Document Fragment View

Matching Fragments

II The share exchange ratio of 1 : 5 (one share of Reliance Industries Ltd. in exchange of five shares of IPCL) is unfair, unjust and prejudicial to the whole class of equity shareholders of IPCL.
III Serious irregularities were committed by IPCL in obtaining proxies from certain minority equity shareholders of IPCL. They were threatned or cerced into signing blank proxy forms by the Heads of Departmens of IPCL before the day of the equity shareholders' meeting. This was violative of the provisions of Section 166 of the Companies Act, violative of the Articles of Association of IPCL and also violative of the Company Court's order dated 23.4.2007 in Company Application No. 126 of 2007.

18. It is true that if one were to decide the matter only by referring to the contents of the share valuation certificate dated 9.3.2007, it may not be possible for a layman to form an opinion or to comment upon the wisdom in fixing the share ratio of 1 : 5 because the share valuation report dated 9.3.2007 refers to various accounting methods and the factors taken into account by the Chartered Accountants without indicating what would have been the share exchange ratio by following one particular method nor does the report give the details about the valuation of the assets, turn-over, net profits etc. of the two companies. However, in view of the decision of the Apex Court in Hindustan Lever Employees Union (supra) from which the relevant observations are quoted in para 15 hereinabove and more particularly in view of the undisputed fact that after amalgamation, the price of the shares in the transferee company (RIL) has substantially gone up and thereupon the shareholders in IPCL have substantially gained, we would not be justified in investing any further time on the share exchange ratio which was accepted by 99.89% of the equity shareholders of IPCL at the meeting of the equity share holders convened on 14.4.2007 pursuant to the directions of the Company Court; the appellants held only 0.007% shares in IPCL. Blank Proxy Forms

(ii) Not a single person has addressed any letter to the Chairman of the Court convened meetings or the Company for withdrawal of his proxy.

(iii) Even otherwise, during the meeting, the Chairman had assured that even if any of the employee shareholders had given a proxy form earlier, but if they were present at the meeting, then they would be entitled to participate in the voting and the proxy forms given earlier would be held invalid, while their votes would be considered. Chairman had also instructed scrutineers accordingly. This is also stated in the Chairman's Report submitted to this Court. Thus, there is no violation of the provisions of the Companies Act as also of the order of the Court dated 16.03.2007 in Company Application No. 126 of 2007 as alleged.

It is thus clear that the Chairman had assured the equity shareholders at their meeting held on 14.4.2007 that even if any of the shareholders had given his proxy form earlier, but if they were present at the meeting then they would be entitled to participate in the voting and the proxy forms given earlier would be held invalid and that their votes would be considered. The Chairman had also instructed the scrutinisers accordingly.

In view of the above report and particularly in view of the fact that more than 99% of the equity shareholders of the transferor company granted approval to the scheme and that the appellants making this grievance, have not led any specific evidence on this disputed question of fact, we are not in a position to give any finding in favour of the appellants or against the transferor company.