N. V. RAMANA, J. ( 1 ) THIS Company Petition filed by M/s. TCI industries Limited, under Sections 391 and 394 of the Companies Act, 1956 seeks sanction of the court to the Scheme of arrangement proposed by the petitioner with their shareholders. ( 2 ) IN the year 1965, the petitioner was incorporated as a Private Limited Company under the provisions of the Companies Act, 1956 (for short the Act ), in the State of assam. Thereafter, in the year 1974, the petitioner converted itself into a Public limited Company and changed its registered office to the State of Andhra Pradesh after complying with the provisions of the Act. As on 31-3-2002, the authorized share capital of the petitioner is at Rs. 15,00,00,000. 00 divided into 1,50,00,000 equity shares of Rs. 10. 00 each and 1,00,000 preference shares of rs. 100/- each, and the issued, subscribed and paid-up capital of the petitioner is at rs. 95,00,000/- divided into 9,50,000 equity shares of Rs. 10. 00 each fully paid. Apart from the above capital, there is forefeited amount of Rs. 99,450. 00. ( 3 ) THE petitioner was incorporated for carrying on the business of public carriers, transporters and carriers, goods, passengers, merchandise, com-commodities and other products and goods and luggage of all kinds and description in any part of India and elsewhere, on land, water and air by any conveyance whatsoever. ( 4 ) THE petitioner proposed a scheme of arrangement between Transport corporation of India Limited M/s Gati corporation Limited, TCI Industries Limited and Transcorp. International Limited for demerger in the year 1999. In consideration of the demerger of the above companies, the shareholders who were holding 100 shares each in the petitioner company were allotted five shares each of the company. ( 5 ) THE Board of Directors of the petitioner-company in their meeting held on 27-4-2002 have approved the Scheme of arrangement between the petitioner and their shareholders. In pursuance thereof, the petitioner filed an application in C. A. No. 613 of 2002, wherein this court by order dated 23-7-2002 directed the meeting of the equity shareholders of the petitioner-company be held on 7-9-2002 at 12. In pursuance thereof, the petitioner filed an application in C. A. No. 613 of 2002, wherein this court by order dated 23-7-2002 directed the meeting of the equity shareholders of the petitioner-company be held on 7-9-2002 at 12. 00 a. m. at Lions bhavan, Lakhpat Building, Behind Usha kiran Complex, S. D. Road, Secunderabad - 500 003 for the purpose of considering the scheme of Arrangement, and appointed Sri p. Subba Rao, on Advocate practicing in this court as Chairman to preside over the meeting. ( 6 ) THE Chairman having conducted the meeting, filed his report before the court stating that the meeting was attended by 20 members in person holding shares valued at rs. 400/- divided into 40 shares of Rs. 10. 00 each and nine members by proxy holding shares valued at Rs. 2,06,03,250. 00 divided into 20,60,325 equity shares of Rs. 10. 00 each out of the issued, subscribed and paid up capital of Rs. 2,31,54,260. 00 divided into 23,15,426 shares of Rs. 10. 00 each, and that all the members present at the meeting, have unanimously resolved to approve the scheme of Arrangement proposed by the company. ( 7 ) PURSUANT thereto, the Secretary of the petitioner-company, filed the present company Petition praying this court to sanction the Scheme of Arrangement with their shareholders. This Court, on 1-10-2002 while admitting the Company Petition, issued notice to the Central Government, and directed the petitioner to publish the notice of hearing of the Company Petition in two news papers, namely "andhra Prabha" and "new Indian Express", as required under rule 80 of the Companies (Court) Rules, 1959. ( 8 ) ON behalf of the Central Government, the Registrar of Companies filed affidavit on 21-8-2002 stating that the Scheme of arrangement mooted by the petitioner for cancellation of its equity shares, held small lot, as indicated in the scheme, and payment in consideration thereof to such equity shareholders of the petitioner in accordance with the scheme is nothing but a scheme for buyback of its own shares, and as such, section 77-A of the Act, would be attracted. According to him. According to him. Section 77 of the Act imposes complete prohibition of purchasing of own shares, but Section 77-A thereof permits the companies buyback its own shares on certain terms and conditions, and the petitioner in stead of approaching this court under Sections 391 and 394 of the Act, ought to have followed the procedure prescribed in Section 77-A read with sec. 192-A of the Act, 1956 for buying back its own shares. The scheme is silent about the source from which the company proposes to pay consideration of the shares, which are to be reduced, cancelled and extinguished. He, therefore, prayed that the scheme spelt out in para 4 (a) be modified that instead of automatic cancellation, cancellation can be done in respect of those shareholders who desire to cancel their shares against payment. ( 9 ) PURPORTING to submit reply to the above, the petitioner filed memo stating that sections 391 and 77-A of the Act are independent of each other, and in any manner, Section 77-A of the Act does not have any overriding effect on Section 391 thereof. That, in fact, Section 77-A is merely an enabling provision, providing for an alternative method by which a company can buy-back its shares upto a certain percentage of its total paid-up capital in any financial year, and therefore, the procedure prescribed under Section 77-A of the Act, cannot be made applicable to the scheme under Section 391 read with Section 100 of the Act, which is much wider in its perspective, and permits the Scheme of arrangement between the company on the one hand and its shareholders on the other. According to the petitioner, the language used in Section 77 A of the Act is not suggestive of the fact that the jurisdiction of this court under Sections 391 and 394 of the act has been taken away or substituted. According to the petitioner, the language used in Section 77 A of the Act is not suggestive of the fact that the jurisdiction of this court under Sections 391 and 394 of the act has been taken away or substituted. The petitioner in order to negative the contention of the Registrar of Companies that the provisions of Section 77-A of the Act, cannot be bypassed while proceeding under section 391, placed reliance on the judgment of the Bombay High Court in s. E. B. I. v. Sterlite Industries (India) Ltd. In support of his contention that this court cannot sit in appeal over the decision arrived at by the shareholders in their meeting to consider the scheme of arrangement, he placed reliance on the judgment of the karnataka High Court rendered in C. P. No. 14 of 2002, dated 19-11-2002, in the matter of falcon Tyres Limited and the judgment of the Gujarat High Court rendered in c. P. No. 232 of 2002, dated 19-2-2003 in the matter of Gujarat Ambuja Exports Ltd. ( 10 ) CONTENDING that the scheme need not be modified to ready that the cancellation may be done in respect of those shareholders who desire to cancel their shares against payment, the petitioner states that out of 18,934 small share holdings, 17,767 holdings are still in physical form, though the trading in shares is in compulsory demat since last two years. That para 4 (a) of the Scheme of Arrangement envisages automatic cancellation without surrender of share certificate only in case of physical holdings, but still the holder has the option to continue as a member and opt for non- cancellation of his holding by sending an intimation in Form-A to the company, and if this is done, the Scheme of Arrangement, will not permit the petitioner to cancel the said shares. That the said para is an investor friendly measure in the interest of the shareholder, and that the Scheme of arrangement, is offering small shareholder folios a hassle-free, cost-free exit from their small shareholding in physical certificate form at a price more attractive than the one that may become available to them in the stock market. That to safeguard the interests of the shareholders, para 15 (e) provides depositing on amount of Rs. 45. 00 lakhs. That apart, the company is having share premium account of Rs. 6. That to safeguard the interests of the shareholders, para 15 (e) provides depositing on amount of Rs. 45. 00 lakhs. That apart, the company is having share premium account of Rs. 6. 50 crores, which can be utilized for the purpose of cancellation of shares, and the amount required for cancellation of equity shares will be made available from expected fund flow from future business plans. In view of circular G. S. R. No. 773 (E), dt. 11-10-2001, there is no need for compulsory voting by postal ballot. ( 11 ) AS a rejoinder to the above reply, the registrar of Companies, in his affidavit filed on 27-1-2003 states that the aforesaid contention of the petitioner is not tenable having regard to the fact that Section 77-A of the Act, came to be incorporated vide companies (Amendment) Act, 1999, which came into effect from 31-10-1999, giving power to a company to purchase its own shares, which was prohibited earlier. The contention of the petitioner that Sec. 77-A of the Act is merely on enabling provision is disputed. Reiterating the very stand taken in his earlier affidavit, the Registrar of companies states that the proposed scheme of Arrangement contemplates for reduction/cancellation and extinguishments of small lots of shareholdings and payment of consideration in respect thereon in the form of cash, envisaged in the scheme which will provide an exit route to small holders is nothing but a scheme of buyback of its own shares attracting the provisions of section 77-A of the Act and SEBI (Buy Back of Securities) Regulations, 1998. Further according to him para 4 of the scheme which provides for automatic cancellation of shareholding in physical form upto 10 equity shares, and in case of shareholding in physical form of more than 10 equity shares, cancellation of upto 10 equity shares upon the company receiving a written intimation in form-B, and in case of shareholding in demat form of less or equal to or more than 10 equity shares held, upon the company, receiving a written intimation, which means it is a clear buy back of shares within the meaning of Section 77-A of the Act, and the petitioner ought to have complied with the requirements prescribed thereunder as also under Section 192-A of the act. He further states that if the petitioner intends to give option to the shareholders holding upto 10 equity shares, the petitioner should have obtained the approval of the shareholders on the terms and conditions of the offer so that it does not contain any negative option and the draft letter should have been made a part of the scheme. ( 12 ) THE proposed Scheme of arrangement admittedly is approved by 100% vote of the shareholders, and this is evident from the report filed by the chairman, who presided over the meeting of the shareholders under the directions of this court, There was no objection to the Scheme of Arrangement from any of the shareholder, who was present at the meeting and voted in favour of the motion. ( 13 ) THE contention of the Registrar of companies that the Scheme of Arrangement proposed by the petitioner which seeks cancellation of shares held as small-lot in consideration of payment for such cancellation, in accordance with the provisions of the scheme, is nothing but a scheme of buyback of its own shares by the petitioner, and therefore, the petitioner ought to have followed the procedure prescribed under Section 77-A read with Section 192-A of the Act and the provisions of SEBI (Buy back of Securities) Regulations, 1998, instead of invoking the jurisdiction of this court under Sections 391 and 394 read with section 100 of the Act, cannot be accepted. ( 14 ) BE it noted that Sections 391 and 77-A of the Act are independent of each other. Section 77-A of the Act, which was incorporated by reason of Companies (Amendment) Act, 1999, and which came into effect from 31-1-1999, was not given any overriding effect over the provisions of sections 391 and 394 of the Act. The said provision is merely an enabling provision, providing for alternative mode by which the company can buyback its shares upto a certain percentage. The High Court of bombay, in the case reported in S. E. B. I, v. Sterlite Industries (India) Limited, upon which the learned counsel for the petitioner placed reliance, considered similar objection as was raised by the Registrar of companies, in this Company Petition. The High Court of bombay, in the case reported in S. E. B. I, v. Sterlite Industries (India) Limited, upon which the learned counsel for the petitioner placed reliance, considered similar objection as was raised by the Registrar of companies, in this Company Petition. The bombay High Court having framed the point namely Whether the company court has power to grant reorganization scheme under section 391 read with Sections 100 and 104 empowering the company to buy back the shares from the shareholders or whether section 77-A is the only mode to buyback the shares, for its consideration, analyzed the provisions of Sections 77 and 77-A of the act, and held thus: the opening words of Section 77-A viz. , "notwithstanding anything contained in this Act, but subject to the provisions of Sub-section (2) of this section and Section 77-B, a company may purchase its own shares or other specified securities. . . " shows that section 77-A is a facilitating provision which enables the provisions of subsections (2), (3) and (4 ). Prior to the introduction of Section 77-A, the only manner in which a company could buy back its shares was by following the procedure set out under Sections 100 to 104 and Section 391 which required the calling of separate meetings of each class of shareholders and creditors as well as (if required by the court) the drawing up of a list of creditors of the company and obtaining of their consent to the scheme for reduction. The legislative intention behind the introduction of Section 77-A is to provide an alternative method by which a company may buy back upto 25 per cent of its total paid up equity capital in any financial year subject to compliance with sub-sections (2), (3) and (4 ). It does not supplant or take away and part of the pre-existing jurisdiction of the company court to sanction a scheme for such reduction under Sections 100 to 104 and sec. 391. The submission of the appellants that the non-obstante clause in Sec. 77-A gives precedence to that section over the provisions of sections 100 to 104, section 391 is misconceived. The non- obstante clause in Sec. 77-A namely "notwithstanding anything contained in this Act. . . 391. The submission of the appellants that the non-obstante clause in Sec. 77-A gives precedence to that section over the provisions of sections 100 to 104, section 391 is misconceived. The non- obstante clause in Sec. 77-A namely "notwithstanding anything contained in this Act. . . " only means that notwithstanding the provisions of section 77 and Sections 100 to 104, the company can buy back its shares subject to compliance with the conditions mentioned in that section without approaching the court under section 100 to 104 or Section 391. There is nothing in the provision of section 77-A to indicate that the jurisdiction of the court under Sec. 391 or 394 has been taken away or substituted. It is well settled that the exclusion of jurisdiction of the court should not readily be inferred, such exclusion should be explicitly or clearly implied. There is nothing in the language of Section 77 that gives rise to such an inference We are, therefore, inclined to hold that Section 77-A is merely on enabling provision and the court s powers under Sections 100 to 104 and Section 391 are not in any way affected. The conditions provided in section 77-A are applicable only to buy back of shares under Section 77-A. The conditions applicable to Secs. 100 to 104 and Section 391 cannot be imported into or made applicable to a buy back under Section 77-A. Similarly, the conditions for a buy back under section 77-A cannot be applied to a scheme under Sections 100 to 104 and section 391. The two operate in independent fields. ( 15 ) THE principle is well established that this court while exercising its powers under sections 391 and 394 of the Act, does not sit in appeal over the decision arrived at by the shareholders or the secured creditors or the unsecured creditors, and minutely examine whether the proposed Scheme of arrangement, as approved by the shareholders or the secured creditors or the unsecured creditors, as the case may be, should be sanctioned or not. Suffice it to say, if the proposed scheme as approved by the shareholders or the secured creditors or the unsecured creditors, as the case may be, is in their best interests and, it is appropriate that the Scheme of Arrangement should be sanctioned, and it is not for this court to delve deep into the commercial wisdom exercised by the shareholders or the secured creditors or the unsecured creditors, for this court lacks such an expertise. ( 16 ) IN Falcon Tyres Limited, a similar question came up for consideration before the Karnataka High Court in C. P. No. 14 of 2002. The Karnataka High Court by its judgment dated 19-11 -2002, quoted the ratio laid down by the apex Court in Miheer H. Mafatlal v. Mafatlal Industries Limited, which is to the following effect: the Company court which is called upon to sanction a scheme of compromise and arrangement has not merely to go by the ipse dixit of the majority of the shareholders of creditors or their respective classes who might have voted in favour of the scheme by requisite majority but the court has to consider the pros and cons of the scheme with a view to find out whether the scheme is fair, just and reasonable and is not contrary to any provisions of law and it does not violate any public policy. This is implicit in the very concept of compromise or arrangement which is required to receive the imprimatur of a court of law. No court of law would ever countenance any scheme of compromise or arrangement arrived at between the parties and which might be supported by the requisite majority if the court finds that it is an unconscionable or an illegal scheme or is otherwise unfair or unjust to the class of shareholders or creditors for whom it is meant. Consequently, it cannot be said that a Company Court before whom an application is moved for sanctioning such a scheme which might have got the requisite majority support of the creditors or members of any class of them for whom the scheme is mooted by the concerned company has to act merely as a rubber stamp and must almost automatically put its seal of approval on such a scheme. It is trite to say that once the scheme gets sanctioned by the court it a view to finding out whether a better scheme could have been adopted by the parties. ( 17 ) SO quoting, the Karnataka High court, approved the scheme before it, and while approving the scheme, it held thus: therefore, it becomes clear that this court cannot have jurisdiction like an appellate authority to minutely scrutinize the arrangement and to arrive at an independent conclusion whether the arrangement should be permitted to go through or not when the majority of the creditors or members or their respective classes have approved the scheme as required by Section 391 sub-section (2 ). All that the court has to consider is that the scheme is fair, just and reasonable and it is not contrary to any provisions of law and if does not violate any public policy. ( 18 ) SIMILAR objections, as are raised in this Company Petition by the Registrar of companies, came up for consideration before the Gujarat High Court in C. P. No. 232 of 2002, dated 19-2-2003, in the matter of gujarat Ambuja Exports Ltd. The Gujarat high Court while negativing the objections taken to by the Registrar of Companies, quoted the following broad principles as laid down by the Supreme Court in Miheer H. Mafatlal v. Mafatlal Industries Ltd. : (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 39 (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. 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 391 (1) (a) is placed before the voters at the concerned meetings as contemplated by Section 391 (1 ). 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 391 (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 subsection (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 view 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 promise any interest adverse to that of the latter comprising the same class who 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 of the class represented by them tor 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 or person who with their open eyes have given their approval to the scheme even in the view of the court there could be a better scheme for the company and its members or creditors for whom the scheme on that grounds it would otherwise amount to the court exercising appellate jurisdiction over the scheme rather than its supervisory jurisdiction. ( 19 ) IN the instant case, as already noted supra, the proposed Scheme of arrangement, was unanimously approved by 100% vote, and there was not even a single vote, which was polled against the proposed scheme of Arrangement. This apart, the petitioner had made provision for depositing a sum of Rs. 45,00 lakhs and earmarked a sum of Rs. 6. 50 crores, for meeting the payment needs of the shares, which maybe cancelled. When the shareholders, in their wisdom, thought that the proposed Scheme of Arrangement, is fair and reasonable for them and that it had safeguarded their interest, it is not for this court to go into the pros and cons thereof and balance them. Suffice it to say that the proposed Scheme of arrangement, having been approved by 100% vote, and there being no resistance from any of the shareholders or persons interested in the affairs of the company, this court has no other alternative except to approve the proposed Scheme of arrangement, as approved by the shareholders of the company. ( 20 ) IN the above view of the matter, the company petition is liable to be allowed for none of the objections raised by the Registrar of Companies against the scheme of Arrangement, which is filed as annexure-3 to the Company Petition, can be upheld. Hence the objections raised by the registrar of Companies are rejected. The company Petition is allowed. As a corollary, the Scheme of Arrangement, as approved by the shareholders of the company, is required to be sanctioned, and it is accordingly sanctioned. The petitioner shall cause a copy of this order on the Registrar of companies, Andhra Pradesh, Hyderabad, within a period of 30 days from the date of its receipt. No costs.