JUDGMENT : Heard Mr. R Banerjee, learned Senior Counsel for the petitioners and Mr. J Saha, learned Senior Counsel for the Objector. This is an application under sections 391 (2) and 394 of the Companies Act, 1956, seeking sanction of the Court to the scheme of amalgamation of Buragohain Tea Company Ltd. (Transferor Company) with B&A Ltd. (Transferee Company). Transferor Company was incorporated on 20.05.1927 under the provisions of the Indian Companies Act, 1913. It is an existing company under the Companies Act, 1956 (Act).The registered office of the Transferor Company is situated at Govindapur Tea Estate, Post Office-Latekujan, Dist-Golaghat. The authorized share capital of the Transferor Company is R.6,00,000.00 divided into 600 equity shares of Rs.1,000.00 each. The issued, subscribed and paid up share capital of the Transferor Company is Rs.5,30,000.00 divided into 530 equity shares of Rs.1,000.00 each fully paid up. The Transferor Company is engaged in the business of cultivation and sale of tea. It is stated that Transferor Company has maintained proper Books of Accounts as required by law and its annual accounts have been audited as on March 31, 2012. Value of the assets of the Transferor Company is Rs.19,53,87,760.00 whereas, liabilities of the Transferor Company stood at Rs.6,26,27,175.00, thus excess of assets over liabilities stood at Rs.13,27,60,585.00. It is stated that subsequent to March 31, 2012, there has been no substantial change in the financial position of the Transferor Company, except what would be consequent to usual course of business. The Transferee Company was incorporated on 01.06.1915 under the provisions of the Indian Companies Act, 1913 in the name of Barasali Tea Company Pvt. Ltd. It is an existing public limited company within the meaning of the Act and is presently known as B & A Ltd. w.e.f. 06.12.2000. The registered office of the Transferee Company is situated at Indu Bhawan, MG Road, Jorhat. Authorized share capital of the Transferee Company is Rs.10,00,00,000.00 divided into 50,00,000 equity shares of Rs.10.00 each and 5,00,000.00 Redeemable Cumulative Preference Shares of Rs.100.00 each. The issued, subscribed and fully paid up share capital of the Transferee Company is Rs.3,10,00,000.00 divided into 31,00,000 equity shares of Rs.10.00 each fully subscribed and paid up. The Transferee Company is engaged in the business of cultivation, manufacture and sale of tea. The annual accounts of the Transferee Company have been audited as on March 31, 2012. The issued, subscribed and fully paid up share capital of the Transferee Company is Rs.3,10,00,000.00 divided into 31,00,000 equity shares of Rs.10.00 each fully subscribed and paid up. The Transferee Company is engaged in the business of cultivation, manufacture and sale of tea. The annual accounts of the Transferee Company have been audited as on March 31, 2012. The assets of the Transferee Company stood at Rs.1,12,48,96,650.00 and total liabilities stood at Rs.62,68,26,053.00, thus excess of assets over liabilities stood at Rs.49,80,70,597.00. It is stated that since March 31, 2012, there has been no substantial change in the financial position of the Transferee Company except those arising out of the usual course of business. Transferee Company is a listed company with the stock exchanges. Both the Transferor Company and the Transferee Company have placed on record their Memorandum of Association and Articles of Association as annexures to the company petition. By the scheme of amalgamation, which has been placed on record as an annexure to the company petition, the entire undertaking of the Transferor Company is proposed to be transferred to the Transferee Company. The justifications for the said scheme of amalgamation have been set out in the company petition. Transferee Company is currently operating 7 tea gardens in Upper Assam, producing high quality black tea. It has three processing units with a combined annual capacity of 8 million kgs of black tea. With the Transferee Company having its own leaf production of 3.4 million kgs, there is surplus tea processing capacity of 4.6 million kgs, which is partly utilized at present by processing bought tea leaf. Transferee Company has been in the tea business for a long time and has considerable expertise and goodwill in such business. On the other hand, Transferor Company has a tea garden, namely, Govindapur Tea Estate in the district of Golaghat. The said tea estate was, however, shut down in the year 2005 following dispute with the workers. Rockland Realty Pvt. Ltd., a company having the same management as the Transferee Company, took over the Transferor Company in May, 2011 by acquiring the majority shares of the Transferor Company. A petition was pending in this Court for voluntary liquidation of the Transferor Company. Rockland Realty Pvt. Ltd., a company having the same management as the Transferee Company, took over the Transferor Company in May, 2011 by acquiring the majority shares of the Transferor Company. A petition was pending in this Court for voluntary liquidation of the Transferor Company. The same was allowed to be withdrawn by this Court on 07.05.2011 whereafter, it was taken over by Rockland Realty Pvt. Ltd. Thus Transferor Company came under the same management and control as the Transferee Company. Operation of the Govindapur Tea Estate resumed thereafter. It is stated that under the new management, the said tea estate has been able to achieve a turn around by producing 8.5 lakh kgs of tea in green leaf form. Business of the Transferor Company has revived and has stabilized. It has good potential now. However, the Transferor Company does not have a processing unit of its own and has to sell its tea leaf. It is stated that Govindapur Tea Estate is situated at a distance of 55 kms from Mokrung Tea Estate belonging to the Transferee Company, which has its own processing unit having a capacity of 20 lakh kgs of black tea, but is presently under-utilized. In case of amalgamation, business of both the companies can be combined together, and can be carried out more conveniently and advantageously. On the one hand, the amalgamation will enable the Transferee Company to expand its business with an established tea estate and utilize its surplus tea processing capacity more gainfully in processing the larger quantities of its own production of green leaf, on the other hand, the amalgamation will benefit the Transferor Company as it will have direct access to in house tea processing capacity as well as the expertise, well established management set up, distribution and marketing network and goodwill of the Transferee Company. Amalgamation will facilitate consolidation of the two companies and enable the combined company to carry on its business in a more convenient and advantageous manner with pooling of and more efficient utilization of resources, thus strongly fortifying the position of the amalgamated company. Other benefits of amalgamation have also been set out in the company petition. As per the terms of the scheme of amalgamation (scheme), the proposed appointed date was 01.04.2011, but would become effective from the effective date subject to sanction granted by the High Court. Other benefits of amalgamation have also been set out in the company petition. As per the terms of the scheme of amalgamation (scheme), the proposed appointed date was 01.04.2011, but would become effective from the effective date subject to sanction granted by the High Court. With effect from the appointed date, all assets, property rights and powers as well as debts, liabilities, duties and obligations of the Transferor Company were to be transferred to the Transferee Company. All the employees serving under the Transferor Company as on the effective date were to become employees of the Transferee Company with effect from the effective date on such terms and conditions, which would not be less favourable to them than those subsisting with reference to the Transferor Company as on the said date. All proceedings pending by or against the Transferor Company as on the effective date, including contracts etc. would stand transferred to the Transferee Company and would be enforceable by or against the Transferee Company. The most important or rather controversial clause of the scheme is that on the scheme becoming effective, the Transferee Company shall issue and allot to the share holders of the Transferor Company 786 equity shares of Rs.10.00 each in the Transferee Company for every one equity share of Rs.1,000.00 each in the Transferor Company. Thus, the scheme envisages amalgamation of the Transferor Company with the Transferee Company in the above terms and conditions. Both the Transferor Company and the Transferee Company had earlier approached this Court by filing Company Petition No.2/2013 and this Court by order dated 11.02.2013 directed holding of separate meetings of the equity share holders of the Transferor Company and the Transferee Company on 23.03.2013 for the purpose of considering the said scheme of amalgamation. The Court appointed Chairman for the said meetings. Notices of the said meetings were sent to the equity share holders of both the companies by post and also published in two local news papers on 27.02.2013, “The Assam Tribune” in English and the “Dainik Janambhumi” in Assamese. On 23.03.2013, meetings of the equity share holders of the two companies were held separately. In the meeting of the equity share holders of the Transferor Company, which was attended by five equity share holders entitled together to 503 equity shares of Rs.1,000.00 each fully paid up, the scheme was approved. On 23.03.2013, meetings of the equity share holders of the two companies were held separately. In the meeting of the equity share holders of the Transferor Company, which was attended by five equity share holders entitled together to 503 equity shares of Rs.1,000.00 each fully paid up, the scheme was approved. Similarly, in the meeting of the equity share holders of the Transferee Company, which was attended by 19 equity share holders entitled together to 15,27,938 equity shares of Rs.10.00 each fully paid up, the scheme was approved. Both the companies approved the scheme without any modification. Proceedings of the aforesaid two meetings were placed before this Court by the Court appointed Chairmen. Respective Boards of Directors of the two companies had also approved the scheme of amalgamation. It is stated that the Transferor Company and the Transferee Company are under the same management and control. The scheme of amalgamation would be beneficial to both the companies. The exchange ratio of the shares of the Transferee Company for the shares of the Transferor Company has been fixed on a fair and reasonable basis and on the basis of the valuation report of M/s. Ghosal Barnwal & Co., Chartered Accountants. Further, Microsec Capital Ltd., independent Merchant Bankers, have also confirmed that such ratio is fair. Transferor Company is an unlisted company, but the. Transferee Company being a company listed with the Bombay Stock Exchange Ltd., has duly filed the scheme with the stock exchange whereafter, Bombay Stock Exchange has given its no objection to the scheme. It is in this backdrop that prayer has been made for sanctioning the scheme by this Court. An affidavit has been filed by one Ms. Yvette D’SA as the constituted attorney of Smti. Sharmila Vijay Shetty because of the latter’s absence from the country. It is stated that Smti. Sharmila Vijay Shetty (hereafter referred to as Objector) is holding 3,16,200 shares in her own name and is the joint shareholder of another block of 8,61,918 shares along with her father, Hemendra Prasad Barooah. It is stated that Objector is the daughter of Hemendra Prasad Barooah, the Chairman of the Board of Directors of the Transferee Company. Sharmila Vijay Shetty (hereafter referred to as Objector) is holding 3,16,200 shares in her own name and is the joint shareholder of another block of 8,61,918 shares along with her father, Hemendra Prasad Barooah. It is stated that Objector is the daughter of Hemendra Prasad Barooah, the Chairman of the Board of Directors of the Transferee Company. With a view to divest the Objector from her claim to the said block of shares in the Transferee Company, TS No.41/2012 was filed by Hemendra Prasad Barooah in the Court of Civil Judge, Jorhat, wherein, it has been claimed that though the block of 8,61,918 shares are in the joint name of the plaintiff (Hemendra Prasad Barooah) and the Objector, for all intent and purpose, the plaintiff is the sole beneficial shareholder and the reason for introducing the Objector as the joint owner was for operational convenience and to ensure that after the death of the plaintiff, the demat account should not be frozen. Plaintiff has sought for a declaration that he is the sole and absolute owner of the said block of 8,61,918 shares of the Transferee Company along with other incidental reliefs. The civil suit was filed after the Company Law Board had rejected such a prayer made by the father. Misc. (J) Case No.27/2012 was filed by the plaintiff under Order 39 Rules 1 & 2 of the Code of Civil Procedure, 1908. Learned Civil Judge passed order dated 13.08.2012 directing the parties to maintain status quo in respect of the aforesaid block of shares lying in the demat account of HDFC Bank. Another title suit being TS No.47/2012 was filed by Hemendra Prasad Barooah and others against the Objector and 4 others in the Civil Court at Jorhat, questioning the transfer of 2,21,230 shares of Rs.10.00 each of the Transferee Company by Late Usha Barooah, wife of Hemendra Prasad Barooah to the Objector. In the said suit, an injunction application was also filed, which was registered as Misc.(J) Case No.32/2012. Learned Civil Judge, Jorhat passed order dated 29.08.2012 restraining defendant No.1 i.e., the Objector from selling, dealing with, transferring, alienating, encumbering or exercising voting right over the said 2,21,230 shares and also restrained the Transferee Company and the concerned bank i.e. HDFC Bank Ltd. from making payment of any dividend on the said shares to the Objector. Learned Civil Judge, Jorhat passed order dated 29.08.2012 restraining defendant No.1 i.e., the Objector from selling, dealing with, transferring, alienating, encumbering or exercising voting right over the said 2,21,230 shares and also restrained the Transferee Company and the concerned bank i.e. HDFC Bank Ltd. from making payment of any dividend on the said shares to the Objector. However, the aforesaid order dated 29.08.2012 was modified by this Court in FAO No.19/2012 filed by the Objector. Vide order dated 09.11.2012, this Court directed release of the dividend to the Objector for the financial year 2011-2012 without prejudice to the rights of the plaintiff to claim temporary injunction for release of dividend in future. It is contended that in order to dilute the share holding of the Objector in the Transferee Company and to cover up their mismanagement and oppression, management of the Transferee Company has planned the convoluted scheme to merge a company (Transferor Company) having no intrinsic value with the Transferee Company. It is stated that though the scheme of amalgamation was stated to have been notified to the Bombay Stock Exchange on 25.05.2012, it was actually notified on 26.09.2012. It is contended that the scheme was not discussed in the meeting of the Board of Directors of the Transferee Company on 25.05.2012, but was inserted subsequently because of certain disputes between the management and the Objector. Father Hemendra Prasad Barooah had filed company petition No.923/2012 before the Company Law Board, New Delhi Bench under section 111 A of the Act to have the name of the Objector deleted as a shareholder in respect of the joint share holding of 8,61,918 shares. This petition was dismissed by the Company Law Board on 31.07.2012. In this proceeding, the Company Law Board was never informed about any such scheme. According to the affidavit filed on behalf of the Objector, there are sufficient reasons to belief that after the order of the Company Law Board, the management fabricated the minutes of the Board’s meeting dated 25.05.2012 and notified the Bombay Stock Exchange on 26.09.2012. Rockland Realty Pvt. Ltd. owns 510 out of the 580 shares of the Transferor Company i.e. 87.93%. Directors of Rockland Realty Pvt. Ltd. are also the Directors and employees of the Transferee Company. All the share holders of Rockland Realty Pvt. Ltd. are Directors of the Transferee Company and sister-concern; therefore, the whole deception becomes apparent. Rockland Realty Pvt. Ltd. owns 510 out of the 580 shares of the Transferor Company i.e. 87.93%. Directors of Rockland Realty Pvt. Ltd. are also the Directors and employees of the Transferee Company. All the share holders of Rockland Realty Pvt. Ltd. are Directors of the Transferee Company and sister-concern; therefore, the whole deception becomes apparent. Allegation as regard non-receipt of notice of the meeting of the Transferee Company held on 23.03.2013 has been made. It is alleged that notice was sent to the address not currently occupied by the Objector and was received after the meeting. Finally, it has been contended that the scheme is devoid of any justification and the exchange ratio of shares is wholly prejudicial to the interest of the Transferee Company in which the public is interested. The scheme has not been placed before the Court in terms of the circular of the Security Exchange Board of India (SEBI) dated 14.02.2013, which lays down certain steps to be taken prior to submission of the scheme before the High Court. In view of non-compliance with the SEBI circular dated 14.02.2013, sanction should not be granted. A reply-affidavit has been filed by the petitioners to the affidavit filed on behalf of the Objector. It is stated that objector does not represent any class of shareholders and is not a bonafide shareholder of the Transferee Company. Personal and private disputes that existed between the Objector and her father and other persons cannot be a ground to oppose amalgamation of the two companies, which decision has been taken on the basis of sound business policy. It is stated that Objector was appointed as a whole time Director of the Transferee Company w.e.f. 01.06.2010. However, she did not devote any time and attention to the affairs of the company and did not even attend a single meeting of the Board of Directors. Taking the view that her continuance as whole time Director was not in the interest of the Company, resolution dated 19.09.2011 was adopted by the Board of Directors terminating her appointment as Director of the Transferee Company. It is stated that due notice of the meeting of the share holders of the Transferee Company held on 23.03.2013 was given and it was sent to the address of the Objector, which is mentioned in the register of shareholders. It is stated that due notice of the meeting of the share holders of the Transferee Company held on 23.03.2013 was given and it was sent to the address of the Objector, which is mentioned in the register of shareholders. Objector had never attended any of the Annual General Meetings of the Transferee Company in the past. Allegations made by the Objector have been denied. Share holding status of the Objector has been highlighted as under: - i) 94,970 numbers of shares (3.06%) are in the name of the Objector without any litigation. ii) 2,21,230 (7.14%) earlier in the name of her mother Lt. Usha Barooah. This block of shares is subject to litigation in TS No.47/2012 pending in the Civil Court at Jorhat. iii) 8,61,918 numbers of shares (27.80%) jointly in the name of Hemendra Prasad Barooah and Objector. This block of shares is also under litigation in the Civil Court at Jorhat in TS No.41/2012. It is stated that it is a common business practice for amalgamation of companies having common management. Approval of the scheme by the Board of Directors of the Transferee Company was intimated to the Bombay Stock Exchange on the date of the meeting itself i.e., on 25.05.2012. Regarding the SEBI circular dated 14.02.2013, it is stated that the scheme was filed in this Court on 21.01.2013. As such question of the SEBI circular dated 14.02.2013 being applicable does not arise. It is reiterated that the scheme will advance the business of the Transferor Company and the Transferee Company and would be to the benefit and advantage of both the company, their shareholders, employees and all concerned. Contending that the objections raised by the Objector are vague and frivolous being devoid of merit, petitioners seek dismissal of the objection and pray for sanction of the scheme. Regional Director, Eastern Region, Ministry of Corporate Affairs, Govt. of India, Kolkata has filed affidavit. In his affidavit, he has stated that as per the balance sheet of both the companies, there are secured creditors. However, no meeting of the creditors has been held and consent obtained. According to him, the accounting standard applied in the scheme does not conform to the requirement of Accounting Standard 14 read with section 211 (3A) of the Act. In his affidavit, he has stated that as per the balance sheet of both the companies, there are secured creditors. However, no meeting of the creditors has been held and consent obtained. According to him, the accounting standard applied in the scheme does not conform to the requirement of Accounting Standard 14 read with section 211 (3A) of the Act. However, the basic objection raised by the Regional Director is regarding the exchange ratio of shares between the Transferor Company and the Transferee Company. According to him, the provision to pay 786 equity shares of Rs.10.00 each of the Transferee Company against one equity share of Rs.1,000.00 of the Transferor Company is not at all justified considering the status of the two companies. The balance sheet of the Transferor Company does not portray the correct picture of the said company, having a direct impact on the share exchange ratio of 1:786. He submits that the scheme appears to be against the interest of the minority shareholders and is meant to give exclusive benefits to the promoter group. Petitioners have filed reply-affidavit to the affidavit of the Regional Director. Contentions made by the Regional Director have been denied. In fact, his role has also been questioned. It is stated that the exchange ratio of shares has been fixed on the basis of the earning capacity of the Transferor Company and not on the basis of its net asset value or net worth as appearing from its balance sheet as alleged by the Regional Director. The exchange ratio has been fixed on the basis of profitability and earnings of the Transferor Company and not on basis of the net worth of the two companies. Value of assets and consequently re-evaluation reserve has not been considered at all in the valuation. Further contention is that matter of valuation of shares and exchange ratio is a matter for the shareholders and the Central Govt. has no locus standi to raise any objections with regard to the same. Fairness of valuation and exchange ratio of shares have been approved by the shareholders of both the companies and confirmed by independent auditors and Merchant Bankers. Contending that the scheme will advance the business interest of the two companies and is for the benefit and advantage of the companies, their shareholders, employees and all concerned, petitioners have requested that objection raised on behalf of the Central Govt. Contending that the scheme will advance the business interest of the two companies and is for the benefit and advantage of the companies, their shareholders, employees and all concerned, petitioners have requested that objection raised on behalf of the Central Govt. should be overlooked. The Objector has filed a hard hitting supplementary affidavit on 19-03-2014. Referring to the affidavit earlier filed on her behalf opposing the scheme, she has stated that in her own name she has 3,16,200 equity shares in the Transferee Company which is equivalent to 10.2% of the issued and paid up capital of the said company. She has further stated that she owns a further block of 8,61,918 shares in the Transferee Company jointly with her father Hemendra Prasad Barooah in a demat account with HDFC Bank. Father has since expired. By operation of law, the said share jointly held by her alongwith her father has now devolved upon her. The said block of 8,61,918 equity shares represent 27.8% of the issued and paid up capital of the Transferee Company. Thus she claims to hold 38% of the shares in the Transferee Company. A malafide attempt has been made to deplete her share holding in the Transferee Company. The scheme has been devised as part of such a move. It is a ploy to deprive the Objector of her control over the company. According to the Objector, the Transferee Company has been traditionally a concern of the Barooah family. Her elder sister has been living abroad permanently alongwith her family since the last four decades. Her only brother Amit Barooah died in the year 2007. His widow has since remarried and is living abroad permanently. It is stated that because of the aforesaid developments, her father became mentally very weak and vulnerable. Moreover, because of old age, he was suffering from various diseases and ailments. Taking advantage of the situation, some employees of the company started influencing him against the petitioner since she is the only member of the Barooah family residing in India and concerned with the affairs of the Transferee Company. The scheme has been devised to dilute her share holding and control in the Transferee Company. Taking advantage of the situation, some employees of the company started influencing him against the petitioner since she is the only member of the Barooah family residing in India and concerned with the affairs of the Transferee Company. The scheme has been devised to dilute her share holding and control in the Transferee Company. When the scheme was devised, litigation was already pending before the Company Law Board, u/s 111 A of the Act instituted by the father seeking to de-register her name from the share register of the company in respect of 8,61,918 shares which stood jointly in the name of her father and herself. The said petition was dismissed by the Company Law Board. No notice of any share holders meeting to consider the scheme was served on her. It is stated that following the death of her father, an attempt was made by the said group of employees of the Transferee Company to usurp the control over the company alongwith its valuable assets and properties. Complaining of mismanagement and oppression committed by the present management in running the affairs of the Transferee Company, she has filed a company petition u/s 397 and 398 of the Act before the Company Law Board, Kolkata Bench which is now pending for disposal wherein interim order was passed on 24.01.2014 directing maintenance of status-quo with regard to the existing paid up share capital of the company. Devising of the scheme has been projected in the company petition as an act of oppression against the Objector. It is contended that the scheme is not in the interest of the company and is in reality a mischievous and malafide design to commit further oppression and mismanagement against the Objector. It is also contended that no meeting of the creditors was held. Accounts and finances have been manipulated. The scheme seeks to materially alter the share holding pattern and structure of the Transferee Company which would be an act prejudicial and detrimental to the interest of the Objector being the single largest share holder of the Transferee Company. It would also negate the subsisting order of status quo passed by the Company Law Board. She therefore seeks rejection of the scheme and the related petition. It would also negate the subsisting order of status quo passed by the Company Law Board. She therefore seeks rejection of the scheme and the related petition. An objection was raised on behalf of the petitioners regarding acceptance of the said supplementary affidavit filed by the Objector on 19-03-2014 on the ground that the same was not filed at least three days prior to the date of hearing. After hearing the parties and on due consideration, this Court passed order dated 20-03-2014 opining that having regard to the facts and circumstances of the case, the supplementary affidavit filed by the Objector on 19-03-2014 was required to be taken on record except the averments made in paragraphs 3, 4 and 8 of the said affidavit. It was ordered accordingly. Petitioners have filed rejoinder affidavit to the supplementary affidavit filed by the Objector. It is stated that the allegations made by the Objector in the supplementary affidavit are wholly irrelevant for the purpose of consideration of sanction of the scheme as proposed by the petitioners. It is denied that the Objector is the largest share holder of the Transferee Company. It is contended that the Objector has no right to 2, 21, 230 and 8, 61, 918 equity shares of the Transferee Company which are subject matters of pending litigation in the Civil Court. By reason of Article 45 of the Articles of Association of the Transferee Company, the block of 8, 61, 918 equity shares would have to be recorded in the name of the executor of the estate of Hemendra Prasad Barooah and the Transferee Company has recorded the name of Shri Somnath Chatterjee as the executor subject to orders passed in Title Suit No.41/2012. Conduct of the Objector has been highlighted to contend that she was never concerned about the affairs of the Transferee Company either as a Director or as a share holder. Her elder sister Smti. Anuradha Farley is now the Chairperson of the company. All allegations made in the supplementary affidavit have been denied. It is reiterated that Objector on her own holds only 3.06% of the share holding of the Transferee Company. Late Hemendra Prasad Barooah during his lifetime had disowned and dis-inherited the Objector from his estate. After denying and disputing the allegations made by the Objector, petitioners seek sanctioning of the scheme. Mr. It is reiterated that Objector on her own holds only 3.06% of the share holding of the Transferee Company. Late Hemendra Prasad Barooah during his lifetime had disowned and dis-inherited the Objector from his estate. After denying and disputing the allegations made by the Objector, petitioners seek sanctioning of the scheme. Mr. R. Banerjee, learned Senior Counsel appearing on behalf of the petitioners submits that the scheme presented before the Court jointly by the two companies i.e. by the Transferor Company and by the Transferee Company whereby the Transferor Company would be merged with the Transferee Company, is in the best interest of both the companies, their share holders, employees etc. It is a decision based on practical logic backed by sound business and commercial considerations. All formalities as required under the law have been complied with. As per order of this Court, meetings of share holders of the two companies were held on the same date i.e. on 23-03-2013 but separately. Notice of the said meeting of the share holders of the Transferee Company was sent to the Objector in the address which is available in the register of share holders. Inspite of notice, Objector did not attend the meeting. In both the meetings the share holders of the two companies approved the scheme. The Objector having not attended the meeting cannot now raise any objection against sanctioning of the scheme. Regarding the exchange ratio of shares i.e. one share of Rs.1000.00 of Transferor Company being made equivalent to 786 shares of Rs.10.00 each of the Transferee Company, it is submitted that the said exchange ratio has been worked out by the experts. The opinion of the experts has been approved by the share holders of both the companies. Therefore this Court may accept the scheme alongwith the exchange ratio. Objection raised by the Objector are primarily personal in nature concerning family disputes between her late father and herself. Such disputes are not at all relevant in a proceeding for sanction of scheme u/s 391 and 394 of the Act. No meeting of the creditors is required to be held to approve the scheme, he submits. In support of his submissions, learned Senior Counsel for the petitioners has placed reliance on a number of decisions which will be referred to and discussed in the succeeding part of the judgment. No meeting of the creditors is required to be held to approve the scheme, he submits. In support of his submissions, learned Senior Counsel for the petitioners has placed reliance on a number of decisions which will be referred to and discussed in the succeeding part of the judgment. He finally submits that the objection raised by the Objector may be rejected and the scheme as proposed may be sanctioned by the Court. Per-contra, Mr. J. Saha, learned Senior Counsel for the Objector submits that the Objector is battling mismanagement and oppression in the Transferee Company. Referring to the share holding of the Objector in the Transferee Company, he submits that it is most unfortunate that taking advantage of a family dispute between father and daughter, Objector is being targetted and sought to be made irrelevant in the affairs of the Transferee Company. He submits that initially a company petition was filed u/s 111A of the Act to divest the Objector from her joint share holding over the block of 8, 61, 918 shares. When the said company petition was dismissed, civil suit was filed at Jorhat by the father claiming that the said block of shares belongs entirely to him. Another civil suit was instituted questioning the gift deed whereby a block of 2, 21, 230 shares were gifted to the Objector by her mother late Usha Barooah. Changes were made in the Articles of Association of the Transferee Company adversely affecting the interest of the Objector in respect of the joint share holding. It is in the light of these developments that the scheme is required to be critically examined. The Transferor Company was for all intent and purport a sick concern. Proceedings were instituted before this Court for voluntary liquidation of the said company. It was at that stage that Rockland Realty Private Limited, a company formed entirely of the members of the Board of Directors and employees of the Transferee Company took over the management of the Transferor Company by purchasing the shares to the extent of 87%. He submits that it is an admitted position that Govindapur tea estate, which is the only tea estate belonging to the Transferor Company, had stopped production in the year 2005. He submits that it is an admitted position that Govindapur tea estate, which is the only tea estate belonging to the Transferor Company, had stopped production in the year 2005. Comparing the financial and market standing of the two companies, learned Senior Counsel for the Objector submits that the exchange ratio of shares of the two companies proposed is totally absurd and has been worked out in such a manner that it would render the Objector irrelevant in the amalgamated company if only her undisputed share holdings are considered. He therefore submits that the scheme and more particularly the exchange ratio of shares is unfair to the Objector having been designed malafide and therefore this Court may not grant sanction to the scheme as proposed. He has also placed reliance on a number of decisions which will be considered at the appropriate stage. Rival submissions made at the Bar have received the due and anxious consideration of the Court. Both the sides have produced and relied upon a large number of documents and orders which have also been perused. Question for consideration in this petition is whether the Court should grant sanction to the scheme proposed by the petitioners in the face of objection raised by the Objector and the Central Government? To answer the aforesaid question, it would be apposite to first refer to the relevant provisions of the Act. Section 391 (1) of the Act provides that where a compromise or arrangement is proposed between a company and its creditors or any class of them or between a company and its members or any class of them, the Court may, on the application of the company or any creditor or member of the company, or, in the case of a company which is being wound up, of the Liquidator, order a meeting of the creditors or class of creditors or of the members as the case may be, to be called, held and conducted in such manner as the Court directs. Sub-section (2) provides that if a majority in number representing three-fourth in value of the creditors, or class of creditors, or members, or class of members, as the case may be, present and voting either in person or, where proxies are allowed, by proxy, at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the Court, be binding on all the creditors, all the creditors of the class, all the members, or all the members of the class, as the case may be, and also on the company, or, in the case of a company which is being wound up, on the Liquidator and contributories of the company. However, as per proviso to sub-section (2) of section 391, no order sanctioning any compromise or arrangement shall be made by the Court unless the Court is satisfied that the company or any other person who has made the application under sub-section (1) has disclosed to the Court all material facts relating to the company. As per sub-section (3), an order made by the Court under sub-section (2) shall have no effect until a certified copy of the order made by the Court has been filed with the Registrar of Companies. During the pendency of the application, the Court may stay the continuation of any suit or proceeding against the company on such terms as the Court thinks fit [sub-section (6)]. Section 392 of the Act deals with power of Court to enforce compromise and arrangement. As per sub-section (1), where the Court makes an order under section 391 sanctioning a compromise or an arrangement in respect of a company, it shall have power to supervise the carrying out of the compromise or the arrangement and may, at the time of making such order or at any time thereafter, give such directions in regard to any matter or make such modifications in the compromise or arrangement as it may consider necessary for the proper working of the compromise or arrangement. Under sub-section (2), if the Court is satisfied that a compromise or an arrangement sanctioned under section 391 cannot be worked satisfactorily with or without modifications, it may, either on its own motion or on the application of any person interested in the affairs of the company, make an order of winding up of the company. Under sub-section (2), if the Court is satisfied that a compromise or an arrangement sanctioned under section 391 cannot be worked satisfactorily with or without modifications, it may, either on its own motion or on the application of any person interested in the affairs of the company, make an order of winding up of the company. Section 393 of the Act lays down the procedure regarding holding of meeting under section 391, including issuance of notice etc. Section 394 deals with provisions for facilitating reconstruction and amalgamation of companies. As per sub-section (1), where an application is made to the Court under section 391 for the sanctioning of a compromise or arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the Court that the compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme for the reconstruction of any company or companies, or the amalgamation of any two or more companies and that under the scheme, there is wholesale transfer or any part transfer of the undertaking, property or liabilities of a Transferor Company to a Transferee Company, Court may, either by the order sanctioning the compromise or arrangement or by a subsequent order, make provision for matters enumerated therein, including allotment or appropriation by the Transferee Company of any shares etc. in that company, under the compromise or arrangement are to be allotted or appropriated by that company to or for any person. As per the first proviso, no compromise or arrangement proposed for the purpose of or in connection with a scheme for amalgamation of a company which is being wound up with any other company or companies shall be sanctioned by the Court, unless the Court has received a report from the Registrar of Companies that the affairs of the company have not been conducted in a manner prejudicial to the interest of its members or to public interest. Under section 394-A, when applications are filed under sections 391 and 394, the Court is required to give notice to the Central Govt. and shall take into consideration the representations, if any, made to it by the Central Govt. before passing any order under the said sections. In Hindustan Lever Employees’ Union Vs. Hindustan Lever Ltd. & Ors., reported in 1995 Supp. and shall take into consideration the representations, if any, made to it by the Central Govt. before passing any order under the said sections. In Hindustan Lever Employees’ Union Vs. Hindustan Lever Ltd. & Ors., reported in 1995 Supp. (1) SCC 499, the Hon’ble Supreme Court examined the jurisdiction of the Court in the merger of two companies in the light of the aforesaid provisions. It was held that the jurisdiction of the Court in sanctioning a scheme of merger is not to ascertain with mathematical accuracy if the determination satisfied the arithmetical test. A Company Court does not exercise an appellate jurisdiction. It exercises a jurisdiction which is founded on fairness. The Court’s obligation is to be satisfied that valuation was in accordance with law and it was carried out by an independent body. The determination should not be contrary to law and should not be unfair to the shareholders of the company. The Court must be satisfied that the scheme for amalgamation or merger is not contrary to public interest – it should not be unfair or contrary to public policy or unconscionable. The Apex Court examined in detail the provisions of sections 391 and 393 of the Act in Miheer H. Mafatlal Vs. Mafatlal Industries Ltd., reported in AIR 1997 SC 506 . That was a case where Mafatlal Fine Spinning and Manufacturing Company Ltd. being the Transferor Company was to be amalgamated with Mafatlal Industries Ltd. being the Transferee Company. The appellant was one of the Directors of the Transferor Company. Since the registered office of the Transferor Company was at Bombay, the application for sanctioning the scheme of amalgamation was moved in the Bombay High Court. At that stage, the appellant did not object to the scheme of amalgamation. Learned Single Judge of Bombay High Court sanctioned the scheme. As the registered office of the Transferee Company was located at Ahmedabad, the Transferee Company approached the Gujarat High Court for sanctioning the same scheme of amalgamation on behalf of the Transferee Company. It was at this stage, the appellant, who was one of the shareholders of the Transferee Company filed his objection to the scheme of amalgamation. As the registered office of the Transferee Company was located at Ahmedabad, the Transferee Company approached the Gujarat High Court for sanctioning the same scheme of amalgamation on behalf of the Transferee Company. It was at this stage, the appellant, who was one of the shareholders of the Transferee Company filed his objection to the scheme of amalgamation. Basic objection raised was that the scheme as proposed was unfair to the minority shareholders represented by the appellant and that the exchange ratio of equity shares was ex-facie unreasonable and unfair to the shareholders of the Transferee Company. Learned Single Judge of the Gujarat High Court overruled the objections and sanctioned the scheme, which was confirmed by the Division Bench of the High Court in appeal. Thereafter the matter came up before the Apex Court. By the aforesaid decision, the appeal was dismissed by the Apex Court. While deciding the aforesaid issue, the Apex Court examined the scope of interference by the Company Court in sanction proceeding. The Apex Court held that such a compromise as visualized in section 391 would also take in its sweep any scheme of amalgamation/merger of one company with another company. After thorough examination of the aforesaid provisions, the Apex Court held that on a conjoint reading of the relevant provisions of sections 391 and 393 of the Act, it becomes clear that the company Court which is called upon to sanction a scheme of amalgamation/merger has not merely to go by the ipse dixit of the majority of the shareholders or the creditors, 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 finding out whether the scheme is fair, just and reasonable and is not contrary to any provisions of law and that it does not violate any public policy. The Apex Court held as follows: - “28. ……This is implicit in the very concept of compromise or arrangement which is required to receive the imprimatur of a Court of law. The Apex Court held as follows: - “28. ……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 or 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 would bind even the dissenting minority shareholders or creditors. Therefore, the fairness of the scheme qua them also has to be kept in view by the Company Court while putting its seal of approval on the concerned scheme placed for its sanction. It is, of course, true that so far as the Company Court is concerned as per the statutory provisions of Sections 391 and 393 of the Act the question of voidability of the scheme will have to be judged subject to the rider that a scheme sanctioned by majority will remain binding to a dissenting minority of creditors or members, as the case may be, even though they have not consented to such a scheme and to that extent absence of their consent will have no effect on the scheme. It can be postulated that even in case of such a Scheme of Compromise and Arrangement put up for sanction of a Company Court it will have to be seen whether the proposed scheme is lawful and just and fair to the whole class of creditors or members including the dissenting minority to whom it is offered for approval and which has been approved by such class of persons with requisite majority vote.” After examining various facets and dimensions of the Court’s jurisdiction, the Apex Court summarized the broad contours of the scope and ambit of the jurisdiction of the Company Court in sanctioning a scheme of amalgamation/merger as under: - “ 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, sub-section (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 393 (1) (a) is placed before the voters at the concerned meetings as contemplated by section 391, sub-section (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 veil of apparent corporate purpose underlying the scheme and can judiciously X-ray the same. 7. For ascertaining the real purpose underlying the Scheme with a view to be satisfied on this aspect, the Court, if necessary, can pierce 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 majority in order to promote any interest adverse to that of the latter comprising of 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 requirement 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 would 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 Apex Court further clarified that the aforesaid parameters of the scope and ambit of the jurisdiction of the Company Court are not exhaustive but only broadly illustrative. In view of the very clear and succinct exposition of the law by the Apex Court, it is not necessary for further deliberation on the above aspect of the matter. However, since the judicial pronouncements are being considered, it would be useful to briefly refer to the various judgments cited at the bar at this stage itself. In Hindustan Lever Employees’ Union (Supra), the Court examined the exchange ratio of shares of the two companies and posed the question as to what method should be adopted for arriving at a proper exchange ratio. In Hindustan Lever Employees’ Union (Supra), the Court examined the exchange ratio of shares of the two companies and posed the question as to what method should be adopted for arriving at a proper exchange ratio. Observing that there are three well accepted methods to arrive at the fair value of the shares, namely, i) the yield method, ii) the asset value method and iii) the market value method, the Apex Court held that the usual rule is that shares of the going concern must be taken at quoted market value. In the said judgment, it was observed that the Court will decline to sanction a scheme of merger if any tax fraud or any other illegality is involved. In Meehir H. Mafatlal (Supra), the Apex Court held 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. In Bengal Tea Industries Ltd. & Ors. Vs. Union of India (Company Appeal No.418/1986 decided on 25.08.1987), a Division Bench of the Calcutta High Court held that in a scheme of amalgamation of two companies, it is not necessary in law to call for a meeting of the creditors and obtain their views on the scheme. Regarding objection raised by the Regional Director, Govt. of India that the exchange ratio of the shares between the Transferor Company and Transferee Company as provided in the scheme was unfair to the shareholders of the Transferor Company, the Calcutta High Court held that when no complaint was raised on behalf of the shareholders, Regional Director was not entitled to raise objection as to fairness or unfairness of a proposed exchange ratio of shares in an amalgamation of two companies which is a matter concerning only the shareholders of the companies involved. Valuation is ultimately a matter of expert opinion. There are more than one method of valuation of shares and valuation would vary if different methods are adopted. While observing that the shares are the properties of the shareholders and they are the ultimate and the best judge of the value which they would put on their shares, it was however stated that in the best interest of all concerned and to prevent controversy, a proper basis of valuation should be recorded. While observing that the shares are the properties of the shareholders and they are the ultimate and the best judge of the value which they would put on their shares, it was however stated that in the best interest of all concerned and to prevent controversy, a proper basis of valuation should be recorded. The Division Bench of the Calcutta High Court put in a caveat that in the event any shareholder of the Transferor Company had appeared before the Court and had objected to the valuation of the shares or to the exchange ratio, the matter would have taken an entirely different complexion and the Court would have been inclined to probe further into the question of exchange ratio to ensure that shareholders were not treated unfairly. In the absence of any challenge from any of the shareholders of the Transferor Company, the Court declined to interfere in the matter at the instance of the Regional Director. In Maknam Investments Ltd. & Ors., In Re 87 Company Cases 689, a Single Bench of the Calcutta High Court held that the Court is not supposed to set its seal upon a decision of the majority if it finds that the majority vote was not obtained honestly or that any financial or arithmetical jugglery was perpetrated. However, a note of caution was sounded by saying that the scheme is not to be scrutinized by the Court with the eye of an expert or the exactness of an accountant. If the scheme is broadly speaking calculated to benefit the company as a whole, it would be entitled to sanction of the Court. In Maharashtra Apex Corporation Ltd., In Re 124 Company Cases 637, a Single Bench of the Karnataka High Court held that if the creditors have been duly served with notices of the meeting which were also accompanied by copies of the scheme and, they do not chose to be present in the meeting and express their view one way or the other, the only inference that can be drawn prima facie, is that they have no objection to the scheme being approved. Similar is the view of the Delhi High Court in CRB Capital Markets Ltd. Vs. Reserve Bank of India, 135 Company Cases 86 (Del). In Meghal Homes (P) Ltd. Vs. Similar is the view of the Delhi High Court in CRB Capital Markets Ltd. Vs. Reserve Bank of India, 135 Company Cases 86 (Del). In Meghal Homes (P) Ltd. Vs. Shree Niwas Girni KK Samiti & Ors., reported in (2007) 7 SCC 753 , the Hon’ble Supreme Court referred to the decision in Miheer H. Mafatlal (Supra) and held that while the Court will not sit in appeal over the commercial wisdom of the shareholders of a company, it will certainly consider whether there is a genuine attempt to revive the company that has gone into liquidation and whether such revival is in public interest and conforms to commercial morality. It was clarified that the decision in Miheer H. Mafatlal (Supra), cannot be understood as standing in the way of the aforesaid interpretation of the jurisdiction of the Company Court in the above manner. In Chembra Orchard Produce Ltd. & Ors. Vs. Regional Director of Company Affairs & Anr., reported in AIR 2009 SC 1278 , the Hon’ble Supreme Court held that section 391 (1) is not a sign-post but a check-post whereat it is the duty of the Court to examine the genuineness and the bonafides of the scheme for itself. While conceding that a scheme sanctioned by majority will remain binding on a dissenting minority, even though they had not consented to such a scheme and to that extent absence of their consent will have no effect on the scheme, nonetheless, the Apex Court held that when a scheme is placed before the Court for sanction, it will have to be seen whether it is lawful and just and fair to the whole class of creditors or members, including the dissenting minority. Having noticed the broad legal provisions as discussed above, the scheme, which has been placed before the Court for sanction may now be examined. The scheme provides for amalgamation of the Transferor Company with the Transferee Company. The rationale for the scheme has been explained by stating that the Transferee Company is an established company operating seven tea gardens in Upper Assam, producing high quality black tea. It has three processing units with an annual capacity of 8 million kgs of black tea. However, the Transferee Company has its own leaf production of 3.4 million kgs only. There is thus shortfall of 4.6 million kgs to achieve optimum utilization of production capacity. It has three processing units with an annual capacity of 8 million kgs of black tea. However, the Transferee Company has its own leaf production of 3.4 million kgs only. There is thus shortfall of 4.6 million kgs to achieve optimum utilization of production capacity. For this purpose, the Transferee Company has to bring in bought tea leaf. On the other hand, Transferor Company has a tea garden, namely, Govindapur Tea Estate in the district of Golaghat, Assam with 190.47 hectares of land under tea cultivation but without any factory. Amalgamation will result in a larger and stronger company with a strong asset and capital base, which will have beneficial results for both the companies, their employees and shareholders. While the appointed date has been mentioned as 01.04.2011, it is stated that the effective date would be the date on which certified copy of the order of the High Court sanctioning the scheme is filed by the companies with the Registrar of Companies. As per the scheme, with effect from the date on which the scheme would come into force the entire business and whole of the undertaking of the Transferor Company, including all its assets and liabilities shall stand transferred and vested in the Transferee Company without any further act or deed and all debts, liabilities, contingent liabilities, duties and obligations of the Transferor Company shall be transferred to the Transferee Company. In other words, the Transferor Company would cease to have its existence and would stand merged with the Transferee Company and the Transferor Company shall stand dissolved without being wound up. On the scheme being operative, all staff and employees of the Transferor Company in service as on the effective date, shall be deemed to have become the staff and employees of the Transferee Company without any break or interruption in their service and on the terms and conditions of their employment not less favourable than those subsisting with reference to the Transferor Company as on the said date. The scheme has been made conditional upon consent of the Central Government as may be necessary under the law, approval by the requisite majority of the members/creditors of both the Companies and sanction of the High Court under sections 391 and 394 of the Act. The scheme, as presented before the Court, appears to be based on business/commercial conditions of the two Companies. The scheme, as presented before the Court, appears to be based on business/commercial conditions of the two Companies. The Transferee Company which is already an established company having substantial goodwill in the market seeks to consolidate its area of business by accretion of one more tea estate to its production base. The Transferor Company would also stand to benefit substantially by virtue of the amalgamation as it will have sufficient safeguard by virtue of economy of scale and would stand benefitted by an established management. Till this stage, the Court sees no hindrance or impediment in the sanction of the scheme. The only jarring clause of the scheme pertains to the issue of allotment of shares by the Transferee Company. As per Clause 4 (i) of Part-II of the scheme, 786 fully paid equity share of Rs.10.00 each of the Transferee Company shall be issued and allotted for every one equity share of Rs.1000.00 each held in the Transferor Company. In other words, for every thousand rupees value of shares in the Transferor Company, the shareholders of the Transferor Company would be entitled to Rs.7860 value of shares of the Transferee Company. It is true that valuation of shares and consequently the exchange ratio of shares between two merging companies is a complex issue requiring technical expertise. This is an issue which is required to be decided by the experts. The Court in its supervisory jurisdiction can however certainly look into and examine the justification or otherwise of the valuation and exchange ratio proposed and in appropriate cases may lift the veil to see the real purpose. As already discussed above, the Company Court exercises jurisdiction which is founded on fairness. While exercising its jurisdiction, the Court is competent to examine the bonafides or fairness of the valuation of shares or the exchange ratio and whether the proposal conforms to commercial morality. The Calcutta High Court in Bengal Tea Industries Ltd. (Supra) held that when an objection is raised by a shareholder to the valuation of the shares or the basis of the exchange of ratio, Court would be justified to probe further into the matter to ensure that the shareholder has not been treated unfairly. It was further observed that there are different methods of valuation and valuation would vary if different methods are adopted. It was further observed that there are different methods of valuation and valuation would vary if different methods are adopted. But it would be in the best interest of all concerned and to prevent controversy, if an appropriate basis of valuation is recorded. The Hon’ble Supreme Court in Hindustan Lever Employees’ Union (Supra) held that though there are three well accepted methods to arrive at the fair value of the shares i.e., i) yield method, ii) the asset value method and iii) market value method, the usual rule is that shares of the going concern must be taken at quoted market value. In this case, while the authorized share capital of the Transferor Company is Rs.6,00,000.00 having 600 equity shares of Rs.1,000.00 each, the authorized share capital of the Transferee Company is Rs.10,00,00,000.00 with 50,00,000 equity shares of Rs.10.00 each. The issued, subscribed and paid up capital of the Transferor Company is Rs.5,30,000.00 with 530 equity shares of Rs.1,000.00 each fully paid up. On the other hand, the issued, subscribed and paid up capital of the Transferee Company is Rs.3,10,00,000.00 with 31,00,000 equity share of Rs.10.00 each fully paid up. As per statement made in the company petition, the excess of assets over liabilities in so far the Transferor Company is concerned is Rs.13,27,60,585.00. On the other hand, the excess of assets over liabilities in respect of the Transferee Company is Rs.49,80,70,597.00. As per the Auditors’ Report of the Transferor Company dated 11.08.2012, the accumulated loss of the company was more than 50% of its net worth though the Company had earned cash profit during the financial year under audit. As per the Directors’ Report also dated 11.08.2012 that was the first year of operation after it was taken over by the present management. Due to poor condition of the plant, the management had to sell all its produce of green tea leaf in the market. The present management had taken over operations of the Transferor Company w.e.f. 08.05.2011. Prior to that, operation of the garden and factory was completely shut down due to several accidents that occurred in the garden. The records of statutory dues were missing when the Transferor Company was taken over by the present management and were reportedly destroyed by vandals. The operations of the Transferor Company were in lock out since 2005-2006 and accumulated loss resulted from the same. The records of statutory dues were missing when the Transferor Company was taken over by the present management and were reportedly destroyed by vandals. The operations of the Transferor Company were in lock out since 2005-2006 and accumulated loss resulted from the same. Transferor Company made cash profit only in the year under consideration and the management was hopeful that the accumulated loss would be written off within a reasonable period of time. It is stated in the company petition that prior to taking over of the Transferor Company by Rockland Realty Pvt. Ltd., a petition for voluntary liquidation of the Transferor Company was pending before this Court, which was allowed to be withdrawn on 07.05.2011. Thus from a careful comparison of the two companies and the business profile of the Transferor Company vis-a-vis the Transferee Company it is quite apparent that the exchange ratio proposed in the scheme which is heavily loaded in favour of the shareholders of the Transferor Company appears to be unrealistic and illogical, if not downright absurd. Shares of a company which was under lock out for long period with accumulated losses with petition filed in the High Court for voluntary liquidation perhaps cannot be valued in the manner projected in the scheme i.e. for every Rs.1,000.00 value of shares in the Transferor Company, a shareholder in the Transferor Company would get Rs.7,860.00 value of shares in the Transferee Company. When objections have been raised by the Objector and by the Regional Director about the exchange ratio, the explanation given by the petitioners is that the exchange ratio of shares has been fixed on the basis of the earning capacity of the Transferor Company and not on the basis of its net asset value or net worth as appearing from the balance sheet. The exchange ratio of shares has been fixed on the basis of profitability and earnings of the Transferor Company and the Transferee Company. Fairness of valuation and exchange ratio of shares worked out by experienced hands has been confirmed by Microsec Capital Ltd., an independent Merchant Banker. I am afraid the explanation furnished by the petitioners do not inspire the confidence of the Court. Nothing has been placed on record beyond what has been stated above. No material has been disclosed either in the petition or in the affidavits as to how the particular exchange ratio has been worked out. I am afraid the explanation furnished by the petitioners do not inspire the confidence of the Court. Nothing has been placed on record beyond what has been stated above. No material has been disclosed either in the petition or in the affidavits as to how the particular exchange ratio has been worked out. While from the stand point of the commercial strength of the two companies, the exchange ratio does not appear to be sound, the same can also be examined in the light of the recent litigation history of the Transferee Company, vis-a-vs the Objector. Before dwelling further on this aspect, it will be useful to keep in mind that both the Transferor Company and the Transferee Company are now under the same management with whom the Objector is locked in a series of legal battles. As per the pleaded case of the petitioners themselves, 87% of the shares of the Transferor Company are now owned by persons who are connected with the Transferee Company one way or the other with whom the Objector is at loggerheads. From the pleadings and the large volume of documents placed before the Court, the following facts could be culled out. At one point of time, Objector was a whole time Director of the Transferee Company. It appears that disputes, and differences, cropt up between the Objector and her father late Hemendra Prasad Barooah, who was the driving force behind the Transferee Company. She was removed from the Board of Directors of the Transferee Company on 19.09.2011. Hemendra Prasad Barooah filed a petition before the Company Law Board under sections 111 and 111A of the Act seeking deletion of the name of the Objector from the share register of the Transferee Company and the demat account lying with the HDFC Bank with regard to joint holding of 8,61,981 shares contending that he alone was the beneficiary of those shares. This petition was dismissed by the Company Law Board by holding that there was no case to invoke jurisdiction under sections 111 and 111A of the Act. In the meanwhile, the scheme was proposed and it was decided by the Transferee Company to approve the scheme. Also Articles of Association of the Transferee Company was altered which the Objector claims is to her detriment. In the meanwhile, the scheme was proposed and it was decided by the Transferee Company to approve the scheme. Also Articles of Association of the Transferee Company was altered which the Objector claims is to her detriment. Hemendra Prasad Barooah also filed a civil suit in the Court of Civil Judge, Jorhat being TS No.41/2012 wherein Objector has been made the principal defendant. The said suit pertains to the block of 8,61,981 shares jointly held in the name of Hemendra Prasad Barooah and the Objector. In the said suit, injunction order has been passed by the Civil Court directing the parties to maintain status quo in respect of the said block of shares. Hemendra Prasad Barooah and others had also filed another civil suit before the Court of Civil Judge, Jorhat being TS No.47/2012 questioning the gift deed of the mother Usha Barooah in favour of the Objector whereby, 2,21,230 numbers of equity shares held by Usha Barooah were gifted to the Objector. Injunction order has been passed in the said civil suit restraining payment of dividend to the Objector on account of the said block of shares and further restraining the Objector from exercising her voting rights in respect of the said block of shares as well as from alienating the said shares. On the other hand, Objector has filed Company Petition No.186/2013 before the Company Law Board, Kolkata under sections 397 and 398 of the Act alleging mismanagement and oppression by the present management of the Transferee Company. The Company Law Board has passed order dated 24.01.2014 directing that status quo with regard to the existing paid up share capital of the Transferee Company should be maintained without any prejudice to the outcome of the two civil suits. In addition to the above cases, the parties are also involved in several other incidental litigations. It is in the backdrop of the above litigation history between the parties on the one hand and the financial condition of the Transferor Company vis-a-vis the Transferee Company on the other hand that the exchange ratio presented before the Court does not appear to be just and fair. A conjoint and careful reading of sections 391 and 394A of the Act would indicate that the Registrar of Companies as well as the Central Govt. A conjoint and careful reading of sections 391 and 394A of the Act would indicate that the Registrar of Companies as well as the Central Govt. have a role to play in the case of amalgamation or merger of two companies, more so when one of the companies to the amalgamation or merger had earlier sought for voluntary liquidation. Since it is a case of valuation of the shares of the two companies and the determination of the exchange ratio, keeping in mind that the Transferee Company is a public limited company and a listed company before the Bombay Stock Exchange, there cannot be any doubt that substantial public interest is involved in the above exercise. Since the Court has agreed in principle to sanction the scheme, but has found the exchange ratio to be unfair and unjust and not based on the market realities, Court is of the view that it would be just and proper if the Registrar of Companies is directed to examine the matter through experts and determine a fair and just exchange ratio. Accordingly and in the light of the above, the following orders are passed: - i) Court has no objection to sanction the scheme for amalgamation of Buragohain Tea Company (Transferor Company) with B & A Ltd. (Transferee Company). ii) However, having regard to the litigation history in the Transferee Company involving the Objector and other related developments and also having regard to the financial status of the Transferor Company as discussed above, objection raised by the Objector and by the Central Govt. through the Regional Director regarding the exchange ratio of shares between the two companies cannot be brushed aside. iii) The exchange ratio of 786 fully paid up equity shares of Rs.10.00 each of the Transferee Company to be issued and allotted for every one equity share of Rs.1,000.00 held in the Transferor Company does not appear to be fair and justified. iv) Accordingly, Court directs the Registrar of Companies, Shillong to work out the exchange ratio in a fair manner through independent experts keeping in view the discussions made above and submit the same to the Court in two months time. v) Thereafter Court may sanction the scheme with modification(s) List for further order on 16.11.2015.