ASHIM KUMAR BANERJEE, J. ( 1 ) THIS is an application for sanction of the scheme of amalgamation approved by the requisite majority of the shareholders of the transferor companies as well as transferee company. The Central Government initially asked for clarification on various issues and ultimately decided to oppose the application as they were not satisfied with the explanation given by the applicants. ( 2 ) IT appears from the auditors' report as well as the director's report of the transferor companies that there were spate of litigations. concerning taking over of the respective undertakings being the sugar mills by the government. The compensation was not yet received by the respective transferor companies from the appropriate authority. The litigations are pending upto the Apex Court level. In this backdrop the auditors in their report commented that they were not able to certify that the valuation of the shares of the transferor companies was fair. The relevant extract of the auditors' comment is quoted below:"4. The company is engaged in legal matters consequent to acquisiton of its business by the U. P. State Government. The decisions in these legal matters may influence the company's business plans and the accounts have been prepared on the basis of 'going concern'. In view of the above, we are unable to comment whether the accounts prepared on the basis of 'going concern' is correct. " ( 3 ) SIMILAR comment was made in respect of all transferee companies. The Central Government in their affidavit contended that they were in agreement with the observation made by the auditors of the transferor companies and in view of such observation, the Central Government was not in a position to arrive at a conclusion that the scheme would not be detrimental to the interest of the public at large and as such, they decided to oppose the proposed merger. The applicants filed affidavit in reply. In the affidavit in reply it has been contended that the issues of taking over of the sugar mills and payment of compensation are long overdue to be resolved since 1979. According to the applicants, the transferee company is not in any way involved with those litigations and the transferor companies are not transacting any business at all save and except conducting those litigations for the purpose of recovery of the compensation amount. According to the applicants, the transferee company is not in any way involved with those litigations and the transferor companies are not transacting any business at all save and except conducting those litigations for the purpose of recovery of the compensation amount. According to the applicants, if the proposed merger is sanctioned, the transferor companies would be in a better position to mobilise their resources and stand behind the transferee company for future betterment. ( 4 ) MR. Debansu Basak, learned counsel appearing for the applicants, relying upon the decision of the Apex Court in the case of Hindustan lever. Employees' Union vs. Unilever Limited and Ors. , respondents reported in AIR 1995 Supreme' Court page 470 submits that once the shareholders of the transferor companies as well as transferee company approved the scheme by overwhelming majority, the Central Government is not entitled to oppose the same on the ground that the exchange ratio was not properly done. Mr. Basak has placed heavy reliance on paragraph 31 which is quoted below:"31. We are unable to uphold any of the above contentions raised by Mr. Dholakia. The overwhelming majority of the shareholders had approved the scheme at the meeting called for this purpose and had approved the exchange ratio. In fact, a proposal for amendment of the exchange ratio was also rejected by the overwhelming majority of 99% shareholders. There is no reason to presume that the shareholders did not know what they were doing" ( 5 ) I have carefully considered the said decision. In my view, paragraph 13 of the said decision is also relevant herein and the same is quoted below: "13. Transfer of share to a foreign company on under valuation is of course a matter of concern. It is true that the transfer of shares by one company to another company is primarily to be determined by the shareholders and, therefore, if the 99% are of the view that the valuation of the shares was reasonable and fair then the court should be slow to interfere with it. But what is necessary to be emphasised is that a shareholder may not be interested in the ultimate effect of allotting shares to a multi-national on a low price valuation, but the court certainly is. For instance, if the value of the share which has been determined at Rs. But what is necessary to be emphasised is that a shareholder may not be interested in the ultimate effect of allotting shares to a multi-national on a low price valuation, but the court certainly is. For instance, if the value of the share which has been determined at Rs. 105/- for allotment to hll is hypothetically determined, say at Rs. 210/-, then the result would be that UL will have to pay more in lieu of getting the shares and that could definitely bring more foreign exchange to the national stream. It is just one illustration to demonstrate that how low pricing of the valuation of share effects the public interest. That the valuation was low-priced was found even by the High Court. Therefore, it is not open to the respondents to argue that the valuation of Rs. 105/- having been accepted by majority of almost