attended the meeting. iii) It is significant to note that the Government of India as equity shareholder of A.P.B.L. did not attend or vote by proxy. It is, therefore, crystal clear that the scheme was approved by 100% in number and value of the equity share holders present and voting. iv) In the meeting of the preferential shareholders, members holding 373,00,000 shares attended and all voted for the scheme. The scheme was approved by 100% of the preferential shareholders present. v) It is further pertinent and significant to note that the Government of India as preferential shareholders did not attend or vote by proxy. In the meeting of the secured creditors six secured creditors of value Rs. 9.04 crores voted. All the creditors present including the S.B.I. voted for the scheme. The scheme was, therefore, approved by 100% of secured creditors present. 24. If the S.B.I. had any objection against the scheme, it ought to have raised such objections even in the meeting. The objections to the scheme did not and could not vary or did not depend on the class of the meeting. If the S.B.I. was opposed to the scheme in principle, it could have very well raised such objections even as secured creditors. It, however, voted for the scheme without any objection. It, therefore, cannot be heard from the S.B.I. before this Court that though as secured creditors they had no objection to the scheme, as allottee of the preferential shareholders by the Government of India, they have certain objections. Objectively speaking any valid objection to the scheme could have been raised regardless of the composition of the meeting as the scheme presented for approval was the same and it did not vary or change according to the meetings of the members. 25. Objectively speaking any valid objection to the scheme could have been raised regardless of the composition of the meeting as the scheme presented for approval was the same and it did not vary or change according to the meetings of the members. 25. In the meeting of the unsecured creditors of A.P.B.L., 86 unsecured creditors of the value of Rs. 30.79 crores attended. 85 unsecured creditors of value Rs. 30.74 crores voted for the scheme. One secured creditor of value Rs. 4.48 lakhs voted against the scheme. The scheme was thus approved by 99.85% of unsecured creditors in value and 98.84% in number from those present. 26. To conclude, the scheme was opposed by one unsecured creditor of value Rs. 4.48 lakhs. Barring one such opposition, the scheme was approved by one and all from all the classes. One person cannot dictate his baseless commercial wisdom on the 99% voters. If the majority cannot be allowed to coerce the minority, even the molecule or microscopic minority can never be allowed to stall the scheme approved by almost 100% members. To do so, would be to mock at the vast majority who overwhelmingly are in favour of the scheme. Even minority cannot tyrannise the majority. 27. Let us now see the voting pattern and the commercial wisdom of the transferee company i.e. A.P.I.L. It was submitted by Shri Dwarkadas that the transferors had nothing to lose but to gain from the scheme and, therefore, the scheme was approved by all amongst the transferor companies as it was in their own interest. Shri Dwarkadas vehemently contended that the scheme was totally tilted in favour of the transferror companies and was against the interest of the transferee company i.e. A.P.I.L. 28. The voting pattern, however, does not support the contention of Shri Dwarkadas who represents three shareholders. i) Pursuant to the directions of the Court, the A.P.I.L. convened meetings of the equity shareholders and unsecured creditors. ii) 196 shareholders/Corp. Reps. holding 236,00,785/- equity shares attended. iii) 189 shareholders holding 235,99,924 shares voted for the scheme. iv) Two equity shareholders holding 501 shares voted against. v) Five equity shareholders holding 360 shares cast invalid votes. vi) The scheme was approved by 98.95% in number and 99.99% in value. vii) Most significant factor is that the S.B.I. which is a shareholder of A.P.I.L. did not attend or vote by proxy. iv) Two equity shareholders holding 501 shares voted against. v) Five equity shareholders holding 360 shares cast invalid votes. vi) The scheme was approved by 98.95% in number and 99.99% in value. vii) Most significant factor is that the S.B.I. which is a shareholder of A.P.I.L. did not attend or vote by proxy. viii) The I.D.B.I. which is an equity shareholder attended but did not vote. 29. Both of them are vociferously objecting to the scheme in the Court. Both of them did not think it proper to open their mouth in the meetings at the appropriate forum. That was the moment of action for both of them. Belated willows are of no value in this Court. Out of 115 unsecured creditors of value Rs. 38.35 crores attended, 114 unsecured creditors of value Rs. 38.32 crores voted for the scheme. There was no vote against the scheme while the vote of one unsecured creditor of value Rs. 312,040/- was declared invalid. 30. From the above voting pattern, it becomes crystal clear that the members and the creditors of the A.P.I.L. have also favoured the scheme. Opinion of the A.P.I.L. acquires greater significance as their members and the creditors have higher stakes and still they have approved the scheme. According to me, higher weightage has to be given to the opinion of the A.P.I.L. members and the creditors, as even if they stand to get less or lose more as contended by Shri Dwarkadas, they have approved the scheme in their own commercial wisdom. We, therefore, have to bear in mind that not only the transferor companies but also the transferee company both have their interest in the scheme of amalgamation and both have unanimity to approve the scheme of amalgamation as they would stand to gain in the long run. The unification of the functions of all the companies would certainly save the production cost and the operational cost. Duplication of the process work can be avoided and common overhead expenses can be reduced substantially. The members of both the companies have taken into account and consideration all these factors of the long run working of the companies after amalgamation. 31. Duplication of the process work can be avoided and common overhead expenses can be reduced substantially. The members of both the companies have taken into account and consideration all these factors of the long run working of the companies after amalgamation. 31. I do not find any merit in the other submission of the learned Counsel that the petitioners ough to have approached the B.I.F.R. for modifications of its earlier scheme and that this Court has no jurisdiction to modify the B.I.F.R. scheme or to substitute any other scheme. There is no question of the petitioners approaching the B.I.F.R. as the scheme for their rehabilitation was implemented successfully as the sickness span of the petitioners was over and they ceased to be a sick industrial company. The present scheme is for amalgamation of the several entities in the common interest of all so that after the sickness period they can be made financially viable to avoid future sickness. The present scheme has to be sanctioned by the company Court and not by the B.I.F.R. 32. Now dealing with the objections of the other individual shareholders, at the outset it must be stated that all the three shareholders are of the A.P.I.L. and they are Mr. Mrs. Kenia and the father of Mrs. Kenia. The father and daughter hold 5 and 353 shares respectively in the A.P.I.L., while Mr. Kenia, acquired 100 shares only after the date of the meeting. Father and daughter did not attend the meeting of the shareholders and did not cast their vote even by proxy. It is in fact Mr. P.R. Kenia alone who is vehemently opposing the scheme before this Court. 33. It is further pertinent to note that the S.B.I. which is a shareholder in the A.P.I.L. and a secured creditor of A.P.B.L. did not bother or care to attend the meeting of the shareholders of the A.P.I.L. or did not cast their vote by proxy against the scheme. The S.B.I., however, attended the meeting of the secured creditors of the A.P.B.L. and voted in favour of the scheme. 34. The I.D.B.I. which is not a shareholder nor a creditor of the A.P.B.L. but is an equity shareholder of A.P.I.L. The I.D.B.I. attended the meeting of A.P.I.L. shareholders but did not vote either way. The I.D.B.I. did not oppose or object to the scheme in the said meeting. 34. The I.D.B.I. which is not a shareholder nor a creditor of the A.P.B.L. but is an equity shareholder of A.P.I.L. The I.D.B.I. attended the meeting of A.P.I.L. shareholders but did not vote either way. The I.D.B.I. did not oppose or object to the scheme in the said meeting. This is very important and crucial aspect to be borne in mind, while considering the objections of Shri Dwarkadas, the learned Counsel for Mr. P.R. Kenia. The objections of Shri Dwarkadas can be summarised as under:---- A. Merger is only for the benefit of the parent company of the Alstom Group the majority shareholder:--- B. Net worth of the Transferor and Transferee Companies and its impact on the share exchange ratio (swap ratio) C. Effect of the scheme is adverse on the A.P.I.L. shareholders. D. Benefits/advantage of the merger only to parent company. E. The scheme is prejudicial to the minority shareholders of the Transferee Company. F. The resolutions passed at the meetings of the shareholders of the transferor and transferee Companies are not for the benefit of the minority shareholders of the transferee Company. G. Valuation for the purpose of determining swap ratio is not done properly. H. Swap ratio cannot be regarded as fair or equitable or for the benefit of the minority shareholders. 35. From the undisputed voting pattern which I have noted hereinabove, there is absolutely no substance in the contention of Shri Dwarkadas that there was no real participation by the ordinary/independent shareholders in the meeting called by A.P.B.L. and A.P.I.L. and A.S.L. The overwhelming majority of the A.P.I.L. have favoured the scheme. The father and the daughter (Kenia) did not attend the meeting to oppose the scheme. Even Mr. P.R. Kenia could not and did not attend the meeting as he was not a shareholder of the A.P.I.L. at that particular point of time but curiously enough, he purchased the shares of the A.P.I.L. after the meeting in which the scheme was approved. Even Mr. P.R. Kenia could not and did not attend the meeting as he was not a shareholder of the A.P.I.L. at that particular point of time but curiously enough, he purchased the shares of the A.P.I.L. after the meeting in which the scheme was approved. If Shri Kenia had studied the scheme which was placed before the shareholders and if he was satisfied that the scheme was against the interest of the shareholders of the A.P.I.L., I fail to understand any good reason for him to have purchased 100 shares of the A.P.I.L. It appears that he has been set up for the purpose of opposing the scheme in the Court by someone who is interested to topsy-turvy or thwart the smooth sailing of the scheme. According to me, Shri P.R. Kenia lacks bona fides. 35-A. In fact Shri Dwarkadas on behalf of Shri P.R. Kenia wants me to enter into the accounts books and the profit and loss account and the balance sheet of the companies, transferor and transferee. He in fact expects me to carry out the auditing of the accounts as a meticulous accountant or auditor which certainly is not the function of this Court. Shri Dwarkadas has shown me various figures of the assets and liabilities of the transferor companies and also the transferee company, trying to establish how the scheme is against the interest of A.P.I.L. shareholders, even if 99.99% shareholders in value have adopted and approved the scheme. There is no allegations of fraud or mala fides against the valuation done by the reputed C.As. M/s. A.F. Fergusson and Company. The swap ratio has been approved and accepted by the shareholders of the A.P.I.L. The said auditors have set out in detail how they have arrived at the said swap ratio on the basis of the audited financial statements of the company. They have not only considered the net worth of the companies but they have also considered other relevant factors. They have not only considered the net worth of the companies but they have also considered other relevant factors. The Supreme Court has in the case of Miheer Mafatlal (supra) has observed on pages 835 to 840 as under:--- ".......So far as this contention is concerned it has to be kept in view that before formulating the proposed scheme of compromise and amalgamation an expert opinion was obtained by the respondent company as well as the transferor company, namely M.F.L. on whose Board of Directors, the appellant himself was a member....." "........It must at once be stated that valuation of shares is a technical and complex problem which can be appropriately left to the consideration of experts in the field of accountancy. Pennington in his principles of company law mentions four factors which had to be kept in mind in the valuation of shares; 1. Capital Cover; 2. Yield, 3. Earning capacity, and 4. Marketability. For arriving at the fair value of share, three well known methods are applied:--- 1. The manageable profit basis method (the earning per share method) 2. The net worth method or break up value method, and 3. Market value method. "..................It has to be kept in view that the appellant never bothered to personally remain present in the meeting of equity shareholders for pointing out the unfairness of this exchange ratio to his brother equity shareholders who were likely to be affected by the very same ratio as the appellant. His interest at least to that extent was entirely common and parallel to that of other equity shareholders. But he had no time to remain personally present. He sent his proxy only to record his dissent vote which was in the microscopic minority of 5% as compared to the 95% majority vote. Not only that, even before the Court he did not submit any contrary expert opinion regarding the valuation of shares of the transferor and transferee companies for supporting his ipse dixit that the correct ratio would be 6:1 ........" "...........It has also to be kept in view that which exchange ratio is better is in the realm of commercial decision of well informed equity shareholders. It is not for the Court to sit in appeal over this value judgment of equity shareholders who are supposed to be men of the world and reasonable persons who know their own benefit and interest underlying any proposed scheme. With open eyes they have okayed this ratio and the entire scheme.........." ".........As stated earlier it was a sort of a package duly considering all imponderables and implicit factors which the shareholders had to keep in view for deciding whether to approve the scheme of amalgamation or not. The exchange ratio was only one of the items. They thought it fit in their commercial wisdom to accept the scheme as a whole along with the exchange ratio presumably in expectation of better profits in years to come when the amalgamated companies would operate and when there would be, according to the shareholders, better prospects of earning greater dividends..........." ".........The appellant was representing only 5% dissenting shareholders and his objection was almost a voce in the wilderness, which did not appeal to the majority of his brother shareholders. ......" "........It was for the equity shareholders who acted bona fide in the interest of their class as a whole to accept even a less favourable ratio considering other benefits that may offset such less favourable ratio once an amalgamation goes through. We wholly concur with this view. In this connection we may also refer to a decision of Maugham, J., in (Hoare and Co. In re)12, 1933 All.E.R. 105, wherein it was laid down that where statutory majority had accepted the offer the onus must rest on the applicants to satisfy the Court that the price offered is unfair. In this connection the following pertinent observations were made by the learned Judge. "The other conclusion I draw is this ........that 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 any 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 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 unfair." "We may also refer to a decision of the Madras High Court in (Kamala Sugar Mills Ltd. In re)13, 1984(55) Comp.Cas. 308 dealing with an identical objection about the exchange ratio adopted in the scheme of compromise and arrangement. The Court observed as under: (headnote). "Once the exchange ratio of the shares of the transferee company to be allotted to the shareholders of the transferor company has been worked out by a recognised firm of chartered accountants who are experts in the field of valuation and if no mistake can be pointed out in the said valuation, it is not for the Court to substitute its exchange ratio, especially when the same has been accepted without demur by the overwhelming majority of the shareholders of the two companies or to say that the shareholders in their collective wisdom should not have accepted the said exchange ratio on the ground that it will be detrimental to their interest."........ ".........No grievance, therefore, can be made by the appellant at the stage of company petition proceedings for demonstrating the ratio to be ex facie unfair and unacceptable as the appellant would like to have it........" "........But as a package deal when the scheme as a whole is examined and found to be advantageous to the economic and commercial interest of shareholders as a class only one or two items simpliciter for deciding the exchange ratio cannot tilt the balance as so many factors and aspects would enter that exercise. ............" 36. The main emphasis of the learned Counsel was on the computation of the net worth of the transferor and the transferee companies and thereby to show that the book value of the A.P.I.L. would be reduced from Rs. 21.52 to Rs. 17.68 and that the shareholders will not get dividend. Here again, I am of the opinion that the Company Court need not enter into such controversy when the shareholders of the A.P.I.L. have accepted the swap ratio arrived at by the auditors. 21.52 to Rs. 17.68 and that the shareholders will not get dividend. Here again, I am of the opinion that the Company Court need not enter into such controversy when the shareholders of the A.P.I.L. have accepted the swap ratio arrived at by the auditors. Shri Chinoy, however, pointed out the inaccuracy in the computation of Shri Dwarkadas. According to him the book value post merger will be 20.70 and not Rs. 17.68. Shri Chinoy has also pointed out that A.P.I.L. has upto date never paid any dividend. Shri Chinoy has also submitted that there was no carry forward loss of Rs. 350 crores which was allegedly taken over by the A.P.I.L. According to him, the said loss have been adjusted in computing the fair value/swap ratio. 37. The scheme is fair and just for all. Even otherwise it must be presumed that the scheme is fair and just as except a fraction of the concerned, all have consciously voted for the scheme and have accepted it to be in their larger interest. 38. Further, I do not find any unfairness or unjustness in the scheme. The A.P.I.L. shareholders have accepted the swap ratio and whatever was computed in the scheme. Commercial wisdom of the A.P.I.L. shareholders cannot be subjected to appeal before this Court. In my opinion, broadly the scheme by and large, is fair and just to both the parties and all the shareholders and the creditors and the same deserves to be sanctioned. There is hardly any valid dissent to the scheme which is approved almost unanimously, even by those from the A.P.I.L. who stand to gain less immediately in short run. 39. As the last frantic and desperate attempt on the part of Shri Kenia, the sole opponent, Shri Dwarkadas, the learned Counsel files the further submissions after I finished the dictation of this judgment to try to further buttress his point of unfairness of the scheme on the basis of the latest balance sheet of the A.P.I.L. These further submissions try to point out loopholes in the affairs of the company. It is not possible for me to scrutinise the balance sheet and other details as the scheme evolved by the companies and approved by all except one Shri Kenia, has to be accepted as fair and just and in the interest of all. It is not possible for me to scrutinise the balance sheet and other details as the scheme evolved by the companies and approved by all except one Shri Kenia, has to be accepted as fair and just and in the interest of all. Shri Kenia alone cannot be allowed to tyrannise the whole overwhelming majority of even the A.P.I.L. 40. The scheme is, therefore sanctioned. The affidavits of Official Liquidator and Regional Director stating their no objection to the scheme are taken on record. The Company Petition No. 337 of 2002 is made absolute in terms of prayer Clauses (a) to (p). Company Petition No. 338 of 2002 is made absolute in terms of prayer Clauses (a) to (r). 41. Cost of Rs. 2500/- each to the Regional Director as well as to the Official Liquidator to be paid by the petitioners within four weeks. 42. All concerned to act on a copy of this order duly authenticated by the Company Registrar. Drawn up order and certified copy is expedited. 43. The learned Counsel for both the opponents in both the petition pray for stay of this order for four weeks. Since the scheme is sanctioned and approved by 99% majority, there is no merit in the prayer for stay. The prayer for stay is refused. Order accordingly. -----