Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

On January 29, 2015 the change of name from “Sesa Sterlite Limited” to “Vedanta Limited” (the “Company”) was approved by the board of directors of the Company. The shareholders of the Company approved the name change through a postal ballot dated March 30, 2015. A copy of the Certificate of name change issued by the Registrar of Companies, Goa, India, effective as of April 21, 2015 is attached hereto as Exhibit 99.1 and is incorporated by reference herein. A copy of the Specimen share certificate of the Company is attached hereto as Exhibit 99.2 and is incorporated by reference herein. A copy of the Memorandum and Articles of Association is attached hereto as Exhibit 99.3 and is incorporated by reference herein.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS Registrar of Companies, Goa Company Law Bhawan, EDC Complex, Plot No. 21, Patto Panaji Goa - 403001, Goa, INDIA Certificate of Incorporation pursuant to change of name [Pursuant to rule 29 of the Companies (Incorporation) Rules, 2014] Corporate Identification Number (CIN): : L13209GA1965PLC000044 I hereby certify that the name of the company has been changed from Sesa Sterlite Limited to Vedanta Limited with effect from the date of this certificate and that the company is limited by shares. Company was originally incorporated with the name Sesa Goa Private Limited Given under my hand at Goa this Twenty First day of April Two Thousand Fifteen. Signature valid Digitally signed by KATKAR VISHNU PANDURANG Date: 2015.04.21 16:49:42 GMT+05:30 VISHNU PANDURANG KATKAR Registrar of Companies Registrar of Companies Goa Mailing Address as per record available in Registrar of Companies office: Vedanta Limited SESA GHOR 20 EDCCOMPLEX PATTO, PANJIM, GOA - 403001, Goa, INDIA (iv)

vedanta SHARE CERTIFICATE [Pursuant to Sub-section(3) of Section 46 of the Companies Act, 2013 and Rule 5(2) of the Companies (Share Capital and Debentures) Rules, 2014) VEDANTA LIMITED (formerly known as Sesa Sterlite Limited/Sesa Goa Limited) www.vedantalimited.com CIN: L13209GA1965PLC000044 (INCORPORATED UNDER THE COMPANIES ACT, 1956) Registered Office : Sesa Ghor, 20 EDC Complex, Patto, Panjim-Goa 403 001 THIS IS TO CERTIFY that the person(s) named in the Certificate is/are the Registered Holder(s) of the within-mentioned share(s) bearing the distinctive number(s) herein specified in the above Company subject to the Memorandum and Articles of Association of the Company and that the amount endorsed hereon has been paid up on each such share. EQUITY SHARES EACH OF RUPEE 1/- AMOUNT PAID UP PER SHARE RUPEE 1/- Reg. Folio No. Certificate No. Name(s) of Holder(s) No. of Shares held ( ) Distinctive No(s) Given under the Common Seal of the Company this VEDANTA LIMITED * * PANJIM-GOA Director Director Secretary/Authorised Signatory Note: No transfer of any of the Shares comprised in this Certificate will be registered unless accompanied by this Certificate.

MEMORANDUM OF TRANSFERS OF SHARE(S) MENTIONED OVERLEAF Date Transfer No. Registered Folio Name(s) of Transferee(s) Initials Authorised Signatory VL 000001

Fresh Certificate of Incorporation consequent upon change of name of Sesa Goa Limited to Sesa Sterlite Limited

Fresh Certificate of Incorporation consequent upon change of name of Sesa Sterlite Limited to Vedanta Limited

Copy of the order dated 25-3-1980 of the Court Of the Judicial Commissioner, Goa, Daman & Diu, Panaji, made under section 394 of the Companies Act, 1956, in the matter of amalgamation of Mingoa Private Limited, with Sesa Goa Private Limited.

Copy of the order dated 5th October, 1996 of High Court of judicature at Bombay, Panaji Bench made under Section 394 of the Companies Act, 1956 in the matter of Sesa Shipping Limited with Sesa Goa Limited.

Copy of the order dated 6th June, 2003 of High Court of Bombay at Goa made under Section 394 of the Companies Act, 1956 in the matter of the scheme of amalgamation of a Narain mines limited with Sesa Goa Limited.

Copy of the order dated 4th February, 2005 of high court of Bombay at Goa made under section 394 of the companies act, 1956 in the matter of the scheme of amalgamation of Sesa Kembla Coke company with Sesa Goa Limited annexed to the memorandum of association pursuant to section 391(4) of the companies act, 1956.

Copy of the order dated 7th February, 2011 of Supreme Court of India made under Section 394 of the Companies Act, 1956 in the matter of the scheme of amalgamation of Sesa Industries Limited with Sesa Goa Limited.

Copy of the order dated 3rd April, 2013 of Single Judge of High Court of Bombay at Goa made under Section 394 of the Companies Act, 1956 in the matter the Scheme of amalgamation and arrangement amongst Sterlite, Madras Aluminium Company Limited (MALCO), Sterlite Energy Limited (SEL), Vedanta Aluminium Limited (VAL) and Sesa Goa and their respective Shareholders and Creditors (‘Composite Scheme’) and the Scheme of Amalgamation of Ekaterina Limited (Ekaterina) with Sesa Goa and their respective Shareholders and Creditors (‘Ekaterina Scheme’).

Copy of the order dated 12th August, 2013 of Division Bench of High Court of Bombay at Goa in the matter the Scheme of amalgamation and arrangement amongst Sterlite, Madras Aluminium Company Limited (MALCO), Sterlite Energy Limited (SEL), Vedanta Aluminium Limited (VAL) and Sesa Goa and their respective Shareholders and Creditors (‘Composite Scheme’) and the Scheme of Amalgamation of Ekaterina Limited (Ekaterina) with Sesa Goa and their respective Shareholders and Creditors (‘Ekaterina Scheme’).

Copy of the order dated 27th August, 2013 of Supreme Court of India made in the matter the Scheme of amalgamation and arrangement amongst Sterlite, Madras Aluminium Company Limited (MALCO), Sterlite Energy Limited (SEL), Vedanta Aluminium Limited (VAL) and Sesa Goa and their respective Shareholders and Creditors (‘Composite Scheme’) and the Scheme of Amalgamation of Ekaterina Limited (Ekaterina) with Sesa Goa and their respective Shareholders and Creditors (‘Ekaterina Scheme’.

Copy of the order dated 12th March, 2015 of High Court of Bombay at Goa made under Section 394 of the Companies Act, 1956 in the matter of the Scheme of amalgamation of a Goa Energy Limited with Sesa Sterlite Limited.

Copy of the order dated 25th March, 2015 of High Court of Madras made under Section 394 of the Companies Act, 1956 in the matter of the Scheme of amalgamation of a Sterlite Infra Limited with Sesa Sterlite Limited.

No member to receive dividend whilst indebted to the Company and Company’s right to reimbursement therefrom

Form I. R. CERTIFICATE OF INCORPORATION No. 44/G of 1965-66. I hereby certify that SESA GOA PRIVATE LIMITED * * * * * is this day incorporated under the Companies Act, 1956 (No. 1 of 1956) and that the Company is Limited. Given under my hand at BOMBAY this TWENTY FIFTH day of JUNE One thousand nine hundred and SIXTY FIVE (4th Jaishtha, 1887) THE SEAL OF THE REGISTRAR OF COMPANIES MAHARASHTRA (S.K. DUTT) Ex-officio Registrar of Companies. for the Union territories of Goa, Daman and Diu. J. S. C. MGIPT-515 -12401-(C-517)-7.9-63-5,000. Uh

SECOND CERTIFICATE OF INCORPORATION Company No. 24-00044 of 1965-66 I hereby certify that SESA GOA LIMITED ***** ***** ***** ***** ***** was incorporated on the TWENTY FIFTH day of JUNE One thousand nine hundred and SIXTY FIVE under the Companies Act, 1956 (NO. 1 of 1956) and that the Company is Limited. Given under my hand at Panaji this TENTH day of OCTOBER one thousand nine hundred and ninety SIX. (18 ASVINA, SAKA 1918) THE SEAL OF THE REGISTRAR OF COMPANIES GOA, DAMAN & DIU (R.V. Dani) Registrar of Companies Goa, Daman & Diu Panaji

L13209GA1965PLC000044 SESA GOA LIMITED SESA GOA LIMITED Sesa Goa Private Limited 1956 21 1956 21 507 24.6.1985 B83568964 18/09/2013 Sesa Sterlite Limited 23(1) GOVERNMENT OF INDIA - MINISTRY OF CORPORATE AFFAIRS Registrar of Companies, Goa, Daman and Diu Fresh Certificate of Incorporation Consequent upon Change of Name Corporate Identity Number : L13209GA1965PLC000044 In the matter of M/s SESA GOA LIMITED I hereby certify that SESA GOA LIMITED which was originally incorporated on Twenty Fifth day of June Nineteen Hundred Sixty Five under the Companies Act, 1956 (No. 1 of 1956) as Sesa Goa Private Limited having duly passed the necessary resolution in terms of Section 21 of the Companies Act, 1956 and the approval of the Central Government signified in writing having been accorded thereto under Section 21 of the Companies Act, 1956, read with Government of India, Department of Company Affairs, New Delhi, Notification No. G.S.R 507 (E) dated 24/06/1985 vide SRN B83568964 dated 18/09/2013 the name of the said company is this day changed to Sesa Sterlite Limited and this Certificate is issued pursuant to Section 23(1) of the said Act. Given at Goa this Eighteenth day of September Two Thousand Thirteen. Signature valid Digitally signed by PAMARTHI SRIDHAR Date: 2013 09.18 17:25:05 GMT+05:30 Registrar of Companies, Goa, Daman and Diu *Note: The corresponding form has been approved by SRIDHAR PAMARTHI, Registrar of Companies and this certificate has been digitally signed by the Registrar through a system generated digital signature under rule 5(2) of the Companies (Electronic Filing and Authentication of Documents) Rules, 2006. The digitally signed certificate can be verified at the Ministry website (www.mca.gov.in). Mailing Address as per record available in Registrar of Companies office: Sesa Sterlite Limited SESA GHOR 20 EDCCOMPLEX PATTO, PANJIM, GOA-403001, Goa, INDIA (iii)

GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS Registrar of Companies, Goa Company Law Bhawan, EDC Complex, Plot No. 21 , Patto Panaji Goa - 403001, Goa, INDIA Certificate of Incorporation pursuant to change of name [Pursuant to rule 29 of the Companies (Incorporation) Rules, 2014] Corporate Identification Number (CIN): : L13209GA1965PLC000044 I hereby certify that the name of the company has been changed from Sesa Sterlite Limited to Vedanta Limited with effect from the date of this certificate and that the company is limited by shares. Company was originally incorporated with the name Sesa Goa Private Limited Given under my hand at Goa this Twenty First day of April Two Thousand Fifteen. Signature valid Digitally signed KATKAR VISHNU PANDURANG Date: 2015 04.21 16:49:42 GMT+05:30 VISHNU PANDURANG KATKAR Registrar of Companies Registrar of Companies Goa Mailing Address as per record available in Registrar of Companies office: Vedanta Limited SESA GHOR 20 EDCCOMPLEX PATTO, PANJIM, GOA - 403001, Goa, INDIA (iv)

COPY OF THE ORDER DATED 25-3-1980 OF COURT OF THE JUDICIAL COMMISSIONER, GOA, DAMAN & DIU, PANAJI, MADE UNDER SECTION 394 OF THE COMPANIES ACT, 1956, IN THE MATTER OF AMALGUMATION OF MINGOA PRIVATE LIMITED WITH SESA GOA PRIVATE LIMITED ANNEXED TO THE MEMORANDUM OF ASSOCIATION PURSUANT TO SECTION 391(4) OF THE COMPANIES ACT, 1956.

Upon the above petition coming on for further hearing on the 11th day of March 1980, upon reading the said petition and upon hearing Mr. Joachim Dias, Pleader for Government of Goa, Daman & Diu and Mr. P.K. Patkar, Pleader of the Government of India, and Mr. Atul Setlavad and Mr. V. N.S. Neurencar, Advocates for the Petitioner Companies.

(Bicholim Land Registry Nos. 363,901,1110,1294 and Land Revenue Nos. 145,147,158,160, 163,149,144, 146,148,162,165,166,169,180 & 181)

COPY OF THE ORDER DATED 05th OCTOBER, 1996 OF HIGH COURT OF JUDICATURE AT BOMBAY, PANAJI BENCH MADE UNDER SECTION 394 OF THE COMPANIES ACT, 1956, IN THE MATTER OF SESA SHIPPING LIMITED WITH SESA GOA LIMITED ANNEXED TO THE MEMORANDUM OF ASSOCIATION PURSUANT TO SECTION 391(4) OF THE COMPANIES ACT, 1956.

Shri. E. P. Badrinaraynan, Additional Central Government Standing Counsel for the Regional Director, Department of Company Affairs, Government of India.

Shri. E. P. Badrinarayanan, Additional Central Government Standing Counsel for the Regional Director, Department of Company Affairs, Government of India.

Both these Company Petitions are being disposed of by a common Order as the Petitioner Company in Company Petition No. 11-S/96 is to be amalgamated with the Company in Company Petition No. 12-S/96.

The above petition coming on for hearing on 5th October, 1996, upon reading the said petition, the order dated 8th May, 1996 (further modified by order dated 13th June, 1996) whereby the petitioner Company was ordered to convene a meeting of its equity shareholders for the purpose of considering and if though fit, approving with or without modification, the Scheme of Amalgamation of Sesa Shipping Limited with Sesa Goa Limited and annexed to the affidavit of Shri C.D. Chitnis, Secretary of the petitioner Company, dated 23rd April, 1996 and the issues of ‘Navhind Times’ dated 1st June, 1996, and ‘Sunaprant’ dated 1st June, 1996 respectively, each containing the advertisement of the said notice convening the said meeting directed to be held by the said order dated 8th May, 1996, the affidavit of Mr. T. Pooran filed on the 19th June, 1996 showing the publication and dispatch of the notices convening the said meeting and the report of the Chairman of the said meeting dated 29th June, 1996 as to the result of the said meeting, and upon hearing Shri. E. P. Badrinarayanan, Addl. Central Government Standing Counsel for the Regional Director, Western Region, Department of Company Affairs, Government of India and it appearing from the report that the proposed Scheme of Amalgamation has been approved unanimously by the members present and voting in person or by proxy.

This Court doth hereby sanction the Scheme of Amalgamation of Sesa Shipping Limited with Sesa Goa Limited set forth as Annexure P1 to the petition and the Schedule hereto both hereby declare the same to be binding on the petitioner Company, its members and creditors,

That the said Company do file with the Registrar of Companies a certified copy of this order within 30 days from this date.

(b) Without prejudice to the generality of the foregoing sub-clause (a), the said undertaking and the business of the Transferor Company shall include:

PROVIDED ALWAYS the SCHEME shall not operate to enlarge the security for any loan, deposit or faculty created by or available to the Transferor Company which shall vest in the Transferee Company by virtue of the amalgamation and the Transferee Company shall not be obliged to create any further or additional security there for after the amalgamation has been effective or otherwise.

COPY OF THE ORDER DATED 06th JUNE, 2003 OF HIGH COURT OF JUDICATURE AT BOMBAY, PANAJI BENCH MADE UNDER SECTION 394 OF THE COMPANIES ACT, 1956, IN THE MATTER OF THE SCHEME OF AMALGAMATION OF A. NARAIN MINES LIMITED WITH SESA GOA LIMITED ANNEXED TO THE MEMORANDUM OF ASSOCIATION PURSUANT TO SECTION 391(4) OF THE COMPANIES ACT, 1956.

1. Heard Mr. R. G. Ramani, learned Councel for the Petitioner, Mr. V. P. Thali, learned Senior Central Government Standing Councel for Regional Director and Mr. Ahmed Kunju, learned Official Liquidator.

2. Mr. V.P. Thali, learned Senior Central Government Standing Councel has produced on record a letter signed by the Regional Director, Company Affairs Western Region, Government of India, giving no objection to the approval of the Scheme of Amalgamation.

3. Mr. Ahmed Kunju, learned Official Liquidator has also filed his report on record wherein it is stated that the affairs of the Company have not been conducted in the manner prejudicial to the interests of its members and of the Transferor Company.

4. Mr. R. G. Ramani, learned Councel for the Petitioner has placed the Minutes of the order on record. The same is marked ‘X’ for the purpose of identification. Order in terms of the Minutes of the Order at ‘X’ is passed.

5. The Petitioner shall pay the costs of Rs.2000/- each to the learned Official Liquidator and to the Regional Director, Department of Company Affairs Western Region, Government of India.

Upon the above petition coming on for further hearing on the 6th day of June 2003, upon reading the said petition and upon hearing Mr. V.P. Thali, Sr. Central Government Standing Counsel for Regional Director, Western Region, Department of Company Affairs, Government of India and Shri Ahmed Kunju, the official Liquidator and Mr. R.G. Ramani, Advocate for the petitioner company.

1. That all the property, rights and powers of the Transferor Company specified in the first, second and third parts of the Schedule hereto and all the other property, rights and power of the Transferor Company be transferred without further act or deed to the Transferee Company and accordingly the shall, pursuant to Section 394(2) of the Companies Act, 1956, be transferred to and vest in the Transferee Company for all the estate and interest of the Transferor Company therein but subject nevertheless to all charges now affecting the same; and

2. That all the liabilities and duties of the Transferor Company be transferred without further act or deed to the Transferee Company and accordingly the same shall, pursuant to section 394(2) of the Companies Act, 1956, be transferred to and become the liabilities and duties of the Transferee Company; and

3. That all proceeding now pending by or against the Transferor Company be continued by or against the Transferee Company; and

4. That the Transferee Company shall not allot to the members of the Transferor Company any shares in the Transferee Company as the scheme of amalgamation does not involve transfer of any shares to the Transferee Company since the shares of the Transferor Company are entirely held by the Transferee Company; and

5. That the Transferor Company do within 30 days after the date of this order cause a certified copy of this order to be delivered to the Registrar of Companies for registration and on such certified copy being so delivered the Transferor Company shall be dissolved effective from 1st April, 2002 and the Registrar of Companies shall place all documents relating to the Transferor Company and registered with him on the Transferee Company and the files relating to the said two companies shall be consolidated accordingly; and

6. That any person interested shall be liberty to apply to the Court in the above matter for any directions that may be necessary.

Located at Megalahalli, Hireguntanur Hobli, Holalkere Taluka, Chitradurga District, State of Karnataka.

Leasehold property held under Lease Agreement dated 15th February, 1997 between A. Narrain Mines Limited and Governor of Karnataka (Principal Chief Conservator of Forest, Bangalore,) admeasuring 163.50 hectares, located at Madikeripura Village (Nirthadi State Forest). Holalkere Taluka. Chitradurga District, Karnataka.

All other current assets, loans and advances as determined according to the audited Balance Sheet as at 31st March, 2002.

COPY OF THE ORDER DATED 4TH FEBRUARY, 2005 OF HIGH COURT OF JUDICATURE AT BOMBAY, PANAJI BENCH MADE UNDER SECTION 394 OF THE COMPANIES ACT, 1956, IN THE MATTER OF THE SCHEME OF AMALGAMATION OF A. NARAIN MINES LIMITED WITH SESA GOA LIMITED ANNEXED TO THE MEMORANDUM OF ASSOCIATION PURSUANT TO SECTION 391(4) OF THE COMPANIES ACT, 1956.

1. Heard Mr. Ramani learned Counsel appearing for the petitioner. Order in terms of the Minutes of the Order submitted today which is taken on record and marked “X” for identification.

2. The petitioner to pay costs of Rs. 5,000/- in favour the regional Director, Ministry of Company Affairs, Mumbai. The costs shall be paid within a period of four weeks from today. The petition stands disposed of.

Upon the above petition coming on for further hearing on the 28th day of January, 2005, upon reading the said petition and upon hearing Mr. C. A. Fereira, Senior Central Government Standing Counsel for the Regional Director, Ministry of Company Affairs, Western Region, Government of India and Mr. R. G. Ramani, Advocate for the Petitioner Company

1. That the scheme of amalgamation of the Transferor Company with the Transferee Company is hereby sanctioned as set forth in Annexure P1 to the Petition and the Schedule I hereto doth hereby declare the same to be binding on the Transferee Company, its Members and Creditors.

2. That from the effective date, Clause III of the Memorandum of Association of the Transferee Company would stand amended with the addition of clauses detailed hereunder to carry out the business of the transferor Company.

3. That the entire business and undertaking including all the properties, rights, claims interests and titles of every description of or relating to the Transferor Company and its entire authorities, privileges, technology licenses, industrial and other licenses, and the rights in respect of property, movable and immovable, leases, tenancy rights, sanctions, Govt. approvals and other assets of whatsoever nature including patent rights, trade marks and other industrial property rights, registrations, approvals, clearances, fittings and fixtures, telephones, telex and fax connections, cash balances, reserves, security deposits, refunds, outstanding balances, stocks investments, licenses, contracts, agreements and other rights and interests of all description in and arising out of such properties as may belong to or be in possession of the Transferor Company and all books of accounts and documents and records relating thereto, and all the properties, right and powers of the Transferor Company more particularly specified in the first, second and third parts of the Schedule II hereto be transferred without further act or deed to the Transferee Company and accordingly the same shall, pursuant to Section 394(2) of the Companies Act, 1956, be transferred and vest in the Transferee Company for all the estate and interest of the Transferor Company therein but subject to all charges now affecting the same; and

4 That all the liabilities, debts, obligations and duties of the Transferor Company be transferred without further act or deed to the Transferee Company and accordingly the same shall, pursuant to Section 394(2) of the Companies Act, 1956, be transferred to and become the liabilities debts, obligations and duties of the Transferee Company; and

5. That all proceedings now pending by or against the Transferor Company be continued by or against the Transferee Company; and

6. That the Transferee Company shall not allot to the member of the Transferor Company any shares in the Transferee Company as the scheme of amalgamation does not involve transfer of any shares to the Transferee Company since the shares of the Transferor Company are entirely held by the transferee Company; and

7. That the transferor Company do within 30 days after the date of this order cause a 31 certified copy of this order to be delivered to the registrar of Companies for registration and on such certified copy being so delivered, the Transferor Company shall be dissolved effective from 1st April 2004 without winding up and the Registrar of Companies shall place all documents relating to the Transferor Company and registered with him on the file kept by him in relation to the Transferee Company and the files relating to the said two companies shall be consolidated accordingly; and

8. That any person interested shall be at liberty to apply to the Court in the above matter for any directions that may be necessary.

Leasehold property admeasuring 11,85,413 square meters, granted by Goa Industrial Development Corporation, bearing survey nos. 61/1 (part), 61/3 (part) 62, 63 (part) 120/1, 121, 177 (part), 205 (part), 206 (part) & 207 (part) of Navelim Village, Bicholim taluka and survey nos. 54 (part) and 56/17 (part) of Amona Village, Bicholim Taluka.

All other current assets, loans and advances as determined according to the audited Balance Sheet as at 31st March 2004.

A. In this Scheme, unless inconsistent with the subject or context, the following expressions shall be deemed to mean:

From the effective date, the Memorandum of Association of the Transferee Company would stand amended with the addition of clauses detailed here under to carry out the business of the Transferee Company

The undertaking and business of the Transferor Company shall with effect from the Appointed Date and without further act or deed stand transferred to and vest in or deemed to be vested in the Transferee Company pursuant to Section 391(2) and 394(2) of the Act without any further act, deed, matter or thing so as to become the property of the Transferee Company for all the estate, interest of the Transferor Company as a going concern but subject nevertheless, to all charges, if any, then affecting the same or any part thereof and on the Appointed Date, the Transferor Company, shall be amalgamated with the Transferee Company.

Subject to the provisions of this scheme becoming effective, the profits of the Transferor Company for the period beginning from 1st April, 2004 shall belong to and be the profits of the Transferee Company and will be available to the Transferee Company for being disposed of in any manner as it thinks fit including declaration of dividend by the Transferee Company I respect of its year ending 31st March, 2005 or any other thereafter.

COPY OF THE ORDER DATED 18TH DECEMBER, 2008 OF HIGH COURT OF JUDICATURE AT BOMBAY, PANAJI BENCH MADE UNDER SECTION 394 OF THE COMPANIES ACT, 1956, IN THE MATTER OF THE SCHEME OF AMALGAMATION OF SESA INDUSTRIES LIMITED WITH SESA GOA LIMITED ANNEXED TO THE MEMORANDUM OF ASSOCIATION PURSUANT TO SECTION 391(4) OF THE COMPANIES ACT, 1956.

Mr. I. Chagla and Mr. J. J. Bhat, Senior Advocates with Mr. R. Chagla and Mr. R. G. Ramani, Advocates for the Petitioner.

Mr. S. K. Kakodkar, Senior Advocate with A. Kakodkar and Mr. R. Rivankar, Advocates for the Objector.

These petitions have been filed for sanctioning a scheme of amalgamation of Sesa Industries Limited, the transferor Company, with Sesa Goa Limited, the transferee Company, but have been objected to, by the Objector Smt. H. Bajaj who presently holds 0.29% of shares in Sesa Industries Limited on the ground that the amalgamation is not bonafide and has been thought of to get out of the mess in which both the said Companies find themselves and to stiffle further investigations.

2. Sesa Goa Limited (SGL) was incorporated on 25-6-1965 as a Private Limited Company under the provisions of the Companies Act, 1956 and became a Public Limited Company w.e.f. 16-4-1991. Sesa Industries Limited(SIL) was incorporated on 17-5-1993 as a subsidiary of SGL, the latter holding 88.85% of its shares. Vide letter dated 3-7-1993 the SGL informed its share holders to subscribe to the shares of SIL at a premium of Rs.12.50 per share with a promise that the shares of SIL would be listed on the Bombay Stock Exchange after 12 to 18 months, and on 28-8-1993 issued its preferential offer in the ratio of one equity share for every two equity shares held in SGL i.e. Rs.22.50 per share. By letter dated 26-4-1999 SIL had informed its various shareholders including the Objector the reasons for non listing of the shares. Since the shares of SIL were not listed the Objector complained to the Registrar of Companies by her letter dated 24-5-2003. Prior to that on or about 21-4-1999 the Objector filed a Writ Petition, bearing No.1280/99 seeking refund of monies invested in shares but the same came to be dismissed on or about 17-6-1999, inter alia, with an observation that the Objector may have his remedy either under the Contract Act or under the Companies Act. Thereafter on or about 15-1-2000 the Objector filed a Criminal Complaint bearing No.4/S/2000(renumbered as 111/SW/05) against the Directors of SIL, for offences under Sections 63, 68 r/w 64, 65 and 67 of the Companies Act r/w Sections 403, 406/420 r/w 120B I.P.C. On or about 5-6-2003 the SGL offered to buy back the shares of SIL at Rs.30/- per share, between 30-6-2003 to 29-7-2003. As per the Objector, the share value of SIL share then ought to have been at least Rs.57/- per share. Nevertheless, the Objector who had about 5,31,950 shares of SIL accepted the existing offer and sold the shares pursuant to the said offer at Rs.30/- per share but retained only 57,450 shares which now represents 0.29% of shares in SIL. Mrs. Bhandari, too, accepted the offer and sold her 31950 shares. That was after another Writ Petition bearing No. 1604/03 filed by some other share holders seeking direction to to the Company that the offer should be withdrawn, failed. Another complaint bearing No.152/SS/04(renumbered as 125/SW/05) was filed in September, 2003 which is pending before the 14th Court of Metropolitan Magistrate at Girgaum, Mumbai.

3. The salient features of the amalgamation scheme are set out in para 16 of the petition and the scheme was approved at the separate Board Meetings of the aforesaid Companies on 26-7-2005. The benefits to arise from the scheme are set out in para 15 of SGL’s petition and, inter alia, it is stated that the amalgamation will help to consolidate the position of SGL which will be in a position to operate on a larger scale in terms of production and sales turnover; there will be considerable savings by eliminating duplication of administrative expenses, overheads, etc. The scheme provides that 17,65,284 shares of Rs.10/- each held by the SGL shall be cancelled and the equity share holders of SIL would be allotted one equity share as against five equity shares of Rs.10/- each held by the shareholders in SIL which would stand pari pasu with the existing ordinary equity shares of SGL. The exchange ratio of 1:5 has been worked out by M/s. N. M. Raiji and Co. and Haribhakti & Co., reputed firms of Chartered Accounts. The scheme was approved at the meetings of the Companies held on 8-5-2006. The said meeting was held pursuant to the order of this Court dated 18-3-2006 as modified by Orders dated 27-3-2006 and 31-3-2006. It will not be out of context to refer to some of the observations of this Court in the said Order dated 18-3-2006.

“However, here is a case where one of the shareholders of one of the Companies, is before the Court, asking the Court that the shareholders have a right to be informed that the Companies are under investigation by the Central Government so as to enable them to take an informed decision. In my view, the said prayer of the intervenor cannot be stated to be unreasonable. It is the financial interest of the shareholders which would be at stake in the event, the investigations being carried out by the Central Government, lead to the winding up of the said Companies at the instance of the Central Government”.

“Nevertheless the prayer of the intervenor that the shareholders should know, before they approve the scheme, that the Companies are under investigation so as to allow them to take an informed decision, cannot be simply brushed aside. The shareholders are the first Judges, if I may use that expression, to consider whether the scheme to be placed before them is to be approved or not, and for this purpose, they would be certainly entitled to know whether the Companies of which they are shareholders are being investigated by the Central Government, and, as a result of that what decision they are required to take. As a result, an explanatory statement was added to the individual notices sent to the shareholders under Section 393 of the Companies Act, 1956. The said statement reads as follows:-

“The Central Government has issued a letter dated 17th February, 2006 to various governmental agencies including the Regional Director (Western Region) enclosing a copy of the inspection report and recording that during the course of the inspection, the inspecting officer has pointed out contraventions of Section 269 read with Section 198/309, contravention of Section 289 read with Article no. 111 and 140 of the Articles, contravention of Section 260 and 313, contravention of Section 268 read with Section 256 and contravention of Section 628 of the Act. The Investigating Officer has suggested invoking the provisions of Section 397 and 398 read with Section 388B, 401, 402 and 406 of the Act including that of Section 542 of the Act. The Inspection report has also pointed out financial irregularities and also examined the complaints of Mrs. Kalpana Bhandari and Mrs. Krishna H. Bajaj which have been reported in Part “A” of the Inspection Report. Contravention of Section 297 of the Act has been reported in Part “B” of the Inspection Report. It has also been suggested Part “D” of the Inspection Report for references to be made to the Ministry of Finance and SEBI. Accordingly, the Central Government has requested the addressees to examine the report and take appropriate action”.

4. The complaints of the Objector dated 24-5-2003 and that of one Mrs. Bhandari dated 17-6-2003 have now resulted in two reports under Section 209A of the Companies Act, 1956 dated 17-2-2006(of SGL) which is at page 876 of the paper book and dated 20-3-2006(of SIL) which is at page 1133 of the paper book, of which initially the Objector had sought production and the Objector’s request was rejected by the Order of this Court dated 9-2-2007. However, the learned Division Bench in appeal No.268/07 by Order dated 25-4-2007 was pleased to order that this Court(Company Judge) “should take into consideration the said reports before passing any final orders in the matter of approving the scheme of amalgamation of the two Companies for considering the purpose of its relevancy, in order to grant approval”. The controversy as regards the production of the said two reports has now come to an end, with the production of the same by the Objector herself. Two missing pages thereof, namely page 9 of report dated 17-2-2006 and page 15 of report dated 20-3-2006 were required to be made good by the Regional Director by virtue of Order of this Court dated 29-8-2008. One of the missing pages have been made good. The other is nowhere in sight. This Court need not wait for the same.

Extensive reference was made to the said reports by the learned Senior Counsel appearing on behalf of the Objector, and, which reports certainly are not flattering to either of the said Companies. Both the reports conclude thus:-

“It will be apparent from the various findings of the Inspection Report that the entire control of the day to day working of the company is being managed by Mitsui & Co. Ltd., Japan whereby huge turnover and profits are being siphoned away through systematic under invoicing of international financial transactions and over invoicing of import of coal. As regards inter-se transactions between SGL & SIL, systematic efforts have been made by SGL to put SIL into weak financial position by siphoning of the funds from SIL to SGL by over invoicing the price of iron ore and coke. In the process, the minority shareholders of SIL have been deprived of their reasonable return in the forms of dividend or gains out of fair price of its shares. The minority shareholders of SIL have been cheated through the systematically siphoning the funds by SGL to the ultimate holding company i.e. M/s Mitsui & Co. Ltd., Japan. The I.O. has suggested for redressal of grievances of SIL by SGL in rescending the contract of purchase of shares at under value price of Rs.30/- per share”.

5. The scheme therefore came to be approved at the meetings held on 8-5-2006. Three members of SIL and one member of SGL opposed the said scheme but the fact remains that as required under Section 391 of the Act the majority in number and more than three fourths in value of the equity share holders of both the companies have approved the said scheme. In fact the scheme has been approved by more than 99% of the shareholders. In other words, the shareholders of both the companies have approved the scheme as being of commercial advantage to them and that they have done, inspite of the fact that they were aware that certain provisions of the Companies Act were contravened and the authorities were directed to examine the report and take appropriate action. The Official Liquidator in his affidavit dated 10-8-2006 relying on the report of auditors has stated that the affairs of the transferor Company have not been conducted in a manner prejudicial to the interest of its member or the public and that he has no objection for the approval of the scheme. The Official Liquidator in his affidavit dated 10-8-2006, filed on behalf of Regional Director(Central Government) has stated that he has been authorized by the Regional Director(WR) to file the affidavit and has further stated that both the companies were inspected under Section 209A of the Act during the year 2005 and “any violation which may be noticed during the course of inspection, there will be no dilution for initiating legal action under the Act and that will not in any way affect the amalgamation. This part of the controversy was dealt with in paras 13, 14 and 17 of the Order dated 9-2-2007 which can be taken as reproduced herein. The scheme having been approved by all concerned and by 99% of the shareholders of both the companies and the Central Government as well as the Official Liquidator not having objected to the same, the only function of this Court in this supervisory jurisdiction is only to examine and find out whether the scheme is just and fair to the minority of the shareholders and is otherwise not opposed to any law or public interest including the economic interest of the country, though it is contended on behalf of the Objector by her learned Senior Counsel that the Court has a pivotal role to play in terms of the proviso below sub- section(2) of Section 391 of the Act. While learned Senior Counsel on behalf of the Petitioner has contended that the jurisdiction is not inquisitorial. The relief being discretionary, it will be refused in case the aforesaid criteria is not met.

6. It was reiterated in Order dated 9-2-2007 relying on the law laid down by the Apex Court in Hindustan Lever Employees Union v. Hindustan Lever Ltd.((1995) 83 Company Cases 30) that the jurisdiction of the Company Court sanctioning a scheme of amalgamation is not appellate but only supervisory. That Section 394 of the Act casts an obligation on the Court to satisfy that the scheme for amalgamation or merger is not contrary to public interest and the basic principle of such satisfaction is none other than the broad and general principles inherent in any compromise or settlement entered into between the parties that it should not be unfair or contrary to public policy or unconscionable. In amalgamation of companies, the Courts have evolved the principle of “prudent business management tests” or that the scheme should not be a device to evade the law. In Mehir H. Mafatlal v. Mafatlal Industries Limited(1996 87 Company Cases 792) the Apex Court after considering various decided cases has come to the conclusion that the Company Court whilst sanctioning the scheme is not to go merely by the ipsi dixit of the majority of the share holders or creditors or their respective classes who might have voted in favour of the scheme by requisite majority and the Court is required 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 provision of law and does not violate any public policy. The Court will not sanction a scheme which is otherwise or which is unjust to a class of shareholders or creditors or whom it is meant.

7. To repeat, it was observed in Order dated 9-2-2007 that the Central Government through its Regional Director, has filed an affidavit through Registrar of Companies assuring the Court that any violation which have been noticed, there will be no dilution for initiating legal action under the Act and that will not in any way affect amalgamation. The action to be taken at the most will be criminal action against the Directors or other persons responsible for the violation of the relevant Sections. In case the said reports would lead to supercession of the Board of Directors of the petitioners, then the Regional Director would have certainly stated to be so and the fact that the Central Government has left the matter to the discretion of this Court would only indicate that there is nothing in the said reports which will come in the way of the Boards of the said Companies being superseded or approving the scheme of amalgamation. As assured to this Court, the Central Government is bound to take criminal action against the Directors or other persons responsible for the violation of the relevant provisions of the Act. The Objector is always at liberty to file appropriate proceedings to compel the Central Government to take necessary action, if permissible in law.

8. Notice is given to Central Government under Section 394A of the Act with the object to enable it to study the proposal and raise objections, if any, in the light of information available with it and with a view to assist the Court by placing facts which it has and which otherwise might have not been disclosed to the Court by those approaching the Court so that the interests of the investing public do not suffer and so that such facts are also considered by the Court before any order is made. The Central Government as a repository of public interest has a duty and interest to ensure that public interest i.e. interests of investing public do not suffer and laws are not violated. As stated in Modus Analysis and Information P. Ltd.(2008) 142 Company Cases 410(Cal) notice is issued to Central Government to allow it to look into the mechanics of the scheme and to appraise the Court, upon scrutiny, the legality, propriety and reasonableness of the clauses thereof. The Central Government is required to ensure that there is procedural compliance by the concerned companies and that the terms of the scheme are not opposed to public policy. The very fact that the Regional Director has not objected to the scheme, it is presumed that there is nothing in it which is illegal, or improper or unreasonable and it is not opposed to public interest. As stated in Larsen and Toubro(2004 Company Cases 523) if the Regional Director, after considering the material on record makes a positive statement in the Court that they have no objection to consider the scheme of arrangement in question, that is in itself sufficient reason to consider that the scheme is in public interest or at least not against the public interest or interests of shareholders.

9. The first objection taken by the Objector is that the petitions filed are in violation of the provision of the proviso to sub-section(2) of Section 391 of the Act as the companies have deliberately suppressed the pendency of an inspection/investigation initiated under the provisions of Section 209A of the Act. It is contended that the said proviso casts a duty upon the Company Court to satisfy itself that the company has made full disclosure of the material facts relating to the company. It is further contended that the company has not disclosed in the petition two very important material facts, namely, (i) that the criminal proceedings are pending against the Directors of SIL and SGL for violating certain provisions of the Act as well as offences under the Indian Penal Code, and, (ii) proceedings under Section 209A are pending against the companies which as per the Objector are proceedings like those under Sections 235 to 251 of the Act. As per the Petitioner a report of investigation under Section 209A can certainly be included under the provision of the said proviso as it would squarely fall under the caption of investigation made under the “alike” sections of the said Act and it is further contended neither SIL nor SGL have disclosed in the petitions about the pendency of the said proceedings. It is also submitted that both the companies had received the preliminary letter of findings dated 28-9-2005 but intentionally omitted to disclose the same in the petitions which are filed before this Court and the same were also not disclosed to the shareholders of either of the said companies in the notice sent to them for summoning the statutory meeting to be held on 8-5-2006 for the purpose of approving the scheme of amalgamation. In this context reliance has been placed on Miheer H. Mafatlal v. Mafatlal Industries Ltd.(supra) wherein the Apex Court has stated, inter alia, that the sanctioning Court has to see to it that all the statutory procedure for supporting such a scheme has been complied with and 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. Reliance is also placed on Bedrock Limited(1998 (4) BCR 710) wherein it has been held that a party seeking a discretionary relief from a Court must come with clean hands and must not suppress any relevant fact from the Court and must refrain from making misleading statements or from giving incorrect information to the Court. Reliance is also placed on T. Mathew v. Smt. Saroj G. Poddar((1996) 22 CLA 200).

10. On the other hand, on behalf of the companies, it is submitted that Section 209A of the Act deals with “inspection proceedings” and not “investigation proceedings” and the proviso to Section 391(2) of the Act is not applicable to inspection proceedings as the said proviso only speaks of investigation proceedings in respect of the company under Sections 235 to 251 of the Act and the like. Reliance is placed on Zee Telefilms Limited (Appeal No.164/03 decided by the Division Bench of this Court on 12-3-2003) wherein it was held that Section 391(2) of the Act speaks of investigation proceedings under Sections 235 to 251 of the Act in relation to the company and not to other proceedings. It is further submitted that assuming that proceedings under Section 209A is included in the proviso to Section 391(2) of the Act then the SIL had disclosed the inspection proceedings under Section 209A of the Act to the shareholders in its Explanatory Statement accompanying the notice to the shareholders for the approval of the scheme as directed by this Court by Order dated 18-3-2006 and it is only thereafter that the shareholders of SIL voted in favour of the scheme of amalgamation. Reliance has been placed on Reliance Petroleum Limited((2003) 46 SCL 38) contending that an inspection report under Section 209A of the Act cannot stand in the way of granting approval to the scheme of amalgamation, if other factors stand satisfied. It is submitted that one cannot wait to see the end of inspection proceedings which are bound to take its own course and its own time and that an endless wait cannot be in the economic interests of the country and this is so because an inspection under Section 209A of the Act can only result in prosecution against the Directors /other Officers responsible for the contravention of various Sections of the Act as indicated in the preliminary letter dated 17-2-2006 accompanying the two reports in respect of SIL and SGL and that it would not be in public interest nor in the interest of the company sought to be amalgamated in the light of the consent given by the majority shareholders. As regards the criminal complaints, it is submitted that criminal proceedings are separate proceedings and if the scheme is sanctioned such sanction would have no effect or impact on the criminal proceedings which are totally alien and irrelevant to the present scheme.

11. The requirement of maintaining books of accounts are dealt with by Section 209 of the Act and Section 209A of the Act deals with inspection of books of accounts while Section 224 deals with appointment and remuneration of auditors and Section 235 deals with the investigation of affairs of a company. The object of inspection of the books of accounts is not only to keep a watch on the performance of the companies but also to evaluate the level of efficiency in the conduct of the affairs of the company. It also enables the Government to ascertain the quantum of profits which have accrued but not adequately accounted for taxation purposes, concealment of income, by falsification of accounts, misuse of fiduciary responsibilities by management, for personal aggrandizement, etc. so that the Government can take effective emergent remedial measures before a company goes into liquidation and thus not only save the industry or trade as such, but also to prevent distress to the employees and workers. The object of inspection is also to ensure that the transactions have been validly entered into according to the rules and procedures and also to ascertain whether the statutory auditors have discharged their functions in certifying the true and fair view of the companies accounts and their proper maintenance.

12. Investigations into the affairs of the company are dealt with by Section 235 of the Act and sub-section(1) thereof gives to the Central Government a discretion to appoint one or more persons as inspectors to investigate the affairs of a company and to report thereon in such manner as the Central Government may direct while sub-section(2) gives no choice but to order an investigation when the requirements of that sub-section are fulfilled. It is not disputed that an initial inspection report may invite an action by the Central Government of investigation into the affairs of the company in terms of Section 235 of the Act or it may also invite an action in terms of Sections 397/398 r/w 401 of the Act or for that matter an action in winding up in terms of Section 433(h) of the Act. It is obvious that an inspection carried out in terms of Section 209A is different from an investigation carried out in terms of Section 235 of the Act and the very fact that the second follows the first, they cannot be termed to be alike, as contemplated by the proviso. An inspection of books of accounts and investigation of affairs are differently dealt with under the Act and one cannot be like the other and therefore what is required to be disclosed in terms of the proviso to the Section is only pendency of investigation proceedings and the like. Inspection proceedings are not like investigation proceedings and therefore need not have been disclosed by the companies in the petition. That apart, even if inspection proceedings were to be read into the proviso to Section 391 of the Act and were required to be disclosed, the Petitioners cannot be attributed with suppression of facts. The Petitioners have more than complied with the said proviso when the letter dated 17-2-2006 was made part of individual notices to be sent to the shareholders, by Order dated 18-3-2006 and inspite of knowing the contents of the said letter dated 17-2-2006 that the companies were inspected and certain contraventions of the Act were pointed out, the majority of shareholders have approved the scheme of amalgamation. The said letter dated 17-2-2006 showed that SGL was inspected under Section 209A of the Act and was again reinspected and during the course of inspection certain contraventions of Section 269 r/w 198, 289 read with Article 111 and 140 of the Articles were pointed out, etc. Not only the Court was aware of the said inspection reports but the shareholders too were made aware of the same. Whether it is this letter or that, the explanatory statement bares it all and nothing more than that was required to be placed before the Court or before the shareholders. Even then, they approved the scheme. The passage of time of almost three years and the stand taken by the Regional Director, clearly shows that investigations or action in terms of Section 401 of the Act are not in the offing.

13. In Reliance Petroleum Limited(supra), the Gujarat High Court has clearly stated that inspection report under Section 209A of the Act cannot stand in the way while granting approval to the scheme of amalgamation, if other factors, stand satisfied. The Court has stated that upon inspection of books and records, the person making the inspection is required to report to the Central Government and in case of a default sub-sections (8) and (9) of Section 209A provided for punishment, but the same are in relation to the company or its officers and cannot come in the way while granting approval to the scheme. In that case the scheme of amalgamation was sanctioned with a clarification that the sanction will not come in the way of the proceedings that may be pending or that may be commenced in relation to its liabilities arising from the past activities. The same also could be done in this case. Past actions certainly could not be allowed to come in the way of future steps when past actions can otherwise be adequately dealt with by taking appropriate action.

14. A Division Bench of this Court in Zee Telefilms Limited (supra) held that certain proceedings filed under Sections 217(5),212(9), 209(5), 307(7) and 211(7) of the Act could not stall in any manner the merger of the Programme Asia Trading Company Limited into Zee Telefilms Limited and that was particularly because the transferor company was a fully owned company by the transferee company. In this case it was also held that those proceedings could continue in accordance with law and further noted that the Regional Director having filed an affidavit and not having objected to the merger of the transferor company into the transferee company the merger could be granted. The ratio of both the aforesaid decisions, namely, Reliance Petroleum Limited and Zee Telefilms Limited(supra) is that inspections carried out under Section 209A of the Act can only result in prosecutions of those responsible for the contravention of various sections of the Act and cannot come in the way of merger. In Core Health Care Ltd. v. Nirma Limited(2007) 79 CLA 318) the Gujarat High Court, on facts which are similar to the facts of this case, has held that:-

“So far as other allegations of malfeasance and misfeasance, mishandling of the property, siphoning away of the funds and purchase of the property at a higher price or advancement of the loans are concerned, the same cannot be considered in these proceedings. For that, the objector-Mr. Modi, in his capacity as a shareholder, would be free to take appropriate action in accordance with law. The objections of Mr. Modi deserve to and are hereby rejected.

From this judgment, it would be clear that in the scheme proceedings, the court does not sit in judgment over the commercial wisdom of the parties to the scheme, the court has supervisory role in the matter of sanction of the scheme, the court is not required to find out as to whether a better scheme could have been adopted by the parties and unless the court finds that the action of majority is manifestly unfair and fraud is involved in the scheme, the court cannot reject the same”.

The Court further held that a scheme can always be sanctioned subject to, and, without prejudice to the liability, if any, in the civil and criminal proceedings in respect of the past transactions. It further held that an objection like transfer of funds to the subsidiaries by giving interest free loans could not be considered in proceedings under Sections 391-394 of the Act and the acts of the Board of Directors or the management of the Core had nothing to do with the present scheme. The Court also noted that Core was not amalgamated with Nirma nor is with winding up and if ultimately it is found with the Board or Directors or the management of Core is guilty of an act of commission or omission, mishapenings or malhapenings then it could certainly be brought before the Court and their liability under the law would continue. To repeat, from the time the said two inspection reports were prepared, almost three years have lapsed, and no action has been taken by the Central Government either to proceed with inspection or prevention of mismanagement or dissolution and the stand taken by the Registrar shows that no such action is contemplated and they would only take appropriate action in terms of the said inspection reports. One is certainly not expected to wait to see the end results of the proceedings which the Central Government has assured will be launched and if launched are bound to take considerable number of years before the scheme of amalgamation is sanctioned. A scheme of amalgamation cannot wait for its sanction, for criminal proceedings to be launched, or if launched to be terminated and that is bound to take its own course and its own time. An endless wait cannot be in the interest of the holding Company or the shareholders of both or the investing public and that would certainly not be in public interest in the light of the consent given by the majority of the shareholders. As far as non disclosure of the filing of the criminal complaints, firstly it may be stated that the objector could have raised this plea prior to the Order dated 18th March, 2006 and if raised, the Petitioners might have agreed that the same could also form part of explanatory statement sent with the notices to the shareholders. It is also not the case of the Objector that any charge has been framed into the said criminal complaints filed by her. Filing of criminal complaints also cannot be equated with material facts required to be disclosed in terms of the proviso. On that count also, the petitions cannot be rejected. Those involved in contraventions of the provisions of the Act are bound to be punished for acts committed by them and merger cannot come in their way. In other words, if the merger is sanctioned it will have no effect or impact on the said complaints. The submission that there is violation of the proviso to Section 391(2) or the Petitioners have suppressed material facts needs to be rejected.

15. That takes us to the proviso below sub-section(1) of Section 394 which states that no compromise or arrangement proposed for the purpose of, or in connection with, a scheme for the 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 that the affairs of the company have not been conducted in a manner prejudicial to the interest of its members or to public interest. It is contended on behalf of the objector that a perusal of the report of the Registrar/Official Liquidator shows that he has handled the matter in a cavalier fashion without any concern to the interest of the shareholders and the vesting public. It is submitted that the Registrar after calling for a report from M/s. S. R. Kenkre and Associates, Chartered Accountants has arrived at a conclusion that the affairs of the SIL had not been conducted in a manner prejudicial to the interest of its members or the public. It is submitted that the Registrar/Official Liquidator was aware about the inspection reports prepared by the Ministry of Company Affairs, New Delhi and was in possession of the same and thus was conscious of the fact that the Investigating Officer in the said reports had suggested the invocation of Sections 397, 398 r/w 388B, 401, 402 and 406 of the Act including Section 542 of the Act against both the companies and he was also conscious of the fact that the report had unambiguously suggested that the affairs of SIL had been managed in a manner which was fraudulent or unlawful in nature and thus prejudicial to the interest of its shareholders or to the public interest at large and in a manner oppressive of the members of the company and the said Registrar despite being in possession of the said reports and despite being aware of the contents of the same has stated in para 3 of his affidavit dated 10-8-2006 that:-

“This report of the Official Liquidator is mainly based on the report of the said auditors and the Official Liquidator has no other material either to supplement or to comment on the same”.

16. It is further submitted that M/s. S. R. Kenkre and Associates in their report had opined that “the transferor company had generally complied with the provisions of the Companies Act, 1956” and the said observation was made entirely on the basis of the information furnished by the companies and had carried out no independent verification, and, it further stated in para 18 that the “confirmation was not done” by them due to paucity of time. The objector has submitted that the Registrar of Companies was aware of the inspection reports of both the companies and despite the same they were not considered either by the said Chartered Accountant or by the Registrar of the said companies whilst arriving at their individual conclusions and forming an opinion that the affairs of SIL have not been conducted in a manner prejudicial to the interest of the members or its public and thus the report of the Registrar certifying that the affairs of SIL have not been conducted in a manner prejudicial to the members of the public or to the public interest and thus the SIL has committed breach of the aforesaid proviso appended below clause (b) of sub-section(1) of Section 394 of the Act and in view of that, the present scheme of amalgamation ought to be rejected.

17. On the other hand, it is submitted, on behalf of the Companies, that it is a well settled practice that the Official Liquidator places reliance on Professional Chartered Accountant’s report in observing that the affairs of the company is not being conducted in a manner prejudicial to the members of the public and the Official Liquidator has arrived at a finding that the affairs of the company has not been conducted in a manner prejudicial to the interest of its members or to the public. It may be noted that it is the Registrar of Companies who with authority from the Regional Director who has filed an affidavit and it is not the case of the Registrar of Companies that he was not aware of the inspection reports prepared by the Inspection Officer of the Ministry of Company Affairs and inspite of that he has opined that the affairs of the company have not been conducted in a manner prejudicial to the interest of its members or to the public. In doing so, the Registrar has certainly failed in his duties by not placing the correct facts before the Court. However, only because the Registrar of Companies has not placed the correct position as regards the affairs of SIL with reference to the said two inspection reports, in my view, it would not be a fit case to reject the scheme which has otherwise been approved by the majority of shareholders of both the companies and regarding which the Regional Director on behalf of the Central Government, as repository of public interest, has given his consent at the same time stating that any violation which might have been noticed at the time of inspection, legal action would be initiated regarding the same and that will not affect the amalgamation. The Court is only required to consider the report from the Registrar. It does not mean that in case the report is incorrect, the scheme itself needs to be rejected. A scheme which is just and fair to all shareholders, cannot be rejected because the Registrar has failed in his duty in placing the correct position before the Court and that would be like punishing the majority of shareholders for no fault of theirs. The stand taken by the Regional Director is more than clear that they would take action in terms of the inspection reports and the reports ought not to come in the way of merger or amalgamation. The contention that the Regional Director has not discharged his duties as required by law cannot be accepted. What is said of the Registrar cannot be said of the Regional Director. The Central Government has made its stand clear. It is not the stand of the Central Government that the scheme is contrary to law or sanctioning the same would adversely affect the interests of investing public. It was noted in the Order dated 9-2-2007 that the Assistant Solicitor General had made a statement that the said two inspection reports would be placed in sealed cover before the Court, if required, and it was further noted that there was nothing unusual by the stand taken by the Regional Director on behalf of the Central Government. It may be stated that in Mihir H. Mafatlal v. Mafatlal Industries Ltd.(supra) also notice was issued to the Central Government and the learned Additional Central Government Standing Counsel had appeared before the High Court and had submitted to the order of the Court making it clear that the Central Government was not to make any representation in favour or against the proposed scheme. The same position was in the case of Larsen and Tubro Limited(2004 Company Cases 523, Vol.521).

18. There cannot be any dispute with the proposition of law as stated in T. Mathew v. Smt. Saroj G. Poddar(1996 22 CLA 200(Bom)) that public interest demands that irrespective of whether such a charge is levelled (i.e. of evasion of tax) in any of the affidavits filed, it is the duty of the Court to be satisfied with all the aspects of the scheme. The burden is entirely on the propounder to remove all doubts and satisfy the Court’s conscience that the scheme is not only fair and reasonable but also not contrary to public interest, though on facts it stood on its own. Likewise, in Wood Polymer Ltd. v. Bengal Hotels(1977 Company Cases 597) the purpose of the scheme was found to be to escape capital gains tax and hence sanction was declined. Here, it may be noted that the Regional Director not having taken any objection to the scheme that it was not in the interest of the public or to the companies shareholders it is to be presumed that it is in public interest. In fact nothing has been brought forward on behalf of the objector to show that the scheme is not in public interest when the business of the subsidiary is being taken over by the holding company and the shareholders of the subsidiary are being adequately compensated by issuing shares of the holding company.

19. The third objection taken, on behalf of the objector, is that the proposed scheme is a ruse to stifle further inquiry into the affairs of the transferor and transferee companies and their delinquent management which has been initiated by the Ministry of Affairs, New Delhi, and, which inquiry could lead to the winding up of both the companies or the Government Directors being appointed on the Board of either of the said two companies and is also a ruse to camouflage the past conduct of the Directors of the transferor or transferee companies. This appears to be a perception of the objector alone since the majority of the shareholders perceived the scheme otherwise. Even if it was so, this submission needs to be rejected in the light of the stand taken by the Central Government through the Regional Director that the acceptance of the scheme would not come in the way of action to be taken pursuant to the said two inspection reports. A scheme can also be sanctioned without prejudice to the civil or criminal liabilities which might have been incurred in the light of the said inspection reports and therefore, the scheme can never be a ruse, even if intended, to cover the past liabilities. In case there is any breach of Section 73 of the Act the same could also be taken care of by prosecuting those who are responsible for the said breach. Even if the objectors allegation is accepted that in the past SIL was used as a vehicle company for enrichment of the SGL and ultimately Mitsui and Company the same cannot come in the way of the amalgamation since necessary action both under civil as well as criminal law can be taken against those responsible in the light of the stand taken by the Regional Director. The scheme can never be used as a device to protect the delinquent Directors against the liabilities and consequences which might have incurred in the past and as reflected in the said inspection reports and the same cannot come in the way of approval of the scheme in the light of the limited jurisdiction which the Court exercises in the matters of amalgamation. As already stated, on behalf of the Central Government the Regional Director has given a solemn assurance that the approval of the scheme will not come in the way of action which will be taken against those found responsible for various violations as reflected in the said two reports and in the light of that the observations in the case of J. S. Davar and another v. Dr. Shankar Vishnu Marathe and others (AIR 1967 Bombay 456) and in the case of T. Mathew v. Smt. Saroj G. Poddar(supra) are irrelevant in the facts and circumstances of this case. In the last mentioned case what the Court found was that the scheme was not genuine nor propounded in good faith and was put forward only as a cloak to cover the misdeeds of the Directors. Likewise the observations in the case of Calcutta Industrial Bank Limited (1948) Company Cases 144) are also irrelevant. There can be no quarrel with the observation made in the case of Travancore National & Quilon Bank Ltd. (AIR 1939 Madras 318) that even if the scheme is approved by majority of creditors the Court can decline to sanction it if it is made out that the object of the scheme is to veil the wrongs of the Directors and burke investigation in the matter.

20. The next objection of the objector is that the proposed scheme is based on unfair valuation of SIL thereby affecting the swap ratio of one share of SGL for five shares of SIL since there was systematic devaluation of the assets of SIL owing to the supply of materials at highly exaggerated prices; the valuation report prepared by the Chartered Accountants could not go behind the balance sheets; no explanation was given by both the companies with regard to procurement of coke which has caused a loss of 152 crores; that the swap ratio ought to have been 1:2; that the valuation report of N. M. Raiji & Co. and M/s. Haribhakti & Co. determining the swap ratio of 1:5 is not acceptable. In fact the learned Senior Counsel, on behalf of Objector has severely criticized the valuation reports, as if this Court was sitting in appeal against the said reports.

21. On the other hand, it is submitted that the swap ratio has been correctly arrived at based on a joint verification carried out by reputed valuers who have submitted their report to that effect and the same have been accepted by majority of the shareholders. It is also submitted that the objector has failed to produce her own independent valuation report which would state otherwise. It is also submitted that the procurement costs of a company situated at West Bengal could never be compared with consumption costs of another company situated in Goa as the business economy of that location is totally different from the economics of the location of SIL and comparison between the average procurement cost of one company situated is West Bengal with the consumption cost of another company situated in Goa is totally misplaced, irrelevant and extraneous.

22. In Miheer H. Mafatlal v. Mafatlal Industries Ltd.((1996) 87 Company Cases 792) the Apex Court has stated that unless material is shown and produced on record to show that the valuation, as done, was unfair, or contrary to the record or material, the Court has no reason to interfere with such expert opinion in proceedings like this. It is to be noted that the Court does not sit in appellate jurisdiction over the valuation done by the experts in the field and which has now been approved by a vast majority of the shareholders who in their financial wisdom have found that it is just and it is only the objector who is going about saying it is unjust even without producing another expert report to prove to the contrary. Valuation is nothing but an estimate which is generally based to some extent on guess work and generally it varies from individual to individual. As stated by the Gujarat High Court in Reliance Petroleum Limited((2003) 46 SCL 38) value is a word of many meanings and the basic meaning is how much something is worth. The concept of value predominantly is used for the purpose of ascertainment of “price” or “value”. A fair value assumes that some values could be unfair. In this case reference was made to a Book “Study on share valuation” published by Institute of Chartered Accountants wherein it was stated that “The subject of valuation of shares has always been controversial in the accounting profession. No two accountants have ever agreed in the past or will ever agree in future on the valuation of the shares of a company, as inevitably they involve the use of personal judgment on which professional men will necessarily differ …” and the Court noted that even an expert body of accountants had emphatically expressed an opinion that no two valuers would ever agree to a method of valuating the shares. In this case, joint valuation has been done by two renowned experts in the field and this has been accepted by the overwhelming majority of shareholders and being so there is no reason to hold that the valuation is unfair, only because the objector says so. In Larsen and Toubro Limited(2004) Company Cases 523, Vol.121) this Court referred to various decisions including the case of Miheer H. Mafatlal v. Mafatlal Industries Ltd.(1996) 87Company Cases 792) and stated that unless material is shown and produced on record to show that the valuation, as done, was unfair or contrary to the record or material, the Court has no reason to interfere with the expert opinion. The Court also noted that the valuation of the shares which is mandatory in a scheme of amalgamation may not be necessary in cases of demerger since the shareholders continued to hold shares in the transferor company and are also issued shares in the transferee company. The Court also referred to Piramal Spinning and Weaving Mills Ltd.((1980) 50 Company Cases 514) and reiterated that it is not possible for the Court to examine the various methods of valuation which are available for valuing the shares of the company. The valuation of shares is a technical matter which requires skills and expertise. There are bound to be differences of opinion as to what the correct value of shares of any given company is. Simply because it is possible to value the shares in a manner different from the one which has been adopted in a given case, it cannot be said that the valuation which has been agreed upon, is unfair. The Court also noted that in case all the shareholders of both the companies have unanimously accepted the valuation which was arrived at by the auditors of the transferor and transferee companies and none of the shareholders had complained of any such unfairness. In Miheer H. Mafatlal v. Mafatlal Industries Ltd.(supra) the Apex Court has also reiterated that the valuation of shares is a technical and complex problem which can be left best to the consideration of the experts in the field of accountancy. Many imponderables enter the exercise of valuation of shares and which exchange ratio is better is in the realm of commercial decision of well informed equity shareholders. It is not for the Court to sit in appeal over this valuation judgment over equity shareholders who are supposed to be men of the world and reasonable persons who know their own benefit and interest underlying any proposal scheme and who with open eyes have okayed the ratio and the entire scheme. The Apex Court also noted that the objector had not produced any contrary expert opinion for supporting his ipse dixit. The same is the position in the case at hand. The Apex Court stated the correct legal position in the following words:

“Once the exchange ratio of the shares of the transferee-company to be allotted to the shareholders of the transferor-company has been worked out by a recognized firm of chartered accountants who are experts in the field of valuation and if no mistake can be pointed out in the said valuation, it is not for the Court to substitute its exchange ratio, especially when the same has been accepted without demur by the overwhelming majority of the shareholders of the two companies or to say that the shareholders in their collective wisdom should not have accepted the said exchange ratio on the ground that it will be detrimental to their interest”.

Reverting to the facts of the case the proposed share ratio has been arrived at by two experts in the field and has been approved by the vast majority of the shareholders who in their wisdom know what is best for them, particularly, considering the fact that the shares of the SIL were otherwise not listed. In Core Health Care Ltd. v. Nirma Limited(supra) the Court stated that:

“It is also to be seen that thumping majority had found that the scheme is fair and reasonable, then it would not be possible to hold that any further valuation report would have changed the exercise of discretion. I must agree with the petitioner that it is in the realm of commercial wisdom of the creditors as to what should be the amount payable to them under the scheme of compromise. Furthermore, statutory majority of the lenders believe that instead of waiting for years together and getting uncertain amount of money, it would be advisable to take what is offered to them under the scheme immediately, then majority decision cannot be bypassed or thrown away because some are raising some technical objections. At this stage, the court would also be required to see that what are the stakes”.

“If majority shareholders and the majority of the lenders are of the opinion that particular decision should be taken to receive best of the benefits and avoid delay, then further valuation report is not necessary”.

23. The fifth objection taken is that the proposed scheme is invalid in view of the fact that it is in violation of the provision of Section 73 of the Act. This objection again needs to be rejected. Past events can’t be a disqualification. Those responsible for violation can be prosecuted and punished. The scheme cannot be said to be in violation of Section 73 of the Act. Admittedly, the shares of SIL were not listed, and, at one time an exit option given was availed by the objector except for certain amount of shares. In case the SIL has violated Section 73 of the Act by not listing its shares, the same can be dealt with by the authorities under the Act, particularly the Central Government who has assured that necessary action in terms of the inspection reports will be taken and therefore on that count approval to the scheme cannot be declined. Sanctioning of the scheme certainly will not come in the way of the Directors of SIL or other Officers responsible for acts of commission or omission, misfeasance or malfeasance being dealt with in accordance with law. The observations of the Apex Court in Hindustan Lever Employees’ Union v. Hindustan Lever Ltd. and others((1995) Company Cases 30, Vol.83) that the Court will decline to sanction a scheme of merger, if any tax fraud or any other illegality is involved, are irrelevant for our purpose. The scheme itself is not contrary to any provision of law nor such any provision has been pointed out on behalf of the objector. I have already stated that taking over the business of a subsidiary and compensating the shareholders of the same adequately with shares of SGL cannot be said to be violative of any public policy. If the Director of SIL are guilty of Section 73 for sins of omissions and commissions in that regard they can certainly be dealt with under the law, as stated on behalf of the Central Government pursuant to the said two inspection reports and it cannot be said that the scheme would enable the said Directors or other Officers to wriggle out of the breach of the provisions of Section 73 of the Act.

24. The objection that the proposed scheme is unconscionable also needs to be rejected. It is true that in the past there was no exit route to the shareholders of SIL but at one stage an exit route was provided and was availed of by the objector and now yet another exist route has been provided for by allotting the shares in the SGL and because of that the scheme cannot be branded as unconscionable. An overwhelming majority of shareholders have not found it to be so nor the Central Government. The objection that the scheme ought not to be approved because the scheme involves the amalgamation of an Indian Company with a subsidiary of a foreign company also needs to be rejected since it has been stated on behalf of both the companies that both companies are Indian Companies and SIL was 88.85% subsidiary of SGL. The fact that the Central Government through its Regional Director has not opposed the scheme is indicative of the fact that it is in public interest or at any rate not opposed to public interest or public policy. As already stated the repository of public interest is the Central Government who has made it clear that in case there are any violations as pointed out in the inspection reports would be taken care of and there would be no dilution of action against the management which will not come in the way of the sanctioning of the scheme. A scheme which is beneficial to the shareholders and which is not opposed to public policy cannot be rejected only because in the past certain contraventions of the provisions of the Act were made by those in charge of the management of the company and for that reason a scheme cannot be rejected as being not bona fide. True, the objector will become the shareholder of SGL after the scheme is approved but she is always at liberty to exit from it in case she feels that she should not be a member of a company which has committed violations of the provisions of the Act, in the past.

25. The submission that the proposed scheme of amalgamation is devoid of any merit needs again to be rejected. The benefits arising from amalgamation have been stated in clause 15(i) to (vii) which, inter alia, show that the amalgamation will enable the establishment of optimum size of business which would be essential for better utilization of the available resources thereby ensuring long term economic and financial benefits to the transferee company and its employees and the transferee company with increase turnover and assets will be in a stronger position to raise funds for modernization, expansion and working capital requirements and this has been accepted by the vast majority of the shareholders of the companies and is not being opposed by any of the authorities under the Act and therefore there is no reason why the proposed scheme ought not to be accepted.

26. The objection as regards violation of Section 176(4) of the Act that proxies were solicited by the Directors in favour of the proposed scheme of amalgamation was given up on behalf of the objector.

27. On behalf of the objector, it is also submitted that several material facts have been suppressed from this Court which have been set out in paragraphs 5(iv), 5(viii), 5(ix) and 5(xv) of the affidavit of the objector dated 10-8-12006 including the correspondence between SGL, BSE and the NSE with regard to SGL’s application on the said exchanges. However, in my opinion, these objections are flimsy and need to be rejected. The explanatory statement gave a fair idea to the shareholders about the functioning of the companies. In any event, the same are immaterial for the purpose of the petitions. Otherwise, there can be no dispute with the proposition that all material facts are required to be placed before the Court whilst considering sanction of a proposed scheme and suppression of material facts would entitle the Court to reject the scheme.

28. Likewise, the objection that the scheme has been formulated to wriggle out from the criminal complaints filed by the objector cannot be accepted. The said criminal complaints are bound to take its own time and in case the objector succeeds those responsible for the violations or commission of offences would be adequately punished.

29. In conclusion, it may be stated that the objections raised have no substance at all and it appears that the objector has a grudge against the companies particularly SIL for not listing the shares of SIL as initially promised. The share valuation has been done by experts in the field and has been approved by the vast majority of the shareholders of both the companies and there is no reason why the same should not be accepted by this Court. There is nothing unfair in the scheme and in a way it also gives an exit route to the minority shareholders of SIL to obtain the shares of the SGL. In case the objector is unwilling to continue to be a member of SGL she is always free to sell the shares and cease to be a member. There is nothing unfair in the said scheme and as stated on behalf of both the companies and otherwise accepted by the overwhelming majority of shareholders, to whom no oblique motive is attributed. The merger of the subsidiary with the holding company will benefit the holding company. The scheme is fair, just and reasonable and is not violative of any law or contrary to public interest.

30. In the light of the above, the objections are rejected with costs of Rs.25,000/- to be paid by the objector to SGL. The petitions succeed. However, it is made clear that the sanction to the scheme will not come in the way of either civil or criminal proceedings which may be initiated pursuant to the inspection reports as well as further progress of criminal complaints filed by the objector.

Shri Ramani is present on behalf of the petitioners. Shri C.A. Ferreira, learned Assistant Solicitor General is present on behalf of the Central Government and Shri V.A. Lawande is present on behalf of the Objector.

2. Shri Ferreira, upon instructions, states that page 9 of Sesa Goa’s report is not available with the Regional Director, in the original report, and inquiry is being made with the Inspector who had prepared the said report and who is presently posted in Calcutta. It is but obvious that production of page 9 will take some time, but this Court need not wait for the same. Page 15 submitted on 5/12/2008 be placed at the appropriate page of the paper book. The Regional Director is at liberty to produce page 9 of Sesa Goa’s report as soon as it is available.

3. Judgment pronounced, dismissing the objections and allowing the petitions. Shri Ramani on behalf of the petitioners, submits that the petitioners be dispensed with from filing of drawn up order and instead be allowed to file with the Registrar of Company a certified copy of the order of this court passed today along with authenticated copy of the Scheme for Amalgamation. Request granted.

4. Costs of each petition of Rs. 10,000/- to be paid by the petitioners to the Central Government and to the Registrar of Companies, each.

5. Shri Lawande, the learned Counsel on behalf of the Objector prays for stay of operation of the judgment/order passed today dismissing the objections and granting the petitions. Shri Ramani on behalf of the petitioners objects. Considering the facts and circumstances of the case and including the time taken for disposal of the petitions, in my view, this is not a fit case to stay the operation of the judgment/order. Request rejected.

From the effective date, the objects clause of the Memorandum of Association of the Transferee Company would stand amended with the addition of clauses detailed hereunder as clauses 33 to 36 to enable the Transferee Company to carry on the business of the Transferor Company.

Mr. J. J. Bhat, Senior Advocate with Mr. R. Chagla and Mr. R. G. Ramani, Advocate for respondent No. 1.

The matter was heard at length at the admission stage, as the contesting parties are all appearing in the matter through their Advocates. Learned Asst. Solicitor General is appearing for respondent No.2 and so far as Registrar of Companies is concerned, in the original proceedings, he has filed an affidavit on behalf of the Regional Director and it was agreed by both sides that the matter can be decided finally at the stage of admission itself. As regards respondent No. 4, for the first time when an order was passed on 24.12.2008, the Official Liquidator had appeared and his appearance is shown in that order. However, since there was some error in the name of Official Liquidator, the same was corrected as Shri Sanjay Kumar Gupta in the next order dated 31.12.2008. Accordingly, the matter was heard finally and a formal order of admission is passed. Admit. Respective Advocates waive service for the concerned respondents. The Appeal is now being disposed off by this Judgment.

2. This appeal is directed against the Judgment and Order dated 18.12.2008 delivered in Company Petition Nos. 9 and 10 of 2006. The Sesa Industries Limited (SIL) submitted a company petition for sanctioning a scheme of amalgamation between the petitioner Company i.e. Transferor Company and the Transferee Company i.e. Sesa Goa Limited (SGL) which was incorporated on 25.6.1965 as a private limited company, and subsequently became a public limited company with effect from 16.5.1994. The SIL was incorporated on 17.5.93. The scheme of amalgamation is annexed as Annexure A-6 along with the Company Petition. On behalf of the present appellant, objections were lodged before the learned Company Judge opposing the scheme of amalgamation on various grounds and as per various objections taken by the objector before the learned Single Judge, it was prayed on behalf of the objector that the scheme may not be sanctioned. The learned Company Judge, by the impugned Judgment and Order came to the conclusion that there is no substance in the objections raised by the objector. The learned Company Judge found that the objector has a grudge against the companies, particularly SIL for not listing the shares of SIL as initially promised. The learned Company Judge found that there is nothing unfair in the scheme. The learned Company Judge also found that the scheme also gives an exist route to the minority shareholders of SIL to obtain the shares of SGL. The learned Company Judge found that in case the objector is unwilling to continue to be a member of SGL, she is always free to sell the shares and cease to be a member of SGL. The learned Company Judge found that there is nothing unfair in the said scheme, as the scheme is accepted by overwhelming majority of the shareholders of the Company. The learned Company Judge also found that the merger of the subsidiary company with the holding company will benefit the holding company. The learned Company Judge also found that the said sanctioning of the scheme will not, in any way affect the civil or criminal proceedings which may be initiated pursuant to the inspection reports, as well as further progress of criminal complaint filed by the objector. The learned Single Judge, accordingly, allowed the Company Petition by sanctioning the scheme by Judgment and Order dated 18.12.2008.

3. Being aggrieved by the said order, the appellant-objector has filed this appeal. The appellant who is appearing as party in person, has challenged the said order of the learned Company Judge on various grounds. It is submitted on behalf of the appellant that the direction given by a Division Bench of this Court in Appeal No.268/07 vide order dated 25.4.2007 has not been complied with, as the Division Bench has observed in the said order that the Company Judge should take into consideration the reports before passing any final orders in the matter of approving the scheme of amalgamation of two companies for considering the purpose of its relevancy. It is submitted by the party in person that in view of the reports of the Central Government, Ministry of Company Affairs, the Scheme should not have been sanctioned by the learned Single Judge, as it is clear that it is a case of siphoning of funds and because of the same, minority shareholders are affected. It is submitted that as per the reports, both the Companies have committed a fraud and since the scheme is against the public interest, the same is not required to be sanctioned. It is submitted that the proposed scheme is nothing but an operation on the minority shareholders. It is submitted that after amalgamation, the transferor company shall stand dissolved and therefore, no action against the company will be maintainable. It is further submitted that the transferor Company has not disclosed the fact in petition about pending investigation under Section 209A of the Companies Act. It is also submitted that as per the proviso to Section 391 of the Companies Act no order sanctioning any compromise or arrangement shall be made, unless the Court is satisfied that the company or any other person by whom an application has been made under sub-section (1) has disclosed to the Court by affidavit or otherwise, all material facts relating to the company, such as the latest financial position of the company, the latest auditor’s report requiring the accounts of the company, pendency of any investigation proceedings in relation to the company under Sections 235 to 351. It is submitted that the scheme could not have been sanctioned in view of the fact that the company has not disclosed in the petition pendency of investigation, as the said fact is also required to be disclosed as per the said proviso to Section 391. It is also submitted that since the company has suppressed the fact about the investigation being carried out and there is adverse report against the company, the scheme should not have been sanctioned by the learned Single Judge. It is submitted that the report of the Registrar of Companies, having not been accepted by the learned Company Judge, the learned Company Judge should not have sanctioned the scheme of amalgamation. It is further submitted that the proposed scheme of amalgamation was based on an invalid scheme in view of the fact that the same is in violation of Section 73 of the Companies Act. It is submitted that the shares of SIL though were required to be listed on the Stock Exchanges as per the provisions of the law, as also in terms of the promises given by the petitioning company to its shareholders at the time of initial public offering, have not been listed till the date. It is submitted that the shares of respondent No.1 Company are not listed on any of the Sock Exchanges in India, nor any application has been made by the said company for getting its shares listed and, in view of the same, there is violation of Section 73 of the Companies Act inasmuch as it was statutorily bound to refund the monies so collected by it from its shareholders along with interest due. It is also submitted that since there is violation of Section 73 of the Companies Act, entire allotment of shares of respondent No.1 Company is invalid. It is submitted that the proposed scheme was an unconscionable scheme inasmuch as the minority shareholders of the transferor company have been subjected to complete operation by a majority, i.e. by transferee Company. It is also submitted that the entire scheme has been floated with a view to stifle further investigation which is pending against the transferor Company. It is submitted that there is also violation of Section 394(2) of the Companies Act, as appropriate material was not placed in the meeting before the shareholders. It is also submitted that the Regional Director himself has not filed any affidavit, but, on his behalf the Registrar of Companies has filed an affidavit and the Registrar was also acting as an Official Liquidator. It is submitted that the Official Liquidator has also filed an affidavit. The same person could not have filed an affidavit in his capacity as Registrar and in that respect, an affidavit should have been filed by the Regional Director himself, as the Official Liquidator and the Registrar, both are functioning in a different capacity and when their interest is overlapping, the same person could not have filed two affidavits, one in the capacity as the Official Liquidator while the other in the capacity as the Registrar. It is submitted that the financial reports of the Chartered Accounts also do not reflect the correct picture, as the Chartered Account has gone only as per the entries in the Company’s Books of Account and as per the Balance Sheet. On the aforesaid grounds, the party in person submitted that the scheme, in question, is not required to be sanctioned and, therefore, order of the learned Company Judge is required to be set aside and this Court may reject the scheme submitted by the Company by not sanctioning the same. The party in person has relied upon the following decisions to substantiate his say.

4) J.S. Davar and another v. Dr. Shankar Vishnu Marathe and others, reported in AIR 1967 Bombay 456 (V 54 C 98).

7) Modus Analysis and Information P. Ltd. and others, In re.,reported in [2008] 142 Comp Cas 410 (Cal).

9) Jyotsna Nalinikant Kilachand and others v. Nandlal Kilachand Investment Pvt. Ltd. and others, reported in 1996 page 361.

10) Raymond Synthetics Ltd., and others v. Union of India and others, reported in AIR 1992 Supreme Court 847.

11) Hindustan Lever Employees’ Union v. Hindustan Lever Ltd. and others, reported in Company Cases Vol. 83 page 30.

12) 1. Securities and Exchange Board of India (Appeal Lodging No. 520 of 2002 in Company Petition No. 203 of 2002 in Company Application No. 18 of 2002) 2. Union of India (Appeal Lodging No. 526 of 2002 in Company Petition No. 203 of 2002 in Company Application No. 18 of 2002) v. Sterlite Industries (India) Ltd.

15) Mahendra Kumar Sanghi v. Ratan Kumar Sanghi, reported in Spl. A. Nos. 24 and 30 of 1994 – Equivalent Citation : RLW 2003(3) Raj 1529, [2003]44SCL592(Raj), 2003(1) WLC 445.

17) Shree Niwas Girni Kamgar Kriti Samiti v. Rangnath Basudoo Somant and others reported in Appeal no. 821 of 1994 in Company Application no. 339 of 1994 in Company Petition No. 642 of 1983.

4. Learned Senior Counsel Shri Bhat appearing for respondent No.1, on the other hand, submitted that there is no substance in any of the objections raised by the objector. Mr. Bhat submitted that the party in person mainly relied upon the contents of the reports submitted by the Deputy Director on behalf of the Ministry of company Affairs, New Delhi. It is submitted that the matter is only at the inspection stage and there is nothing to suggest that subsequently it has resulted into any further investigation against the affairs of the Company. Mr. Bhat submitted that the inspection carried out under Section 209A of the Act cannot be construed as an investigation against the company. It is submitted by Mr. Bhat that if the contention of the party in person is accepted that the share allotment is void or that it is in violation of Section 73 of the Companies Act, then the objector cannot be said to be a shareholder on the basis of void allotment. He has, however, submitted that there is no breach of Section 73 as the allotment was not made in favour of the public at all. It is submitted that the only right available to the petitioner is to claim money and even that claim is also time-barred. It is submitted that the objector can still pursue his remedy against the transferee company and his right is not extinguished by sanctioning the scheme of amalgamation. It is submitted by Mr. Bhat that assuming that the Directors have committed any wrong act or even if they have committed any offence, the remedy of taking out prosecution against the erring Director or Directors is available and that cannot be a ground for rejecting the scheme. Mr. Bhat further submitted that the Registrar of Companies who is a delegate of the Regional Director of Company Affairs has already delegated the powers to the Registrar of Companies for filing affidavit and the Registrar of Companies has already made its stand clear in the affidavit. It is submitted that the respondent company had also filed a writ petition before the High Court of Bombay for quashing the proceedings and the learned Company Judge was pleased to hold that there is no violation of Section 73. Mr. Bhat further submitted that ultimately the inspection reports were already placed before the learned Company Judge and the said aspect was also placed before the shareholders during the meeting and, therefore, when the majority of shareholders have approved the scheme, it cannot be said that respondent company has defrauded the shareholders in any manner and no fact is suppressed from the shareholders. It is submitted that the investigation as well as the inspection, both are different things and they are separate chapters for the same. It is submitted that the scheme is not against the public interest in any manner and since majority of the shareholders have approved the scheme in their wisdom, this Court cannot sit in appeal over such decision at the time of considering whether the scheme should be sanctioned or not. Mr. Bhat has relied upon the following decisions to substantiate his say that the objections raised by the objector is devoid of any merit and the scheme is required to be sanctioned.

3) Kalpana Bhandari & ors. v. Securities & Exchange Board of India & ors., reported in Writ Petition No.,1604 of 2003.

4) Sesa Industries Ltd. v. Krishna H. Bajaj, reported in Misc. Civil Appln. no. 24 of 2007 in Company Petition no. 9 of 2006 connected with company Appln. no. 1 of 2006.

It is submitted that in view of the Judgment of the Supreme Court in Miheer H. Mafatlal v. Mafatlal Industries Ltd., (supra), only two aspects are required to be considered by the Court at the time of sanctioning the scheme. It is submitted that there is no violation of any statutory rules. It is also submitted by Mr. Bhat that the valuation of the shares is properly done or not is in the realm of the expert body and once the Chartered Accountants have accepted the said valuation, this Court cannot sit in appeal over the said decision of the expert body. It is also submitted by Mr. Bhat that it is true that the same person was acting as a Registrar as well as Official Liquidator Since their interest is not conflicting even if same person has filed an affidavit in two different categories, that cannot be said to be any violation of statutory provision.

5. We have heard both sides at great length and we have gone through voluminous record and proceedings. We have also considered the scheme submitted by the respondent Company. We have gone through the Judgment of the learned Company Judge and we have also gone through various judgments cited by both sides. At this stage, it is necessary to make a reference to various provisions of the Companies Act, more particularly Sections 391, 392, 393 and 394 of the Act. The said sections read thus :

“391 – Power to compromise or make arrangements with creditors and members – (1) Where a compromise or arrangement is proposed –

(b) between a company and its members or any class of them, the (Tribunal) may, on the application of the company or of 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 or class of members, as the case may be to be called, held and conducted in such manner as the (Tribunal) directs.

(2) If a majority in number representing three- fourths in value of the creditors, or class of creditors, or member, or class of members as the case may be, present and voting either in person or, where proxies are allowed (under the rules made under section 643) by proxy, at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the (Tribunal) 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:

[Provided that no order sanctioning any compromise or arrangement shall be made by the [Tribunal] unless the [Tribunal] is satisfied that the company or any other person by whom an application has been made under sub-section (1) has disclosed to the [Tribunal], by affidavit or otherwise, all material facts relating to the company, such as the latest financial position of the company, the latest auditor’s report on the accounts of the company, the pendency of any investigation proceedings in relation to the company under sections 235 to 351, and the like.]

(3) An order made by the [Tribunal] under sub-section (2) shall have no effect until a certified copy of the order has been filed with the Registrar.

(4) A copy of every such order shall be annexed to every copy of the memorandum of the company issued after the certified copy of the order has been filed as aforesaid, or in the case of a company not having a memorandum, to every copy so issued of the instrument constituting or defining the constitution of the company.

(5) If default is made in complying with sub- section (4), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to [one hundred rupees] for each copy in respect of which default is made.

(6) The [Tribunal] may, at any time after an application has been made to it under this section stay the commencement or continuation of any suit or proceeding against the company on such terms as the [Tribunal] thinks fit, until the application is finally disposed of.

(1) where the tribunal makes an order under section 391 sanctioning a compromise or an arrangement in respect of a company, it -

(b) 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.

(2) If the Tribunal aforesaid 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 winding up the company, and such an order shall be deemed to be an order made under Section 433 of this Act.

(3) The provisions of this section shall, so far as may be, also apply to a company in respect of which an order has been made before the commencement of the Companies (Amendment) Act, 2001 sanctioning a compromise or an arrangement.]

393. Information as to compromises or arrangements with creditors and members – (1) Where a meeting of creditors or any class of creditors, or of member or any class of members, is called under section 391 -

(a) with every notice calling the meeting which is sent to a creditor or member, there shall be sent also a statement setting forth the terms of the compromise or arrangement and explaining its effect; and in particular, stating any material interests of the directors’ managing director 1[***] or manager of the company, whether in their capacity as such or as members or creditors of the company or otherwise, and the effect on those interests of the compromise or arrangement if, and in so far as, it is different from the effect on the like interests of other persons; and

(b) in every notice calling the meeting which is given by advertisement, there shall be included either such a statement as aforesaid or a notification of the place at which and the manner in which creditors or members entitled to attend the meeting may obtain copies of such a statement as aforesaid.

(2) Where the compromise or arrangement affects the rights of debenture-holders of the company, the said statement shall give the like information and explanation as respects the trustees of any deed for securing the issue of the debentures as it is required to give as respects the company’s directors.

(3) Where a notice given by advertisement includes a notification that copies of a statement setting forth the terms of the compromise or arrangement proposed and explaining its effect can be obtained by creditors or members entitled to attend the meeting, every creditor or member so entitled shall, on making an application in the manner indicated by the notice, be furnished by the company, free of charge, with a copy of the statement.

(4) Where default is made in complying with any of the requirements of this section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to (fifty thousand rupees); and for the purpose of this sub-section any liquidator of the company and any trustee of a deed for securing the issue of debentures of the company shall be deemed to be an officer of the company.:

Provided that a person shall not be punishable under this sub-section if he shows that the default was due to the refusal of any other person, being a director, managing director 1[***] manager or trustee for debenture holders, to supply the necessary particulars as to his material interests.

(5) Every director, managing director, 1[***] or manager of the company, and every trustee for debenture holders of the company, shall give notice to the company of such matters relating to himself as may be necessary for the purposes of this section; and if he fails to do so, he shall be punishable with fine which may extend to [five thousand rupees].

Section 394. Provision for facilitating reconstruction and amalgamation of companies. - (1) Where an application is made to the [Tribunal] 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 [Tribunal]-

(a) that the compromise or arrangement has been proposed for the purpose 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

(b) that under the scheme the whole or any part of the undertaking, property or liabilities of any company concerned in the scheme (in this section referred to as a “transferor company”) is to be transferred to another company (in this section referred to as “the transferee company”);

the [Tribunal] may, either by the order sanctioning the compromise or arrangement or by a subsequent order, make provision for all or any of the following matters:-

(i) the transfer to the transferee company of the whole or any part of the undertaking, property or liabilities of any transferor company;

(ii) the allotment or appropriation by the transferee company of any shares, debentures policies, or other like interests in that company which, under the compromise or arrangement, are to be allotted or appropriated by that company to or for any person;

(v) the provision to be made for any persons who, within such time and in such manner as the Court directs dissent from the compromise or arrangement; and

(vi) such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction or amalgamation shall be fully and effectively carried out;

[Provided that no compromise or arrangement proposed for the purposes of, or in connection with, a scheme for the amalgamation of a company, which is being wound up, with any other company or companies, shall be sanctioned by the [Tribunal] unless the Court has received a report from [***] the Registrar that the affairs of the company have not been conducted in a manner prejudicial to the interest of its members or to public interest.

Provided further that no order for the dissolution of any transferor company under clause (iv) shall be made by the [Tribunal] unless the Official Liquidator has, on scrutiny of the books and papers of the company, made a report to the [Tribunal] that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest.]

(2) Where an order under this section provides for the transfer of any property or liabilities, then, by virtue of the order; that property shall be transferred to and vest in and those liabilities shall be transferred to and become the liabilities of the transferee company and in the case of any property, if the order so directs, freed from any charge, which is, by virtue of the compromise or arrangement, to cease to have effect.

(3) Within (thirty) days after the making of an order under this section, every company in relation to which the order is made shall cause a certified copy thereof to be filed with the Registrar for registration.

If default is made in complying with this sub- section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to [five hundred rupees].

(a) “property’ includes property rights and powers of every description; and “liabilities” includes duties of every description; and

(b) “transferee company’ does not include any company other than a company within the meaning of this Act; but “transferor company” includes any body corporate, whether a company within the meaning of this Act or not.”

6. Both sides have relied upon the decision of the Supreme Court in the case of Miheer H. Mafatlal v. Mafatlal Industries Ltd., (supra). The Supreme Court in the Miheer H. Mafatlal’s case has held that a compromise or arrangement can be proposed between a company and its creditors or any class of them. Such a compromise would also take in its sweep any scheme of amalgamation/merger of one company with another. The Supreme Court in the aforesaid Judgment has pointed out the scope and ambit of the jurisdiction of the Court. It has been held at page 818 as under :

“In view of the aforesaid settled legal position, therefore, the scope and ambit of the jurisdiction of the company court has clearly got earmarked. The following broad contours of such jurisdiction have emerged :

(1) The sanctioning court has to see to it that all the requisite statutory procedure for supporting such a scheme has been complied with and that the requisite meetings as contemplated by section 391(1)(a) have been held.

(2) That he 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 393(1)(a) is placed before the voters at the concerned meetings as contemplated by section 391(1).

(5) That all the requisite material contemplated by the proviso to 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 veil of apparent corporate purpose underlying the scheme and can judiciously x-ray the same.

(7) That the company court has also to satisfy itself that members or class of members or creditors or class of creditors, as the case may be, were acting bona fide and in good faith and were not coercing the minority in order to promote any interest adverse to that of the latter comprising the same class whom they purported to represent.

(8) That the scheme as a whole is also found to be just, fair and reasonable from the point of view of prudent men of business taking a commercial decision beneficial to the class represented by them for whom the scheme is meant. (9)Once the aforesaid broad parameters about the requirements of a scheme for getting sanction of the court are found to have been met, the court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the court there could be a better scheme for the company and its members or creditors for whom the scheme is framed. The court cannot refuse to sanction such a scheme on that ground as it would otherwise amount to the court exercising appellate jurisdiction over the scheme rather than its supervisory jurisdiction.

The aforesaid parameters of the scope and ambit of the jurisdiction of the company court which is called upon to sanction a scheme of compromise and arrangement are not exhaustive but only broadly illustrative of the contours of the court’s jurisdiction.”

7. Keeping in mind the said principles enumerated by the Supreme Court in the aforesaid Judgment, the question that requires to be considered is whether the scheme submitted by respondent No.1 Company is required to be sanctioned or not ? So far as the objection of the objector regarding allotment of shares and violation of Section 73 is concerned, it is required to be noted that it has been found by the learned Company Judge in this behalf that if there is any violation the Directors can be prosecuted in accordance with law. It is the say of the respondent company that the shares were not offered to the public and if the objector has monetary claim, he can take out appropriate proceedings for recovery of the same. Mr. Bhat has placed on record a copy of the Judgment of the learned Company Judge in Writ Petition No. 2739 of 2006 dated 11/12/2008. The learned Company Judge has found that there is no violation of Section 73. However, we are not expressing any opinion on the point whether the concerned Directors have violated the provisions of law and if at all there is any violation, legal proceedings against such Directors can be initiated as per law. In our opinion, if at all there is any violation of Section 73, appropriate proceedings can be initiated against the erring Director/Directors, though, or course, the contention of the Company is that the shares were not offered to the public and, therefore, there was no question of listing the same. We, however, make it clear that we are dealing with the point only in connection with sanctioning of the scheme and if any investigation is going on, on the basis of inspection report, the observations made by us in this behalf shall not be taken into account and such proceedings may go on as per the evidence that may be available in that behalf. The Court is required to consider as to whether can it be said that the affairs of the company are not conducted in a manner prejudicial to the interests of its members or to public interest and for that purpose, the Court is required to consider the report of the Official Liquidator and the Registrar as per the statutory provision. Suffice it to say that even if it is found that there is violation of Section 73, the appropriate remedy is to launch prosecution against the erring directors and that itself is not a ground for not sanctioning the scheme of amalgamation. Ultimately, this Court is required to see whether the statutory requirement is complied with or not and see that the report of the Official Liquidator and the Registrar of Companies about the affairs of the company have not been conducted in a manner prejudicial to the interest of its members or to public interest are made available or not and when majority of the shareholders have approved the scheme, this Court will have thereafter a limited role to play. Moreover, so far as the duties of the Official Liquidator and the Registrar of Companies are concerned, they are two independent authorities under the Statute and they are required to submit their two independent reports and the Court is normally guided by such independent authorities.

7. So far as the contention of the party in person as regards valuation and exchange ratio is concerned, since the firm of Chartered Accountants which is expert in the field has approved such a scheme, this Court cannot substitute its own views in this behalf as powers of this Court on this aspect are limited.

9. So far as the argument of party in person that there is no reference in the company petition about the reports submitted by the Deputy Director, Ministry of Company Affairs, New Delhi is concerned, it is required to be noted that it is no doubt true that the fact that inspection has been carried out is not mentioned in the petition, but, subsequently, by an order of this Court, the necessary material was already placed before the shareholders at the time of meeting and ultimately by majority decision of the shareholders the scheme was approved. It is true that as per the inspection reports, serious irregularities have been found by the Officer who inspected the subject- matter on behalf of the Company Affairs. It is also true that it has not reached finality. It is also not disputed by the respondent company that final decision based on the inspection report is not yet taken and the said issue seems to be pending before the concerned authorities. It is not in dispute that the inspection of books of accounts was carried out with a view to find out as to whether the affairs of the company are being carried out properly or not and while carrying out the said exercise of inspection of books of accounts, other material is also taken into consideration. So far as Section 235 is concerned, the same deals with the investigation of affairs of a company. The inspection carried out under Section 209A is the first step towards carrying out the investigation of the affairs of the respondent No.1 Company. It is true that the company has not said anything in the scheme regarding the inspection being carrying out under Section 209A of the Act. In our view, normally the company should point out all relevant aspects in the scheme and the fact that the inspection is carried out should also have to be mentioned in the scheme. Proviso to subsection (2)of Section 391 clearly provides that no order sanctioning any compromise or arrangement shall be made by the [Tribunal] unless the [Tribunal] is satisfied that the company or any other person by whom an application has been made under sub-section (1) has disclosed to the [Tribunal], by affidavit or otherwise, all material facts relating to the company, such as the latest financial position of the company, the latest auditor’s report on the accounts of the company, the pendency or any investigation proceedings in relation to the company under sections 235 to 351, and the like. In our view, interpretation of the said proviso cannot be restricted only to a limited aspect that it takes care of the investigation pending in relation to the company under Sections 235 to 351 as the words “and the like” are to be interpreted to mean that the company is required to disclose all material facts relating to the affairs of the company. In our view, the inspection is being carried out with a view to find out whether any investigation is required to be carried out or not. It is not a matter of playing hide and seek game and all aspects are required to be disclosed in the scheme. In our view, the proviso to Section 391 is widely worded and the words “and the like” may even in its sweep take care of pending inspection also. It is, however, required to be noted that subsequently, reports on the basis of such investigation, have also been placed before the shareholders and ultimately, the scheme has been approved by the shareholders after considering the said reports. In view of the same, in our view, it may not be just and proper to reject the scheme as, ultimately, the reports were made available with the shareholders for discussion at the time of shareholders meeting.

10. Mr. Bhat also submitted that at the time of placing the scheme, inspection reports were not available with the company. However, in our view, the fact about inspection being carried out should have been disclosed by the company, as ultimately, the affairs of the company, in all respects should be transparent. However, the learned Company Judge has come to the conclusion that since majority of the shareholders have approved this scheme, even though reports were also available with the shareholders, it cannot be said that the learned Company Judge overlooked the reports or that the order passed is contrary to the directions given by the Division Bench. It is required to be noted that the mandate of law provides that the Court cannot sanction the scheme, unless the Court has received reports from the Registrar of Company Affairs as well as the Official Liquidator. Similarly, the Official Liquidator is required to submit his report after considering the Books of accounts of the company that the Affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest. Accordingly, in view of the provisions of Section 394, the Court cannot sanction the scheme unless the aforesaid requirement is fulfilled. The Court is not required to blindly approve the scheme simply because majority of shareholders have approved the scheme. But the Court is required to consider whether the scheme is contrary to public interest and can examine whether the affairs of the company have not been carried out in a manner prejudicial to the interests of its members or to public interest. It is true, as pointed out earlier, that the Court cannot substitute the view taken by majority of shareholders in accepting the scheme on various aspects such as violation regarding exchange ratio, etc., but there is also additional duty cast upon the Judge before sanctioning the scheme, even if the scheme is approved by majority of shareholders to see whether the affairs of the company have not been carried out in a manner prejudicial to the interests of its members or to public interest and, in order to facilitate the Court, in the matter of sanction of the scheme specific reports are also required to be submitted by the Registrar of Companies as well as the Official Liquidator in this behalf. In the light of the aforesaid statutory provisions, it is required to be found out as to whether the said requirement which is mandatory in nature can be said to have been complied with in the present case.

11. The Registrar of Companies has filed an affidavit dated 10.8.2006 stating that he was holding temporary charge of Registrar of Companies, Goa, Daman and Diu, Panaji, Ministry of company Affairs, Government of India. In his affidavit, he has stated that he has been authorized and competent to affirm the affidavit in reply on behalf of the Regional Director (Western Region), Ministry of Company Affairs, Mumbai. He has stated in paras (3), (4) and (5) as under :

“ 3) I say that I am conversant with the facts of the case and I am competent to depose in my official capacity as the Registrar of Companies, Goa, Daman & Diu, Ministry of Company Affairs, Panaji, Goa and I am duly authorized by the Regional Director, Ministry of Company Affairs, Western Region, Mumbai.

4) I say that the Scheme of Amalgamation proposed by the Petitioner Company has been examined by the Regional Director, Western Region, Mumbai and he has the following observations for granting the Scheme.

a) That the Transferor and Transferee Company were inspected under Section 209A of the Companies Act, 1956 by the inspecting officers of the Ministry of Company Affairs during the year 2005 and any violation which may be noticed during the course of inspection, there will be no dilution for initiating legal action under the act and that will not in any way affect the amalgamation.

b) The office of Registrar of Companies, Goa has received two complaints for non listing of the Shares of the Transferor Company which is a subsidiary of the Transferee Company. The copies of the complaints of Mrs. Krishna H. Bajaj dated 24/05/2003 and Mrs. Kalpana Bhandari dated 17/06/2003 are annexed hereto and marked as Exhibit “A” and Exhibit “B” respectively.

c) The Office of Registrar of Companies, Goa as well as office of Official Liquidator, Goa and the Regional Director, Mumbai have received objection from Mrs. Krishna H. Bajaj against the instant scheme. The copy of the objection letter dated 10/07/2006 is annexed hereto and marked as Exhibit “C”.

d) The Petitioner Company may be directed to furnish the latest financial position before this Hon’ble Court at the time of final hearing.

5) I say that save as except above, I have no objection for approval of the Scheme of Amalgamation by this Hon’ble High Court with such order as it may deem fit and proper.”

The inspection report submitted by the Deputy Director (Inspection) dated 20.3.2006 which report has been submitted in view of the directions issued by the Ministry of Company Affairs regarding the inspection of the books of account of SIL (transferor company) and its holding company SGL (transferee company). In the said report, the Deputy Director has concluded as under :

It will be apparent from the various findings of the Inspection report that the entire control of the day today working of the company is being managed by Mitsui & Co. Ltd, Japan whereby huge turnover and profits are being siphoned away through systematic under invoicing of international financial transactions and over invoicing of import of coal. As regards inter-se transactions between SGL & SIL, systematic efforts have been made by SGL to put SIL into weak financial position by siphoning of the funds from SIL to SGL by over invoicing the price of iron ore and coke. In the process, the minority shareholders of SIL have been deprived of their reasonable return in the forms of dividend or gains out of fair price of its shares. The minority shareholders of SIL have been cheated through the systematically siphoning the funds by SGL to the ultimate holding company i.e. M/s. Mitsui & Co. Ltd, Japan. The I.O. has suggested for redressal of grievances of SIL by SGL in reascending the contract of purchase of shares made by offer documents dated 05.06.03 at under value price of Rs.30/- per share.”

12. In para 26.12 of the report, it has been found that as per provisions of Section 542 of the Act read with Section 406 thereof, the business of the company has been carried on with intent to defraud creditors of the company and its shareholders and in this regard, all the directors who are occupying the positions as its Managing Director/whole time Directors and other directors even though are occupying the position as Simplicitor Directors are in fact Directors who are looking after the day today policy matters of the company on behalf of the principal i.e. Mitsui & Co. Ltd. Japan being the ultimate holding company who is exerting common control over all its subsidiaries and fellow subsidiaries as admitted in the notes to accounts annexed to the balance sheet of 3 years i.e. 2002-03, 2003-04, 2004-05 are officers in default under Section 5 of the Act. The report has dealt with various aspects and it has been found that it is a case of siphoning of the funds. In para 26.11 of the Inspection Report, it has been found that Mitsui & Co. Japan is exercising common control over SGL and SIL and erstwhile SKCL (which later merged with SGL) and making SGL and SIL into lowering of profits through siphoning off funds from its own subsidiary company SIL and putting Mitsui & Co. Ltd., and its associate companies in undue gains. The Official Liquidator in his report has stated in para 3 that his report is mainly based on the report of the Auditors and the Official Liquidator has no other material either to supplement or to comment on the same. It seems from the record of the case, that it is clear that the Registrar of Companies who has filed an affidavit as a delegate of the Regional Director as well as Official Liquidator is the same person, acting both as Official Liquidator as well as Registrar of Companies. It is required to be noted that the Registrar at the time of filing the affidavit was in possession of the inspection report and in his capacity as Official Liquidator, he has stated that his report would mainly be based on the report of the Auditors and he has no other material either to supplement or to comment on the same. It is also required to be noted that the learned Single Judge has observed in para 17 of his Judgment as under :

“It may be noted that it is the Registrar of Companies who with authority from the Regional Director who has filed an affidavit and it is not the case of the Registrar of Companies that he was not aware of the inspection reports prepared by the Inspection Officer of the Ministry of Company Affairs and inspite of that he has opined that the affairs of the company have not been conducted in a manner prejudicial to the interest of its members or to the public. In doing so, the Registrar has certainly failed in his duties by not placing the correct facts before the Court. However, only because the Registrar of Companies has not placed the correct position as regards the affairs of SIL with reference to the said two inspection reports, in my view, it would not be a fit case to reject the scheme which has otherwise been approved by the majority of shareholders of both the companies and regarding which the Regional Director on behalf of the Central Government, as repository of public interest, has given his consent at the same time stating that any violation which might have been noticed at the time of inspection, legal action would be initiated regarding the same and that will not affect the amalgamation.”

13. In our view, when serious irregularities have been found in the inspection report and when the proceedings on the basis of the said inspection report are still pending and no further decision has been taken in this behalf and the Registrar as a delegate of the Regional Director who was in possession of such inspection report, should not have filed affidavits both, as the Official Liquidator as well as the Registrar as the delegate of the Regional Director. An affidavit is required to be filed by a person who is supposed to have knowledge of the facts. In considering the said aspect, no appropriate care has been taken in the matter of submitting the report on the part of the Regional Director and the Registrar of Companies. Once it is found that the report/affidavit on behalf of the Registrar/Regional Director is not in conformity with the statutory provisions, this Court mechanically cannot sanction the scheme simply because the majority of the shareholders have approved the scheme and the majority shareholders in their wisdom have accepted the valuation regarding exchange ratio.

14. Keeping in mind the aforesaid factual aspects, in our view, the Registrar should have specifically stated in his affidavit as to whether the affairs of the Company have been conducted in a manner prejudicial to the interest of its members or to public interest. It is required to be noted that as per the provisions of Section 393, the Registrar as well as the Liquidator, both are required to submit their separate reports and both are, therefore, functioning in a different capacity. It is surprising as to how the Official Liquidator who was the incharge of the Registrar could have filed the affidavits one in the capacity as a delegate of the Regional Director and the other in the capacity as the Official Liquidator. Even if the Registrar was asked to file affidavit by the Regional Director, considering the facts of the case that the said Registrar was already acting as an Official Liquidator, he should have informed the said aspect to the Regional Director. The affidavit submitted by the Registrar is as vague as it can be. By the said affidavit he has given no objection for sanctioning the scheme. In the instant case, since the Registrar is required to file an affidavit independently and the Official Liquidator and the Registrar are acting in a different capacity, the same persons could not have filed affidavits, both in the capacity as Registrar as well as in the capacity as the Official Liquidator. The statutory requirement of Section 394, therefore, cannot be said to be complied with in the present case. It is to be noted that as per Section 394, the Registrar as well as the Official Liquidator are required to file their separate affidavits. If one is incharge, the same person could not have filed affidavits of the Registrar as well as the Official Liquidator. The Affidavit of the Registrar is absolutely noncommittal. In the affidavit of the Official Liquidator, he has mentioned that the affairs of the company are not being conducted in a manner prejudicial to the interests of its members or to public interest. But when the same person filed affidavit as Registrar, this aspect is clearly omitted in his reply. In his affidavit, the Registrar has tried to become noncommittal. Before us, even no attempt was made on behalf of the Central Government or the Registrar to file any further affidavit. It is also pointed out to us that no final decision on the basis of the inspection reports has been arrived at one way or the other. Mr. Bhat during the course of his argument has submitted that the Registrar has acted as a mere delegate of the Regional Director. If that be so, then the Registrar could have informed the Regional Director that he has also filed an affidavit as Official Liquidator and that he would not be in a position to file an affidavit as delegate of the Regional Director.

15. In our view, the learned Company Judge himself has found that from the stand taken by the Registrar, he has failed in his duty and it cannot be said that the requirement of Section 394 has been complied with. In fact, two contradictory affidavits have been filed by the same gentleman, one in his capacity as the delegate of the Regional Director and the other in his capacity as the Official Liquidator. When the law requires that there should be two independent reports, it is clear that the statutory provision has not been complied with.

16. Considering the aforesaid aspect of the matter, though this Court has got only supervisory jurisdiction in the matter of sanctioning the scheme of amalgamation, surely this Court is not required to sanction the scheme in a mechanical manner and as per the mandate of Section 394 the Court shall not sanction the scheme unless the reports are made available as per the Proviso to Section 394. The Court, therefore, cannot sanction the scheme, unless the said statutory requirement is complied with and in this case, since it is not in dispute the very same person has filed affidavits, both as Official Liquidator and as the delegate of the Regional Director and that too his report is also not in conformity with the provisions of Section 394. Simply because the Central Government might have not opposed the scheme, that itself is not a ground for sanctioning the scheme. As per the mandate of law, even if the majority shareholders have approved the scheme, the Court is not required to straight away sanction the scheme. Proviso to Section 394 speaks otherwise and in that view of the matter, in our view, it is not correct to say that simply because the scheme is not opposed by the Central Government, the Court is required to put its seal on the scheme placed before it. In view of what is stated above, as per the proviso to Section 394 that no Court shall sanction the scheme unless statutory requirement is complied with, and since the said statutory requirement cannot be said to have been complied with, this appeal is required to be allowed and the order of the learned Single Judge, sanctioning the scheme is required to be set aside. We may also make it clear that in a given case by some omission even if averment is not made by the Registrar that the affairs of the company are not being conducted in a manner prejudicial to the interest of its members or to public interest, that may not be treated as fatal in every case in connection with the sanctioning of the scheme. However, so far as facts of the present case are concerned, when the Registrar was mindful of the inspection reports, it was his duty to state clearly that the affairs of the company are not being conducted in a manner prejudicial to the interests of its members or to public interest. The Registrar cannot sit at fence and remain noncommittal in this behalf. Even, otherwise, from the facts it is clear that the same person has filed both the affidavits, one in the capacity as Official Liquidator and the other in the capacity as the Registrar, although both of them are required to give separate reports in different capacity.

17. Before parting with this order, we make it clear that our observations are only meant for the purpose of considering whether the scheme can be sanctioned by this Court or not and whatever, observations made herein above will have no relevance and the same are not to be taken into account in any other proceedings which might be pending or may be initiated in future of any kind.

18. For the reasons stated above, we are of the opinion that the scheme, in question, cannot be sanctioned by this Court as it is in violation of mandatory provision of Section 394 of the Companies Act. As pointed out earlier, the learned Company Judge has not accepted the report submitted by the Registrar and if that report is taken into consideration, it is clear that the requirement of provisions of Section 394 cannot be said to have been fulfilled in the present case.

19. The appeal is allowed. The Order of the learned Company Judge is, accordingly, set aside. The scheme submitted by respondent No.1 Company is, accordingly, not sanctioned and accordingly not approved. Company Petition No.9 submitted before the learned Company Judge, accordingly, stands rejected. No costs.

SGL was incorporated on 25th June, 1965 as a private limited company, and thereafter, on 16th April, 1991 became a public company. The appellant company viz. Sesa Industries Ltd. (for short “SIL”) was incorporated on 17th May, 1993 as a subsidiary of SGL with the latter holding 88.85% of the shares in the former.

“It will be apparent from the various findings of the Inspection Report that the entire control of the day to day working of the company is being managed by Mitsui & Co. Ltd., Japan whereby huge turnover and profits are being siphoned away through systematic under invoicing of international financial transactions and over invoicing of import of coal. As regards inter-se transactions between SGL & SIL, systematic efforts have been made by SGL to put SIL into weal financial position by siphoning of the funds from SIL to SGL by over invoicing the price of iron ore and coke. In the process the minority shareholders of SIL have been deprived of their reasonable return in the forms of dividend or gains out of fair price of its shares. The minority shareholders of (sic) SIL have been cheated through the systematically siphoning the funds by SGL to the ultimate holding company i.e. M/s Mitsui & Co. Ltd., Japan. The I.O. has suggested for redressal of grievances of SIL by SGL in rescinding (sic.) the contract of purchase of shares at under value price of Rs. 30/- per share.”

“The Central Government has issued a letter dated 17th February, 2006 to various governmental agencies including the Regional Director (Western Region) enclosing a copy of the inspection report and recording that during the course of the inspection the inspecting officer has pointed out contraventions of Section 269 read with Section 198/309, contravention of Section 289 read with Article no. 111 and 140 of the Articles, contravention of Section 260 and 313, contravention of Section 268 read with Section 256 and contravention of Section 628 of the Act. The Investigating Officer has suggested invoking the provisions of Section 397 and 398 read with Section 388B, 401, 402 and 406 of the Act including that of Section 542 of the Act. The Inspection report has also pointed out financial irregularities and also examined the complaints of Mrs. Kalpana Bhandari and Mrs. Krishna H. Bajaj which have been reported in Part “A” of the Inspection Report. Contravention of Section 297 of the Act has been reported in Part “B” of the Inspection Report. It has also been suggested Part “D” of the Inspection Report for references to be made to the Ministry of Finance and SEBI. Accordingly, the Central Government has requested the addressees to examine the report and take appropriate action.”

“Perusal of the impugned order, however, nowhere discloses consideration of the said aspect of the relevancy of the document for the purpose of deciding the issue relating to amalgamation of the company. We, however, make it clear that the process regarding amalgamation shall proceed further in accordance with the provisions of law and in terms of direction in order dated 25.4.07 regarding relevancy of the said report.”

The Court may, on the application of the company or of 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 or class of members, as the case may be, to be called, held and conducted in such manner as the Court directs.

(2) If a majority in number representing three-fourths 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 under the rules made under Section 643, 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: Provided that 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 by whom an application has been made under sub-section (1) has disclosed to the Court, by affidavit or otherwise, all material facts relating to the company, such as the latest financial position of the company, the latest auditor’s report on the accounts of the company, the pendency of any investigation proceedings in relation to the company under Sections 235 to 251, and the like.

“Section 394 of the Act, lays down the procedure for facilitating reconstruction and amalgamation of companies. It reads as under: “S.394. Provisions for facilitating reconstruction and amalgamation of companies.—

(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—

(a) 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 (b) that under the scheme the whole or any part of the undertaking, property or liabilities of any company concerned in the scheme (in this section referred to as a ‘transferor company’) is to be transferred to another company (in this section referred to as ‘the transferee company’);

The Court may, either by the order sanctioning the compromise or arrangement or by a subsequent order, make provision for all or any of the following matters:—

(i) the transfer to the transferee company of the whole or any part of the undertaking, property or liabilities of any transferor company; (ii) the allotment or appropriation by the transferee company of any shares, debentures, policies or other like interests in that company which, under the compromise or arrangement, are to be allotted or appropriated by that company to or for any person; (iii) the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company; (iv) the dissolution, without winding up, of any transferor company; (v) the provision to be made for any persons who, within such time and in such manner as the Court directs, dissent from the compromise on arrangement; and (vi) such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction or amalgamation shall be fully and effectively carried out: Provided that no compromise or arrangement proposed for the purposes of, or in connection with, a scheme for the 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 Company Law Board or the Registrar that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest: Provided further that no order for the dissolution of any transferor company under clause (iv) shall be made by the Court unless the Official Liquidator has, on scrutiny of the books and papers of the company, made a report to the Court that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest.

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 meetings concerned 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 meetings concerned as contemplated by Section 391 sub-section (1).

5. That all the requisite material contemplated by the proviso of sub-section (2) of Section 391 of the Act is placed before the Court by the applicant concerned seeking sanction for such a scheme and the Court gets satisfied about the same.

6. That the proposed scheme of compromise and arrangement is not found to be violative of any provision of law and is not contrary to public policy. For ascertaining the real purpose underlying the scheme with a view to be satisfied on this aspect, the Court, if necessary, can pierce the veil of apparent corporate purpose underlying the scheme and can judiciously X-ray the same.

7. That the Company Court has also to satisfy itself that members or class of members or creditors or class of creditors, as the case may be, were acting bona fide and in good faith and were not coercing the minority in order to promote any interest adverse to that of the latter comprising the same class whom they purported to represent.

8. That the scheme as a whole is also found to be just, fair and reasonable from the point of view of prudent men of business taking a commercial decision beneficial to the class represented by them for whom the scheme is meant.

9. Once the aforesaid broad parameters about the requirements of a scheme for getting sanction of the Court are found to have been met, the Court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the Court there 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.”

Mr. I. Chagla, Senior Advocate with Mr. V. Tulzapurkar, Senior Advocate with Mr. Riyaz Chagla, P. Wagle and Mr. D. Lawande, Advocates for the petitioner Company.

Both these petitions and applications taken out therein by the Objector can be disposed of by a common order since the petitioner company in both the petitions and the objector who has taken objection to the scheme of amalgamation are the same.

2. After the company petition was filed, objections were filed by the objector Shailesh H. Bajaj and he also filed three applications in each of the petitions. In Company Petition No.11 of 2012, he has filed company application No. 2/2013, 3/2013 and 4/2013 and similar applications have been filed by him seeking identical prayers vide Company Applications No.5/2013, 6/2013 and 7/2013 in Company Petition No.12/2012. After the applications were heard for sometime, this Court was pleased to direct that both, the applications and the company petitions, should be heard together.

(I) Company Petition No.11/2012 was filed in this Court seeking sanction to the scheme of amalgamation (concurrent scheme of [katerina Limited ([katerina) with Sesa Goa Limited).

(III) Company Petition No.12/2012 has been filed in this Court, seeking sanction to the Scheme of Amalgamation and Arrangement (Composite Scheme) amongst Sterlite Industries (India) Limited (SIlL), The Madras Aluminium Company Limited (MACO), Sterlite Energy Limited (S[L), Vedanta Aluminium Limited (VAL) and Sesa Goa Limited which is the petitioner herein. The petitioner Company is a trasferee company, which is registered in Goa and as such, the present petition has been filed in this Court. The transferor companies have filed their petitions in the appropriate Courts having jurisdiction over them.

(IV) So far as [katerina is concerned, the concurrent scheme has been approved by the Supreme Court of Mauritius by order dated 24th August, 2012.

(V) The company petitions filed by SIlL, MALCO, SEL and VAL for sanction of the Composite Scheme have been heard by High Court of Judicature at Madras and the judgment has been reserved by the Honourable Court on the said Company Petitions. In both the petitions, therefore, it is prayed that the Scheme of Amalgamation referred to in the petitions be sanctioned by this Court, so as to be binding on all the equity shareholders of the petitioner Company and on the petitioner Company and for orders in respect of such incidental, consequential and supplemental matters as are necessary to secure that the scheme is fully and effectively carried out.

4. Shri Shailesh Bajaj has filed his objections and is representing himself and his family members. He has filed his objections-affidavit dated 2lYt August, 2012 and reply-affidavits have been filed by the petitioner company. Rejoinder-affidavit also has been filed by the objector. During the pendency of the petition, Shri Shailesh Bajaj (hereinafter, referred to as “the objector”) has filed Company Application No.2/2013 in company Petition No. 11/2012 and a corresponding application in Company Petition No.12/2012, seeking the following reliefs:

“7(a) necessary notices be issued to FIl’s such as “Robeco”, “City of New York Group Trust”, “[aton Vance” and “Stitching Pensioenfonds” and their respective custodians viz. Deutsche Bank A.G., JP Morgan Chase Bank N.A. directing them to file their individual Affidavits in the present petition stating the stance taken by the each of the aforesaid FIl’s on the resolution concerning the present scheme of merger and the instructions given by the said FIl’s to their respective custodians in terms of voting on the resolute concerning the approval/disproval of the present scheme and the manner in which the said custodian cast the vote on behalf of the concerned FIl;

(b) this Honourable Court may summon the papers concerning the declaration of invalid votes from the Petitioner Company and direct the Official Liquidator/Registrar of Companies, Goa to scrutinize the said votes and file a report in this Honourable Court concerning their validity/ invalidity;

(c) this Honourable Court may decide the issue of authenticity and credibility of the Report submitted by the Chairman of the Petitioner in respect of the results of the Court convened meeting as a preliminary issue before dealing with the other aspects of the present Petition, if found necessary;

(d) any other and further directions that may be issued in view of the facts and circumstances of the present matter by this Honourable Court as deemed fit and proper.”

Vide Company Application No.3/2013 in Company Petition No.11/2012, along with corresponding application filed in company Petition No. 12/2012, he is seeking the following reliefs:

7 (a) necessary direction be issued to the Central Government to produce the papers, files (including the processing note, examination note etc.) and other documents in relation to the actions taken and/or contemplated to be taken by the Ministry of Corporate Affairs in terms of reimbursement of the amount of Rs.1,000 crores that has been siphoned away from the Petitioner Company as per the findings arrived at by the SF10 in its Report dated 29th April, 2011; (b) necessary direction be issued to the Central Government to produce the papers, files (including the processing note, examination note etc.) and other documents in relation to the actions taken and/or contemplated to be taken by the Ministry of Corporate Affairs in terms of supersession of the board of directors of the Petitioner Company in view of the findings arrived at by the SF10 in its Report dated 29th April, 2011; (c) any other and further directions that may be issued in view of the facts and circumstances of the present matter by this Honourable Court as deemed fit and proper.”.

Similarly, in Company Application No.4/2013 in Company Petition No.11/2012 and the corresponding application filed in company Petition No. 12/2012, he has prayed for the following reliefs:

“9 (a) necessary direction be issued to the Petitioner to produce the Valuation Reports compiled by Grant Thornton LLP and KPMG India Private Limited and the Fairness Opinion Report compiled by Citigroup Global Markets India Private Ltd. in this Honourable Court; (b) necessary direction be issued to the directors/concerned personnel of Grant Thornton LLP and KPMG India Private Limited and Citigroup Global Markets India Private Ltd. to file their respective affidavits in this Honourable Court stating whether the Petitioner Company had furnished the SF10 Report to them for the purpose of arriving at the exchange/swap ratio in the present proceedings and whether the valuations arrived at by them had taken into consideration the contents of the said SF10 Report:

(c) any other and further directions may be issued in view of the facts and circumstances of the present matter by this Honourable Court as deemed fit and proper.”.

5. The petitioner company has annexed the Memorandum and Articles of Association of the SGL and has stated that the petitioner is a producer and exporter of iron ore, pig iron and metallurgical coke and that the equity shares of the petitioner are listed on the BS[ Limited and the National Stock Exchange of India Limited. The petitioner has enumerated the objects of the Company which is established to carry on the business in India and abroad. The petitioner then has given the details of Ekaterina (Transferor company) and also the share capital of Ekaterina for the period December 21, 2011 to April 1, 2012. The main objects of Ekaterina, the decision taken by the Board of Directors, along with the resolution approving the scheme have been stated. The particulars of the scheme have been mentioned in the petition regarding transfer and vesting, conduct of businesse till effective date, dissolution of Ekaterina, and consideration. The petitioner Company has annexed all the relevant documents along with the petition, including explanatory statement under Section 393 of the Companies Act, and the judgments.

(A) Non-disclosure of relevant material to this Honourable Court under the provisions of Section 391(2) of the Act;

(B) Non-disclosure of relevant and necessary information to the shareholders of the petitioner Company under the provisions of Section 393 of the Companies Act;

(E) unconscionable nature of the scheme in as much as the interests of the minority shareholders of the petitioner Company have been completely overlooked.

(H) transfer of Vedanta Resources Pic.’s holding of 38.80 % in Cairn India Ltd. along with associated debt of $5.9 billion;

(I) the validity of the votes cast in the Court convened meeting and the validity of the Chairman’s Report concerning the same.

The objector has annexed Serious Fraud Investigation Office, Ministry of Corporate Affairs’s report.

7. Reply affidavit has been filed by the petitioner to the affidavit filed by the objector, explaining the detailed objections which are raised along with the relevant documents.

8. Regional Director, Western Region, Ministry of Corporate Affairs, Mumbai also has filed a report and has stated that as regards para 6 (D) (i) and 6 (D) (ii), the objections raised by the petitioner have some force in the eye of law. However, the Regional Director has stated that having participated in the General Body Meeting and having not raised at the appropriate platform , the validity of the objections raised by the objector may be considered by the High Court. He has further stated that so far as para 6(D) (iii) and 6(D) (iv) is concerned , them facts relate to matters considered at the meeting of shareholders and are part of the indoor management of the company and therefore, the Regional Director is not in a position to make any comments and further for the reason that no supporting documents are annexed in support of the allegations. Save and except, as stated in Clause 6 (A), (B), (C) and (D), the Regional Director, however, has stated that the scheme is not prejudicial to the interest of shareholders and public.

9. Similar objections have been taken in Company Petition No.12/2012 and they have been replied by the petitioner Company and the Regional Director.

10. The objector who appears in person has, in context of the objections which are raised by him, relied on the prayers made by him in the three company applications and has prayed that before hearing the matters any further, initial order may be passed on the said application. We had made clear that the prayers in the said applications would be considered along with other objections which are raised by the objector.

(I) On 25th February, 2012, the Board of Ekaterina and the Petitioner Company approved the Concurrent Scheme, including the share exchange ratio

(II) On 25th February, 2012 itself, the Board of Directors of the Petitioner Company , SIIL, MALCO, SEL and VAL approved the Composite Scheme and the share exchange ratio(s) after considering the valuation reports of Grant Thornton India LLP and KPMG India Private Limited , the independent valuers and the fairness opinion of Citi Group Global Markets India Private Limited (to the Board of Directors of the Petitioner) and DSP Me rill Lynch Private Limited (to the Board of Directors of SIIL).

(III) On 2nd April, 2012 and 12th April, 2012, the National Stock Exchange of India and the Bombay Stock Exchange Limited, respectively approved the Concurrent Scheme.

(IV) On 2nd April, 2012 and 12th April, 2012, the National Stock Exchange of India and the Bombay Stock Exchange Limited, respectively approved the Composite Scheme.

(V) On 23rd April , 2012 , the Competition Commission of India approved the proposed combination, including the proposed combination including the transaction as proved for in the Concurrent Scheme and the Composite Scheme.

(VI) On 26th April, 2012, the High Court of Judicature at Madras dispensed with the convening of the meeting of the Equity Shareholders of SEL in view of the consent affidavits given by all [quity Shareholders to the Composite Scheme.

(VII) On 26th April, 2012, itself, the High Court of Judicature at Madras dispensed with the convening of the meeting of the Equity Shareholders of VAL in view of the consent affidavits given by all Equity Shareholders and Preference Shareholders to the Composite Scheme.

(VIII) On 19th June, 2012, the Equity Shareholders of the petitioner approved the Composite Scheme at the court convened meeting with the requisite majority as prescribed under Section 391(2) of the Companies Act, 1956.

(IX) On 19th June, 2012 itself, the Equity Shareholders of the petitioner approved the Concurrent Scheme at the court convened meeting with the requisite majority as prescribed under Section 391(2) of the Act.

(X) On 21st June, 2012, the Equity Shareholders of SIIL approved the Composite Scheme at the court convened meeting.

(XI) On 23rd June, 2012, the Equity Shareholders of MALCO approved the Composite Scheme at the court convened meeting.

(xii) On 29th June, 2012, the Foreign Investment Promotion Board of India approved the transaction as proposed in the Concurrent Scheme.

(XIII) On 2nd August, 2012, the advertisement of the petition in accordance with Rule 80 of the Companies (Court) Rules, 1959 with respect of the Company Petition No. 11 of 2012 was published in the Navhind Times and Sunaprant newspapers.

(XIV) On 2nd August, 2012 itself, the advertisement of the petition in accordance with Rule 80 of the Companies (Court) Rules, 1959 with respect of the Company Petition No. 12 of 2012 was published in the Navhind Times and Sunaprant newspapers.

Learned Counsel for the petitioner Company then invited our attention to the contours of the jurisdiction of the Company Court while sanctioning the scheme of arrangement, having been laid down by the Supreme Court. He relied on judgments of the Apex Court in Mihir Mafatlal vs. Mafatlal Industries Ltd.1 (paras 27, 28 and 29) and in I-/in dustan Lever Employees Union vs. I-/in dustan Lever Ltd., and others2 (paras 3, 4 and 6). He submitted that the petitioners had duly complied with the statutory provisions under the Act and the Rules and the requisite meeting as directed by this Court had been convened and the scheme as approved by the equity shareholders in terms of section 391(2) of the Act. The relevant material under Section 391 of the Act was provided to the equity shareholders and/or made available for inspection. It was submitted that the scheme is not violative of any provision of law and is not contrary to the public policy. He submitted that the scheme is just, fair and it advances the interest of the petitioner and their shareholders. He, therefore, submitted that the scheme may be sanctioned. He has relied on a number of Judgments which I will refer to at later stage.

12. Shri Bajaj has filed his objections. Firstly, he submitted that the three applications filed in the company petitions should be allowed. It was submitted that so far as Company Application No.2/2013 in Company Petition No.11/2012 is concerned, notices be issued to FIls such as “Robeco”, “City of New York Group Trust”, “[aton Vance”, etc., and their respective custodians viz. Deutsche Bank A.G., JP Morgan Chase Bank N.A. directing them to file their individual Affidavits stating the stance taken by the each of the aforesaid FIls on the resolution concerning the present scheme of merger and the instructions given by the said FIls to their respective custodians. It is further prayed that this Court should summon the papers concerning the declaration of invalid votes and direct the Official Liquidator to scrutinize the said votes. Thirdly, it is contended that the issue of authenticity and credibility of the report submitted by the Chairman of the petitioner in respect of the results of the Court convened meeting, may be decided first. It was contended that though on record it can be seen that FIls had given specific instructions not to vote in favour of the scheme, a part of the votes have been given against the scheme and, therefore, it was necessary to ask the FIls and their respective custodians to file affidavits.

In my view, such an exercise cannot be permitted in a petition which is filed under Section 391 of the Act for grant of sanction of the scheme of amalgamation. Secondly, even otherwise, the stand taken by such FIls and their custodians now after voting is over would be irrelevant and could be an afterthought and would not be germane for the purpose of considering a petition which is filed under Section 391 seeking sanction for the scheme. Similarly, other prayers namely direction to the Official Liquidator to scrutinize the votes, also is an exercise which cannot be carried out after the Chairman of the said meeting who is a Retired Chief Justice of the High Court under whose supervision the said meeting was held. It would only amount to granting permission to carry out the exercise of determining the validity of the votes, after the individual scrutinizers have submitted the report. The same is the case with prayer clause (c). In view of this, it is not possible to consider the reliefs which are claimed by the objector in this application.

13. So far as Company Application No.3/2013 is concerned, in the said application it is claimed that directions be given to the Central Government to produce the papers and other documents in respect of the actions taken or contemplated to be taken by the Ministry of Corporate Affairs in terms of reimbursement of the amount of Rs.1,000 crores that has been siphoned away from the Petitioner Company as per the findings arrived at by the SF10 in its Report dated 29th April, 2011 and seeking further direction to produce the necessary files, etc., in respect of the action taken by the Ministry of Corporate Affairs in terms of the supersession of the Board of Directors in view of the report. In my view, so far as these prayers are concerned, they have nothing to do with the grant of sanction of the scheme which is filed for amalgamation. It is well settled position in law that any pending investigation or proceedings cannot come in the way of the Court considering the grant of sanction under Section 391 of the Act.

14. In Company Application No.4/2013, it is prayed that necessary direction be issued to produce the Valuation Reports compiled by Grant Thornton LLP and KPMG India Private Limited and the Fairness Opinion Report compiled by Citigroup Global Markets India Private Ltd. and for a further direction, directing the concerned persons of the said expert to file their respective affidavits stating therein whether the Petitioner Company had furnished the SF10 Report to them. It has been contended that so far as SF10 Report is concerned, though a letter has now been shown which states that SF10 Report was in fact brought to the notice of the valuers, according to the objector, the said letter is fabricated and reality of the said SF10 Report was not placed before the valuers and for that purpose it is necessary to direct the said valuers to file their personal affidavits.

15. It has been consistently held that a Court cannot question the correctness or otherwise of an opinion given by the experts, since the Court is not equipped either with 148 knowledge or with expertise to consider and give an opinion as to whether the expert opinion is correct or not reliable. In this view of the matter, in an inquiry under Section 391, the question of direction sought by the objector in this application cannot be granted. The experts have stated in their report the basis on which they have given their opinion. It is not now open for the objector to say that in fact a particular document which the valuers claim was shown to them, was in fact not shown. This Court is not expected to go into the disputed questions of fact and hold an inquisitorial inquiry when an application is filed under Section 391 of the Act, seeking sanction of the scheme. Such a power is not given to the Court under the provisions of Section 391 of the Act and the scope of the inquiry, therefore, is to a large extent limited which I shall consider while taking into consideration the powers of this Court which can be exercised when a petition is filed under Section 391 of the Act. It appears that the only intention of the objector is to delay and prolong the proceedings by filing frivolous applications and raising the objections which are based on conjectures and surmises and by creating hypothetical situations which are based on paranoid fears and apprehensions. All these applications, therefore, are dismissed and in my view, it is not necessary to issue the directions which are sought by the objector in these three applications. The three applications filed in Company Petitions No.11/2012 and 12/2012 are dismissed.

16. Before taking into consideration the rival submissions made by the learned Senior Counsel appearing on behalf of Petitioners and the Objector who is appearing in person, it would be relevant to take into consideration contours of the jurisdiction of the Company Court as also the ambit and scope of inquiry which is contemplated under section 391 of the Companies Act while sanctioning the scheme of arrangement/amalgamation. In order to appreciate the nature and scope of the inquiry under section 391 of the Companies Act, 1956, it would be necessary to firstly have a look at section 391 which reads as under:-

“391. Power to compromise or make arrangements with creditors and members- (1) Where a compromise or arrangement is proposed-

(b) between a company and its members or any class of them; the Court may, on the application of the company or of 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 or class of members, as the case may be, to be called, held and conducted in such manner as the Court directs.

(2) If a majority in number representing three- fourths 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 [under the rules made under section 643], 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: [Provided that 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 by whom an application has been made under sub- section (1) has disclosed to the Court, by affidavit or otherwise, all material facts relating to the company, such as the latest financial position of the company, the latest auditor’s report on the accounts of the company, the pendency of any investigation proceedings in relation to the company under sections 235 to 351, and the like.]

(3) An order made by the Court under sub- section (2) shall have no effect until a certified copy of the order has been filed with the Registrar.

(4) A copy of every such order shall be annexed to every copy of the memorandum of the company issued after the certified copy of the order has been filed as aforesaid, or in the case of a company not having a memorandum, to every copy so issued of the instrument constituting or defining the constitution of the company.

(5) If default is made in complying with sub-section (4), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to [one hundred rupees] for each copy in respect of which default is made.

(6) The [Tribunal] may, at any time after an application has been made to it under this section, stay the commencement or continuation of any suit or proceeding against the company on such terms as the Court thinks fit, until the application is finally disposed of.”

The Apex Court in its several judgments has, after taking into consideration the said provisions of the Companies Act has summarized and succinctly laid down the scope of inquiry under the said provisions. In Miheeer H. Ma fat/al vs. Ma fat/al Industries Ltd’ the Apex Court has observed in para 29 of its judgment as under:-

“29. …………………………… In view of the aforesaid settled legal position, therefore, the scope and ambit of the jurisdiction of the Company Court has clearly got earmarked. The following broad contours of such jurisdiction have emerged:

1. The sanctioning court has to see to it that all the requisite statutory procedure for supporting such a scheme has been complied with and that the requisite meeting 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 meetings concerned 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 the 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 of sub- Section (2) of Section 391 of the Act is placed before the Court by the applicant concerned seeking sanction for such a scheme and the Court gets satisfied about the same.

6. That the proposed scheme of compromise and arrangement is not found to be violative of any provision of law and is not contrary to public policy. For ascertaining the real purpose underlying the Scheme with a view to be satisfied on this aspect, the Court, if necessary, can pierce the veil of apparent corporate purpose underlying the scheme and can judiciously X-ray the same.

7. That the Company Court has also to satisfy itself that members or class of members or reditors or class of creditors as the case may be, were acting bona fide and in good faith and were not coercing the minority in order to promote any interest adverse to that of the latter comprising 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 requirements of a scheme for getting sanction of the Court are found to have been met, the Court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the Court there 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 aforesaid parameters of the scope and ambit of the jurisdiction of the Company Court which is called upon to sanction a Scheme of Compromise and Arrangement are not exhaustive but only broadly illustrative of the contours of the Court’s jurisdiction.”

Similarly, the Apex Court in Hindustan Lever Employees Union Vs. Hindustan Lever Ltd and Others’ has taken into consideration the role of the court while making inquiry under section 391 of the said Act and has observed in paras 3,4, and 6 of its judgment as under:-

“3. But what was lost sight of was that the jurisdiction of the Court in sanctioning a claim 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 founded on fairness. It is not required to interfere only because the figure arrived at by the valuer was not as better as it would have been if another method would have been adopted. What is imperative is that such determination should not have been contrary to law and that it was not unfair to the shareholders of the company which was being merged. 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 High Court appears to be correct in its approach that this test was satisfied as even though the chartered accountant who performed this function was a Director of TOMCO but he did so as a member of a renowned firm of chartered accountants. His determination was further got checked and approved by two other independent bodies at the instance of shareholders of TOMCO by the High Court and it has been found that the determination did not suffer from any infirmity. The company court, therefore, did not commit any error in refusing to interfere with it. May be as argued by the learned counsel for the petitioner that if some other method would have been adopted probably the determination of valuation could have been a bit more in favour of the shareholders. But since admittedly more than 95% of the shareholders who are the best judges of their interest and are better conversant with market trend agreed to the valuation determined it could not be interfered by courts as,

“certainly, it is not Dart of the iudicial process to examine entreDreneurial activities to ferret out flaws. The court is least eguiDDed for such oversights. Nor. indeed, is it a function of the iudges in our constitutional scheme. We do not think that the internal management. business activity or institutional operation of Dublic bodies can be subiected to insDection by the court. To do so. is incomDetent and imDroDer and, therefore, out of bounds. Nevertheless, the broad parameters of fairness in administration, bona fides in action, and the fundamental rules of reasonable management of public business, if breached, will become justiciable.” [Fertilizer Corpn Kamagar Union (Regd) v. Union of India, (1981) 1 SCC 568, 588-89, para 47 : (1981) 2 SCR 52. See Buckley on Companies Act, 14th Edn., pp. 473 & 474 and Palmer on Company Law, 23~ Edn., para 79.16.”

4. Nor is there much merit in the claim of the employees that their interest had not been adequately protected. The scheme of 156 amalgamation provides that all the staff, workmen or other employees in the service of the transferor company (TOMCO) immediately preceding the effective date shall become the staff, workmen and employees of the transferee company. Clause 11.1 provides that their services shall be deemed to have been continuing and not have been interrupted. Clause 11.2 and 11.3 protect the interest by providing that the terms and conditions of such employees shall not be less favorable and all employees that no safeguard has been provided for Hindustan Lever Employees’ Union appears to be off the mark as it is the interest of benefits such as PF etc shall stand transferred to HLL. The grievance of the employees of TOMCO which had to be protected. Even the submission that merger will create unemployment or it may result in many employees of TOMCO being rendered surplus does not carry much weight as these are matters which can be taken care of by the labour court if the contingency arises. The learned counsel for the petitioner time and again took strong exception to the observations made by the High Court that any dispute about retrenchment etc could be adjudicated by the labour court. He vehemently submitted that the availability of remedy after retrenchment should not have coloured the vision of the court to adjudicate upon the reasonableness of the scheme. The submission overlooks the primary duties and functions of a company court in matters of merger. When the court found that service conditions of the merged company shall not be to their prejudice it was fully justified in rejecting the claim of employees as it was neither unfair nor unreasonable. Further the court in its anxiety to be fair to the employees recorded the statement of the learned Advocate General who appeared for HLL that no employee of HL has been rendered surplus and in such contingency the company has resorted to friendly handshake by either giving lump sum or pension. A scheme of amalgamation cannot be faulted on a apprehension and speculation as to what might possibly happen in future. The present is certain and taken care of by clauses 11.1.2 and 3 of the Scheme. And unfriendly throwing out being amply protected by taking recourse to labour court no unfairness arises, apparent or inherent. Nor the claim that merger shall result in ‘synergies’ can render the scheme bad. Improved technology and scientific methods result in better employment prospects. Anxiety should be to protect workers and not to obstruct development and growth. May be that advanced technology may reduce the manpower but so long as those who are working are protected they are not entitled to hinder modernisation or merger under misapprehension that future employment of same number of workers may stand curtailed. The wage differential arising between employees of two companies cannot result in making the merger unfair since the service conditions of TOMCO workers having been protected they cannot claim that unless they are paid the emoluments as is being paid by Hindustan Lever the merger was unjust. Various subsidiary submissions that the workers, shareholders were not permitted to attend the meeting or that material facts were concealed from them, does not appear to be correct as when more than 95% of the shareholders have agreed to the valuation determined by the Chartered Accountant all these procedural irregularities cannot vitiate the determination.”

“6 Section 394 casts an obligation on the court to be satisfied that the scheme of amalgamation or merger was not contrary to public interest. The basic principle of such satisfaction is none other than the broad and general principles inherent in any compromise or settlement entered between parties that it should not be unfair or contrary to public policy or unconscionable. In amalgamation of companies. the courts have evolved, the principle of “prudent business management test” or that the scheme should not be a device to evade law. But 158 when the court is concerned with a scheme of merger with a subsidiary of a foreign company then the test is not only whether the scheme shall result in maximizing profits of the shareholders or whether the interest of employees was protected but it has to ensure that merger shall not result in impeding promotion of industry or shall obstruct growth of national economy. Liberalized economic policy is to achieve this goal. The merger, therefore, should not be contrary to this objective. Reliance on English decision Hoare & Co. Ltd. [1933 ALL ER Rep 105, Ch D]and Bugle Press Ltd. [1961 Ch 270 : (1960) 1 All ER 678 : (1960) 2 WLR 658] that the power of the court is to be satisfied only whether the provisions of the Act have been complied with or that the class or classes were fully represented and the arrangement was such as a man of business would reasonably approve between two private companies may be correct and may normally be adhered to but when the merger is with a subsidiary of a foreign company then economic interest of the country may have to be given precedence. The jurisdiction of the court in this regard is comprehensive.” (emphasis supplied)

The Apex Court in Hindustan Lever and another vs. State of Maharashtra and another’ in para 12 of its judgment has observed as under:-

“12 Two broad principles underlying a scheme of amalgamation which have been brought out in this judgment are:

1. that the order passed by the court amalgamating the company is based on a compromise or arrangement arrived at

2 that the jurisdiction of the Company Court while sanctioning the scheme is supervisory only i.e. to observe that the procedure set out in the Act is met and complied with and that the proposed scheme of compromise or arrangement is not violative of any provision of law, unconscionable or contrary to public policy. The Court is not to exercise the appellate jurisdiction and examine the commercial wisdom of the compromise or arrangement arrived at between the parties. The role of the court is that of an umpire in a game. to see that the teams play their role as per rules and do not overstep the limits. Subject to that how best the game is to be played is left to the players and not to the u m p 1 re.

Both these principles indicate that there is no adjudication by the court on the merits as such.” (Emphasis supplied)

17. Keeping in view the provisions of section 391 and the law laid down by the Supreme Court in the aforesaid two cases as also the other judgments, it is now quite well settled that, firstly, the Court is not expected to sit in appeal over the commercial wisdom of the majority of shareholders of the Company who have given their seal of approval to the Scheme of amalgamation. The Court is expected to act as an umpire and dispassionately consider whether the procedure which is laid down under the said section has been followed 160 meticulously, fairly and impartially and proper opportunity is given to all the shareholders and the reditors of the Company who has filed the Petition in order to ensure that sanction and approval of the Scheme is not obtained by suppression of material facts or that a decision is contrary to the interest of minority shareholders or creditors. Thirdly, it is not against the public policy or is illegal and contrary to the provisions of any Act or Rules. Once the Court is satisfied that a proper procedure has been followed, there is no suppression of material facts and documents then, in such circumstances, Court is not supposed to make a fishing and roving inquiry in hypothetical, imaginary and fanciful apprehension expressed by the objector of the scheme. The Court is expected to be guided by the experts’ opinion in respect of Fairness Report, Valuation Report and Feasibility Report given by the experts. The Court also is not expected to make a detailed inquiry to see whether the voting made in the meeting which is held is in accordance with law. The Court, therefore, is not expected to sit in appeal over the Report given by the Chairperson of the meeting in which the voting is made.

18. Keeping in mind the aforesaid principles laid down by the Apex court, I propose to first examine the chronology of dates and events which has not been disputed and which is as under:-

The High Court of Judicature at Madras dispensed with the convening of the meeting of the Equity Shareholders of SEL in view of the consent affidavits given by all Equity Shareholders to the Composite Scheme.

19. The first objection is regarding the Valuation Report and fairness opinion. It has been submitted that swap/exchange ratio arrived at by valuers should not be accepted. The Objector has filed a detailed written submissions on 18/02/3013 which run into 72 pages. A gist of the objections is as under:

(i) The SF10 Report was not placed before the the Valuers by the Petitioner-Company since no reference has been made by the Valuers about SF10 Report and that the affidavit stating that the said Report was placed is an afterthought.

(ii) The share exchange ratio between the Companies which are amalgamated is skewed. In the present case, Valuers have given opinion that a shareholder who has 100 shares in Sesa Goa Ltd would get 29 shares in the amalgamated Company. Great emphasis has been laid on the fact that this ratio is not in favour of the minority shareholders and is in favour of majority shareholders and promoters of the Company. It has been submitted that the said ratio is arrived at on certain absurd valuations for financially sick companies and is also arithmetically not in compliance. Secondly, it is contended that it is hedged by several qualifications which can be seen from the reply filed by the Petitioner- Company to Company Application No. 4 of 2013. It has been submitted that the valuation which is made in respect of valuation of the shares is not uniform. Reliance has been placed on the judgments of the Apex Court in Miheer H. Mafatlal(supra), Hindustan Lever Employees Union’ and this Court in Larsen and Toubro Limited’ & in T. Mathew vs. Smt. Saroj G. Poddar2 and also on the judgment of the Calcutta High Court in Modus Analysis & Information P. Ltd3 It is, therefore, contended that the swap ratio arrived at in the Scheme, apart from being unfair, unjust and predetermined and to the disadvantage of the shareholders of the Petitioner-Company, is a result of incorrect and suppressed financial data being supplied to the Valuers resulting in fallacious exchange ratio being reached by them.

(iii) It has been contended that if this Court is of the opinion that it could not go into the conclusion reached by the expert Valuers then, in that case, this Court may appoint fresh Valuers at the cost of the Objector.

(iv) It has been contended that as a result of the said Scheme, price of the shares of the Petitioner-Company dropped from Rs 227/- per share in the stock market to Rs 163/- per share owing to the announcement of the terms of the present amalgamation.

(v) The Objector has given his own opinion as to how the Valuation Report is incorrect in a detailed analysis made by him of various documents, statements, SF10 Report etc.

(vi) In para 3(i) to 3(x) of his written submissions, the Objector has firstly tried to demonstrate as to how the valuation is not correct. Secondly, he has tried to demonstrate as to how the method of valuation which has been chosen by the Valuers is wrong and thirdly he tried to point out as to how the swap ratio even arithmetically is incorrect by giving various details.

20. On the other hand, the learned Senior Counsel Mr. Chagla appearing on behalf of the Petitioner has submitted that share exchange ratio has been determined by two independent and reputed firms of Valuers viz Grant Thornton India LLP and KPMG India Private Limited and the fairness of the Valuation Report has been given by Citi Group Global Markets India Private Limited (to the Board of Directors of the Petitioner) and DSP Merill Lynch Private Limited (to the Board of Directors of SIlL). It has been contended that the Valuers had applied the commonly accepted valuation principles to arrive at the exchange ratio including adoption of the market price approach, discounted cash offer approach, net asset 167 value approach and price of recent investments and transactions. He contended that Concurrent Scheme and Composite Scheme including the share exchange ratio had been approved by the equity shareholders of the Company and the Objector representing himself and his family members who voted against the Concurrent Scheme and Composite Scheme, represents only 0.43% in number and 0.01% in value of the Equity Shareholders present and voting at the court convened meeting held on 19/06/2012. He submitted that the objections raised are mere conjectures and surmises and no resolution was proposed by the Objector at both court convened meetings for amendment of the share exchange ratio nor has he provided any alternative Valuation Report. It has been submitted that subsequent to the filing of the Petitions before this Court, the relatives of the Objector have increased their equity shareholding in the Petitioner-Company.

21. In my view, submission made by the Objector is without any substance. It is a well settled position in law that the Court, while making inquiry under section 391, cannot substitute the conclusions which are arrived at by the experts. It is not disputed by the Objector that the said Valuers are experts in the field and no allegations of malafide have been made against the said experts. The detailed objection s regarding swap ratio and Valuation Report which 168 the Objector has argued at length before me and further elaborated in the written submissions in para 3. By way of illustration, I would like to point out the submissions which have been made and mentioned in the said para 3. He has stated that the Valuation Report does not take into consideration the findings arrived at by SF10 in its Report dated 28/4/2011. This submission is without any substance. Petitioner-Company has annexed a letter written by the said Valuer in which they have clearly stated that SF10 Report was placed before them by the Petitioner-Company. It has been contended that in the Scheme concerning merger of Ekaterina Ltd, the only methodology that could apply for arriving at the valuation of the said Company as per the Valuation Report submitted by the Valuers was the “Price of Recent Investment” methodology. It has also been submitted that other forms of methodologies that were used to arrive at the exchange/swap ratios in the aforesaid schemes could not be made applicable to Ekaterina Ltd. It has been contended that since Ekaterina Ltd is an unlisted company the “Market Price Approach” methodology could not have been applied while arriving at its valuations. It has also been contended that the “Discount Cash Flow Approach” and/or the “Net Asset Value Approach” could not have been applied by the Valuers to Ekaterina Ltd.

22. It has been contended that Valuers in the present Scheme have even arithmetically arrived at some absurd valuations and swap/exchange ratios and, herefore in the written arguments the Objector has proceeded to illustrate in support of the said contention.

23. In my view, these submissions are nothing but conjectures and surmises and the own opinion of the Objector in respect of Valuation and Fairness Report and his own analysis as to how the swap ratio which is arrived by the Valuers is incorrect. It is an admitted position that the Objector was present at the court convened meeting and, at that time, no amendment was proposed to the swap ratio nor any Valuation Report was submitted by him. In my view, therefore, it is now not open for the Objector to make a submission that this Court should appoint fresh Valuers on the basis of Objector’s own analysis of the Valuation Report and other documents. Admittedly, the Objector is not an expert in the field since he is an engineer by profession as submitted by him during the course of his arguments. There is no material on record to show that minority shareholders would suffer by this ratio whereas promoters and the majority shareholders would stand to gain by this ratio. It is an admitted position that this ratio is applicable to all the equity shareholders without making any exception either in respect of promoter shareholders or any other category of equity shareholders. There cannot be any dispute 170 regarding the ratio of the judgments on which reliance has been placed by the Objector. However, the said observations have been made in the facts of each individual case and, therefore, the said ratio cannot be made applicable to the facts of the present case.

24. Secondly, it has been submitted by the Objector that the present Scheme violates the proviso appended to sub- section (2) of section 391 of the Companies Act which states that the Court has to be satisfied that the Company has disclosed by affidavit or otherwise all material facts relating to the Company. It has been submitted that the Petitioner-Company has deliberately suppressed the Report compiled by the Serious Fraud Investigation Office (SF10) after having investigated the Petitioner-Company under the provisions of Section 235 of the Act. It has been submitted that the said SF10 Report contains findings against the Petitioner-Company which apart from having huge effect on the swap/exchange ratio would also reflect the manner in which state of affairs of the Company are being handled by its management and also demonstrates the manner in which issues public policy and public interest has been managed by it. It has been submitted that in para 26 of the Petition (in the case of the Scheme relating to Ekaterina Ltd) and para 44 of the Petition (in the case of the Scheme relating to other companies) it has been stated that there was a “pending investigation. before SF10 and the Ministry of Corporate Affairs”. It has been submitted that similar averments have been made in para 26 in the Petition concerning Ekaterina Ltd. Reliance has been placed on the judgments of the Supreme Court in Miheer H. Ma fat/al (supra), Bedrock Ltd’ and on the judgment of this Court in T. Mathew vs. Smt. Saro] G. Poddar2

25. On the other hand, the learned Senior Counsel Mr. Chagla appearing on behalf of the Petitioner submitted that SF10 Report is not a bar to the sanction of the Scheme. It has been contended that the Petitioner would be subject to consequences that would arise from SF10 Report. It has been contended that the Petitioner is bound by the provisions of law and even after the Scheme is sanctioned, proceedings, if any, initiated by any authority against the Petitioner-Company would continue. Reliance has been placed on the judgment of the Apex Court in Sesa Industries Limited vs. Krishna H. Baja] and Others3 (paras 28, 43, 44), Hindustan Lever Employees Union4 (paras 71 and 77), Zee Tele films Limited5, Lifeline Drugs and Intermediates Pvt. Ltd6. Reliance Petroleum Limited7 (para 31) and Sesa Industries Limited Vs. Krishna H. Baja] and Ors8. It has been further submitted that sufficient disclosure as required in respect of SF10 Report has been made in explanatory statement dated 19/05/2012. It has been further contended that the Objector had been in possession of the SF10 Report and no other equity shareholder has raised any issue with respect to the alleged non-disclosure of the matters in respect of SF10 Report.

26. In my view, submissions made by the Objector cannot be accepted. It is a well settled position in law that pending investigation or pending cases cannot come in the way of the Court granting sanction to the Scheme of amalgamation filed by the Company under section 391. It is further held that even after the Scheme is sanctioned, prosecution, if any, initiated by the Central Government or any other Agency would continue against those Directors or persons responsible for committing the said illegalities and, as such, therefore, merely because Report has been tendered making allegations against the Company would not deter the Court from granting sanction on that ground alone, if it is satisfied that the provisions of section 391 have been complied with by the Company.

27. The Apex Court in Sesa Industries Limited’ has observed in paras 28, 43, 44 of its judgment as under:-

“28. The learned counsel then contended that the fact of huge siphoning off the funds from the transferor company (SIL) to the transferee company (SGL) being within the knowledge of the Company court, it should not have sanctioned the scheme, as the distinction between the wrongdoer and the beneficiary gets effaced due to sanctions of law. The learned counsel also argued that under the attending circumstances the swap ratio of 1 share of the transferee company for 1 shares of the transferor company was also unfair, especially when the valuers did not have an opportunity to examine the inspection reports under Section 209-A of the Act.”

“43. Having held that the Official Liquidator had failed to discharge the duty cast on him in terms of the second proviso to Section 394(1) of the Act, the next issue that requires consideration is: whether sanction of a scheme of amalgamation can be held up merely because the conduct of an Official Liquidator is found to be blameworthy? We are of the view that it will neither be proper nor feasible to lay down absolute parameters in this behalf. The effect of misdemeanor on the part of the Official Liquidator on the scheme as such would depend on the facts obtaining in each case and ordinarily the Company Judge should be the final arbiter on that issue. In the instant case, indubitably, the findings in the report under Section 209-A of the Act were placed before the Company Judge, and he had considered the same while sanctioning the scheme of amalgamation. Therefore, in the facts and circumstances of the present case, the Company Judge had, before him, all material facts which had a direct bearing on the sanction of the amalgamation scheme, despite the aforesaid lapse on the part of the Official Liquidator. In this view of the matter, we are of the considered opinion that the Company Judge, having examined all material facts, was justified in sanctioning the scheme of amalgamation, particularly when the current investigation under Section 235 of the Act was initiated pursuant to a complaint filed by Respondent 1 subsequent to the order of the Company Judge sanctioning the scheme.”

“44. For the foregoing reasons, the appeals are allowed, and the impugned judgment is set aside. Consequently, the order passed by the Company Judge sanctioning the scheme of amalgamation is restored. However, it is made clear that the scheme of amalgamation will not come in the way of any civil or criminal proceedings which may arise pursuant to the action initiated under Sections 209-A or 235 of the Act, or any criminal proceedings filed by Respondent 1.”

The Apex Court in Hindustan Lever Employees Union vs. Hindustan Leven Ltd and Others’ has observed in paras 71 and 77 of its judgment as under:-

“71. As a result of the amalgamation, it is found that the working of the Company is being conducted in a way which brings it within the mischief of the MRTP Act, it would be pen to the authority under the MRTP Act to go into it and decide the controversy as it thinks fit.”

“77. Nor do we think that “public interest” which is to be taken into account as an element against approval of amalgamation would include a mere future possibility of merger resulting in a situation where the interests of the consumer might be adversely affected. If, however, in future the working of the Company turns out to be against the interest of the consumer or the employees, suitable corrective steps may be taken by appropriate authorities in accordance with law. As has been said in the case of Fertilizer Corpn. Kamgar Union v. Union of India: (SCR p.77 : SCC pp. 588-89, para 47)

“…it is not a part of the judicial process to examine entrepreneurial activities to ferret out flaws. The Court is least equipped for such oversights. Nor, indeed, it is the function of the judges in our constitutional scheme.”

“31. In view of what is stated hereinbefore the Scheme of Amalgamation as proposed by the petitioner-company at Annexure E to the petition is hereby sanctioned subject to the clarification that this sanction shall not affect any proceedings that may be pending or that may be commenced against the petitioner-company in relation to any of its liabilities arising from past activities.”

28. The submission of the Objector that this Report has been suppressed firstly from the Valuers and secondly from the equity shareholders is also devoid of any substance. In the explanatory statement, reference has been made about pending investigation. In the explanatory statement it is also clearly stated that if any voter wanted to take inspection of the document referred to in explanatory statement, he could do so by visiting Company’s Office. Much emphasis was laid by the Objector on the word “pending” which has been used in the explanatory statement. It has been submitted that SF10 had submitted its Report and investigation was not pending and, therefore, there was suppression of material facts and an attempt was made to mislead the equity shareholders. This submission is also without any substance. It is quite well settled that even if the Report is filed and if any action has to be taken, further investigations have to be done for the purpose of taking recourse to criminal proceedings and report has to be filed in the Court and, as such, it cannot be said that by using the word “pending” in the said explanatory statement, there has been a suppression of material fact by the Petitioner-Company.

29. The next objection is regarding voting which has taken place at the court convened meeting of the equity shareholders on 19/06/2012. It has been contended that atleast one of the votes of Bimal S. Gandhi has been shown to be cast in favour of the Scheme is an illegal vote since the said Bimal S. Gandhi expired almost a decayed ago and could not have cast his vote in the said meeting and, as such, he contended that counting of such vote is in violation of provisions of section 391(2) of the Act. It has been then contended that there was no true and correct representation of the shareholders of the Petitioner-Company in the court convened meeting since votes of deceased persons had been counted in the process of arriving at the result of the court convened meeting. Reliance has been placed on the judgment in T. Mathew vs. Smt. Saro] G. Poddar’. It has been then submitted that majority votes of the promoters of the Petitioner-Company comprises of 55.13% and if the said votes are excluded from the counting of the votes of persons who had allegedly voted in favour of the Scheme then both the Schemes had miserably failed to garner support of the minority shareholders of the Petitioner-Company. Reliance has been placed on the judgment in Hellenic and General Trust Ltd.2 which has been followed by the Apex Court in Miheer H. Mafatlal (supra) and this Court in Bedrock (supra). It has been submitted that separate meetings for promoters and minority shareholders ought to have been held in the facts of the present proceedings since the terms offered to both the set of shareholders were the same. It has been contended that the terms offered to the minority shareholders and the promoters of Vedanta group were not the same. It has been submitted that the majority shareholders in the Petitioner-Company who had voted were subsidiaries of ultimate parent company itself. It has been then contended that most FlIS had voted against the scheme of merger. It has been contended that since most of the FlIS had overwhelmingly voted against the scheme that itself is a ground for not granting sanction to the scheme. During the course of arguments the Objector contended that the Chairperson of the court convened meeting and the scrutinizers who had scrutinized valid and invalid votes had committed grave irregularity in not doing their duty as required under the law. The Objector has taken me through various charts which showed who has voted in favour of the scheme and who has voted against. It has been contended that it is inconceivable that FlIs who had voted by proxy could not have given two different votes; one in favour and the one against. It has been contended that this also showed that there was material irregularity in respect of valid and invalid votes. It has been contended that scrutinizers had erred in discarding number of votes as invalid votes. It has been contended that even if these votes had been treated as valid votes, the Scheme could not have been sanctioned by 3/4th majority. It has been contended that the fact that the Scheme was approved by a very slender margin itself indicated that this was a fit case where direction should be given by this Court to convene a meeting again and order re-voting. Again, reliance has been placed on number of judgments which have been referred to in the written submissions.

30. It has been contended by Mr. Chagla, the learned Senior Counsel appearing on behalf of the Petitioner that Chairperson (Justice Gurudas D. Kamat (Retired)) in the court convened meeting of the equity shareholders appointed scrutinizers to scrutinize the ballot papers and the persons so appointed were acceptable to all the shareholders including the Objector and it has been submitted that report of the meetings has been filed by the Chairperson before this Court. It has been contended that under the law and under the Act equity shareholder is entitled to vote on a po11 differently on a resolution with respect to the said shareholder’s holding in a company. It has been submitted that this exercise of discretion by a shareholder could not be objected to or questioned by the Objector in view of provisions of Section 183 of the Act. It has been submitted that the Objector could not be permitted in the present proceedings to go behind the Chairperson’s report and embark on fishing and roving inquiry with the exercise of discretion of the equity shareholder. It has been then submitted that invalid votes are not considered for the purpose of counting and determining the majority by which a resolution is passed. It has been submitted that result of the meetings was duly reported to the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited and also had been posted on the website of the Petitioner. However, no shareholder or FlI had, pursuant to the declaration of results, objected to the voting on the concurrent Scheme and the Composite Scheme or to the Reports. So far as the case of Bimal S. Gandhi is concerned, it has been submitted that the shares held by the said individual were under transmission pursuasnt to the request made by Ms. Ramila Gandhi who had sought issuance of duplicate certificates and Ms. Ramila Gandhi executed a proxy to vote at the court convened meeting and the shares of Bimal S. Gandhi have been thereafter transmitted in favour of Ms. Ramila Gandhi. So far as the submission of the Objector that the minority shareholders constituted a separate class is concerned, it has been submitted that since the same compromise or arrangement was applicable to all its equity shareholders, one last meeting of equity shareholders was convened. It has been submitted that only when a separate or different scheme is offered to a sub-class of shareholders, a separate meeting could be called within the same class.

31. In my view, the submissions made by the Objector regarding irregularity in voting are required to be stated to be rejected. It has to be remembered that meeting was convened by the Chairperson who was a retired judge of this Court and who retired as a Chief Justice of Gujarat High court. He had appointed scrutinizers who scrutinized the said votes. No objection was raised regarding appointment of the said scrutinizers either by the Objector or any other equity shareholders. None of the FlIs had raised any objection regarding voting after the results were declared and made available to the shareholders by publishing it on the website of the Petitioner-Company and before Bombay Stock Exchange and National Stock Exchange. Section 183 of the Act provides for right of a member to use votes differently which reads as under:-

“Right of member to use his votes differently. On a po11 taken at a meeting of a company, a member entitled to more than one vote, or his proxy, or other person entitled to vote for him as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses.”

Merely because different votes have been given by some FlIs, no objection can be raised on that ground since it is legally permissible. Even if the said vote of Bimal S. Gandhi is not taken into consideration even then the said Scheme had been sanctioned by 3/4th majority of the shareholders.

32. The next objection taken by the Objector is that the Scheme proposed by the Petitioner-Company has been modified before seeking approval from the shareholders of the Petitioner-Company and also after seeking approval from the shareholders in the said meeting. Firstly, it is contended that the Valuers have also considered the valuation in terms of transfer of 38.8% stake in the Company known as Cairn India Ltd. (CIL) into one of the 100% subsidiaries of Petitioner-Company alongwith associated debt of $ 5924 million into the same from one of the subsidiaries of Vedanta Resources Plc. viz. Twin Star Energy Holdings Ltd. (“THEL”). He invited my attention to paragraphs on pages 44, 46 and 47 and also the Fairness Opinion Report of Citibank at pages 41 and 42 of the reply filed by the Petitioner-Company in Company Application No. 4 of 2013. He has also submitted that even if the statement made by ultimate promoter company of the Vedanta group viz Vedanta Resources Plc to the London Exchange shows the inclusion of Cairn India Ltd and its associated debt in valuations arrived at by the Valuers. Reliance has been placed on the extract of the statement at page 927 of the Company Petition No. 11 of 2012. It has been submitted that the Scheme as presented before the shareholders and as filed before this Court do not refer to transfer of the stake in Cairn India Ltd and the resultant debt associated with. Secondly, it is submitted that so far as Petition No.12 of 2012 is concerned, as per clause 3.3 of Chapter 6 of the said scheme ‘Residual VAL’ was supposed to take care of its own liabilities and the Petitioner- Company was not required to honor any liabilities of Residual VAL. It has been submitted that despite the said submission made in clause 3.3, in the affidavit dated 2/10/2012 filed by the Petitioner-Company in the Madras High Court, in para 3 it has been stated that all contractual/legal remedies including appellate remedies by Residual VAL shall be discharged by the amalgamated Company to the extent that Residual VAL is unable to discharge the same. With reference to both these instances, it has been submitted that the Petitioner-Company has modified terms of the Scheme of amalgamation after having sought the approval from the shareholders of the Petitioner- Company. Reliance has been placed on two judgments; one in Meghal Homes Pvt. Ltd. Vs. Shree Niwas Girni K.K. Samiti’ and the other in Bengal Bank Ltd. Vs. Suresh Chakravartty2

33. On the other hand, Mr. Chagla, the learned Senior Counsel appearing on behalf of the Petitioner-Company has submitted that transfer of shareholding of 38.8% of Vedanta Resources Plc in Cairn India Limited was not being implemented as a part of either the Concurrent Scheme or the Composite Scheme. It has been contended that the same was a part of the larger transaction and combination which was clear from the communication of the Competition Commission of India. My attention was invited to pages 576 to 581 of Company Petition No.11 of 2012 and pages 1402 to 1407 of Company Petition No.12 of 2012. It has been then submitted that value of the shareholding of Vedanta Resources Plc in Cairn Inida Limited is not the subject matter of the Valuation Report as prepared by Valuers and this has been mentioned in the Valuation Report. Secondly, it has been contended that transfer of VAL’s shares from the Twinstar Holdings Limited (wholly owned subsidiary of Vendanta Resources Plc) and Welter Trading Limited (wholly owned subsidiary of Vedanta Resources Plc) to Ekaterina (wholly owned subsidiary of Vedanta Resources Plc) being a transfer among the holding company and subsidiary company is not required to be at fair values. Whereas the fair value of VAL’s shares was rightly considered by the Valuers for determining the share exchange ratio which was based on factors as stated in the Valuation Report. So far as the liabilities of Residual VAL is concerned, it has been submitted that in terms of the Composite Scheme, it was proposed that Aluminium Business Undertaking of VAL would be demerged and transferred into the Petitioner and Residual VAL would operate the Power Business Undertaking and on the effectiveness of the Concurrent Scheme and the merger of the SIlL into the Petitioner becoming effective, VAL would become a wholly owned subsidiary of the Petitioner. So far as the transfer of debt of Residual VAL is concerned, it has been submitted that this submission was made in the affidavit dated 2/10/2012 in the proceedings pending before the Madras High Court and this was merely an undertaking given to the Madras High Court in the form of a comfort for the benefit of the Unsecured Creditors of Residual Val and would become effective only upon effectiveness of the Composite Scheme. It has been submitted that therefore this is independent of and not a part of the Scheme and the said affidavit is not an amendment of or modification to the Composite Scheme.

34. The submission made by the Objector is without any substance. Perusal of the Valuation Reports clearly discloses that the Valuers had clearly stated that they had carried out relative valuation of the equity shares of SGL, SIlL, MALCO and Ekaterina Ltd with a view to arrive at fair share exchange ratio of equity shares of SIlL, MALCO and Ekaterina Ltd and for equity shares of SGL and, therefore, in my view, shareholding of Vedanta Resources Plc in Cairn India Ltd is not the subject matter of Valuation Report. Similarly, the objection which has been taken regarding affidavit filed before the Madras High Court also has to be taken into consideration in the context and circumstances under which 186 the said affidavit has been filed. Perusal of the affidavit discloses that in order to give comfort to the Residual VAL which would become subsidiary of the amalgamated Company, it was stated that after the Scheme was sanctioned if the Residual VAL was not in a position to repay the debts of its creditors, in that event the said debts would be paid by the amalgamated Company. It is obvious that the said affidavit has been filed in order to give assurance to the creditors of Residual VAL that they would be taken care of and it cannot be said that it amounts to modification of the Scheme. In my view, judgment of the Apex Court in Meghal Homes Private Limited (supra) was in the context of the Scheme which proposed revival of the Company and the Apex Court was concerned with the fact as to whether the Scheme was a genuine attempt to revive the Company and not a mere ruse to dispose of the assets of the Company. These facts are distinguishable from the present case which, in fact, proposes consolidation of business interest of the Vedanta Group Companies in one entity i.e. the Petitioner. In Meghal Home Private Limited (supra), a clear modification of the Scheme was sought to be made and, therefore, the Supreme Court held that the approval of the shareholders was required to the modification. The ratio of the judgment in Meghal Homes Private Limited (supra) is not applicable to the facts of the present case nor is the ratio of the judgment of the Calcutta High Court in Bengal Bank Ltd (supra).

35. It has been then submitted that the Objector was shocked to discover on the perusal of contents of the Valuation Report and Fairness Opinion Reports when they were produced in Court that a draft Scheme of amalgamation between the transferor companies herein along with Cairn India Ltd and the Petitioner/transferee Company was already prepared and was ready on 22/02/2012 i.e. even before the swap/exchange ratio arrived at by the Valuers was known to anybody. It has been contended that the Valuers in the present Scheme had in fact filed their Valuation Report on 24/02/2012. It has been contended that both, DSP Merrill Lynch and Citibank in their Fairness Opinion Reports have stated that the final terms of the scheme of merger ought not to materially vary from those set forth in the draft or else the opinion report given by them would not stand good. It has been contended that the Petitioner-Company and the transferor companies knew about swap/exchange ratios that would be arrived at by the Valuers in the present Scheme atleast two days in advance. It has been submitted that ultimate promoters of the Petitioner-Company also knew the swap/exchange ratio atleast a day in advance i.e. on 23/02/2012 since while making the representation at London Stock Exchange, the ultimate promoting company of the group viz Vedanta Resources Plc happened to provide the swap/exchange ratios to the London Stock Exchange whilst categorically stating that the information contained in the said representation was as on 23/02/2012. It has been submitted that this fact indicated that the said ratios were pre-decided/pre-determined and the valuations were sought to be done in a manner so that the pre-determined results would be ultimately arrived at by the said Valuers.

36. Mr. Chagla, the learned Senior Counsel appearing on behalf of the Petitioner-Company has submitted that the Schemes including share exchange ratio recommended by the Valuers were approved by the Board of Directors of the Petitioner on 25/02/2012. The presentation to the outside world and business community was submitted to RIS for release to the London Stock Exchange on 25/02/2012, after the Board approval was given. It has been submitted that the announcement was also made available on the website of the respective companies being parties to the Composite Scheme from 25/02/2012 and on the London Stock Exchange website from 27/02/2012 and not on 23/02/2012 as contended by the Objector.

In my view, the explanation given by the learned Senior Counsel appearing on behalf of the Petitioner is plausible. Firstly, this objection has been taken by the Objector during the course of his submissions. The said objection has not been taken in his reply and on that ground alone the said objection really needs to be rejected. It is necessary to keep in mind that the Scheme and the share exchange ratio recommended by the Valuers were approved by the Board of Directors on 25/02/2012. The information was released to the outside world and submitted to the London Stock Exchange on 25/02/2012 after the Board’s approval was given. The information was made available on the Website of the respective companies from 25/02/2012 and on the London Stock exchange on 27/02/2012. In my view, merely because the date “23/02/2012” has appeared in one of the documents, on the basis of that date it is not possible to arrive at the conclusion that prior to the approval given by the Board of Directors, swap ratio was already known on 23/02/2012.

37. The next objection to the Scheme is that it is against the public policy and against the public interest. It has been submitted by the Objector that the Report issued by the SF10 clearly indicates that the Petitioner-Company having siphoned away atleast Rs 1002 crores as and by way of under invoicing of iron ore exports which is not only against the principles of public policy but also causing great harm to the interests of general public of our country. Secondly, it has been contended that both Vedanta Aluminium Ltd and Sterlite Energy Ltd are making huge losses in their respective operations over the last few years. It has been contended that different appointed dates have been given for each of the amalgamated companies and this was for the purpose of avoiding income-tax. It has been contended that such a Scheme was nothing else but colourable device by virtue of which refunds of tax amounts were being indirectly claimed by the amalgamating companies. Reliance has been placed on the Judgment of the Apex Court in Mcdowell & Company Ltd vs. Commercial Tax Officer’ which approves the judgment of Gujarat High Court in Wood Polymers Ltd2. Reliance has been placed on paras 17, 45 and 46 of the said judgment. It has been contended that this judgment was approved by the Apex Court in Vodafone International Holding BV Vs. Union of India & Anr.3 Reliance has also been placed on paras 68, 69 and 70 of the said judgment.

Reliance has also been placed on the judgment in Wood Polymers Ltd. (supra). The Objector, therefore, contended that the Scheme deserves to be dismissed on the said aspect of violation of principles of public policy.

38. Mr. Chagla, the learned Senior Counsel appearing on behalf of the Petitioner-Company, on the other hand, submitted that the Composite Scheme complies with the requirements of the provisions of the Income Tax Act, 1961 including Sections 2(1B), 2(19AA) and 72A. It has been submitted that Section 72A expressly permits/provides for carry forward of unutilised business losses of the transferor company to the transferee company in case of merger/demerger. It has been submitted that this is the policy of law and there can be nothing objectionable to the sanctioning of the Scheme, if the law itself permits these consequences. It has been submitted that implementation of the Scheme would be the subject matter of the scrutiny of the Income Tax authorities and it shall not defeat the right of the Income Tax authorities to scrutinize returns to be filed by the Petitioner. Reliance has been placed on the judgments in AVM Capital Services Private Limited’, Union of India and Another vs. Azadi Bachao Andolan and Another2 and Vodafone International Holdings BV vs. Union of India3 (paras 68, 69 and 70).

39. It is surprising that the Objector, who has admittedly purchased the shares of Petitioner-Company after the Scheme of amalgamation was announced, now seeks to challenge the Scheme of amalgamation on the ground that it is against the public policy and only for avoidance of income-tax. Be that as it may. Without going into the reason as to why the Objector purchased the shares after the Scheme was announced, the legal position is quite clear. The provisions of the Income Tax Act contemplates a situation whereby section 72A provides for carry forward of unutilised business losses of the transferor company to the transferee company in case of merger/demerger. Even after the Scheme is sanctioned, it is always open for the Income Tax authorities to scrutinize the returns and issue notices.

40. Apart from that in Azadi Bachao Andolan (supra), the Supreme Court has explained the scheme in McDowell & Co. Ltd.’s case (supra) Paragraphs 147 to 149 are relevant and are reproduced hereunder:-

“147. We may in this connection usefully refer to the judgment of the Madras High Court in M.V. Vallippan v. ITO which has rightly concluded that the decision in McDowell cannot be read as laying down that every attempt at tax planning is illegitimate and must be ignored, or that every transaction or arrangement which is perfectly permissible under law, which has the effect of reducing the tax burden of the assessee, must be looked upon with disfavour. Though, the Madras High Court had occasion to refer to the judgment of the Privy Council in IRC v. Challenge Corpn. Ltd and did not have the benefit of the House of Lord’s pronouncement in Craven the view taken by the Madras High Court appears to be correct and we are inclined to agree with it.

148. WE may also refer to the judgment of the Gujarat High Court in Banyan and Berry v.CIT where referring to McDowell, the Court observed : (ITR p.850 E-H).

“The Court nowhere said that every action or inaction on the part of the taxpayer which results in reduction of tax liability to which he may be subjected in future, is to be viewed with suspicion and be treated as a device for avoidance of tax irrespective of legitimacy or genuineness of the Act; an inference which unfortunately, in our opinion, the Tribunal apparently appears to have drawn from the enunciation made in McDowell case. The ratio of any decision has to be understood in the context it has been made. The facts and circumstances which lead to McDowell decision leave us in no doubt that the principle enunciated in the above case has not affected the freedom of the citizen to act in a manner according to his requirements, his wishes in the manner of doing any trade, activity or planning his affairs with circumspection, within the framework of law, unless the same fall in the category of colourable device which may properly be called a device or a dubious method or a subterfuge clothed with apparent dignity.

41. From the aforesaid paragraphs it can be clearly seen that, according to the Apex Court, decision in Mcdowell & Co. Ltd.’s case (supra) cannot be said to lay down that every attempt at tax planning is illegitimate or that every transaction which is otherwise permissible under law but has the effect of reducing tax burden of the assessee must be looked upon with disfavor. The Apex Court, therefore, in para 166 of its judgment in Azadi Bachao Andholan (supra) has held as under:-

“166. We are unable to agree with the submission that an act which is otherwise valid in law can be treated as non est merely on the basis of some underlying motive supposedly resulting in some economic detriment or prejudice to the national interests, as perceived by the respondents”.

42. In Vodafone International Holdings BV (supra), it was contended on behalf of the revenue that decision in Azadi Bachao Andolan (supra) has to be overruled since it departs from decision of McDowell & Co Ltd (supra).

43. The Apex Court in para 64 of its judgment in Vodafone International Holdings BV (supra) observed that there was no conflict between its judgments in McDowell & Co. Ltd (supra and Azadi Bahao Andolan (supra). Para 64 of the said judgment reads as under:-

“64. The majority judgment in McDowell & Co. Ltd (supra) held that “tax planning may be legitimate provided it is within the framework of law” (para 45). In the latter part of para 45, it held that “colourable device cannot be a part of tax planning and it is wrong to encourage the belief that it is honourable to avoid payment of tax by resorting to dubious methods”. It is the obligation of every citizen to pay the taxes without resorting to 195 subterfuges. The above observations should be read with para 46 where the majority holds “on this aspect one of us, Chinnappa Reddy, J. has proposed a separate opinion with which we agree”. The words “this aspect” express the majority’s agreement with the judgment of Reddy, J. only in relation to tax evasion through the use of colourable devices and by resorting to dubious methods and subterfuges. Thus, it cannot be said that all tax planning is illegal/illegitimate/impermissible. Moreover, Reddy, J. himself says that he agrees with the majority. In the judgment of Reddy J. there are repeated references to schemes and devices in contradistinction to “legitimate avoidance of tax liability” (paras 7-10, 17 and 18). In our view, although Chinnappa Reddy, J. makes a number of observations regarding the need to depart from the “Westminster” and tax avoidance - these are clearly only in the context of artificial colourable devices. Reading McDowell, in the manner indicated hereinabove, in cases of treaty shopping and/or tax avoidance, there is no conflict between McDowell and Azadi Bachao or between McDowell and Mathuram Agrawal”.

44. In my view, therefore, judgment of Gujarat High Court in Wood Polymers Ltd’ and and that of the Calcutta High Court in Bengal Bank Ltd. Vs. Suresh Chakravartty2 is no longer good law.

45. The Apex Court in Vodafone International Holdings BV (supra) in paras 68, 69 and 70 has, in terms, approved the judgment of the Apex Court in Union of India and Another vs. Azadi Bachao Andolan and Another’ and, as such, the said issue is no longer res integra. It cannot be said, therefore, that the said Scheme is against the public policy.

46. It has been then contended that the present Scheme of amalgamation is unconscionable in nature as the interest of minority shareholders has been completely overlooked. It has been contended that balance sheets of Ekaterina Ltd., Vedanta Aluminium Ltd and Sterlite Energy Ltd do not exhibit any sort of a confidence that can be reposed in their financial status. It has been contended that if the Scheme is sanctioned then the Petitioner-Company would be saddled with enormous amount of debts concerning the transferor companies that would need to be serviced and which in turn would convert the Petitioner-Company into loss making concern and thus the interest of shareholders would be affected. It has been submitted that interest of the promoters was to somehow load the Petitioner-Company with the liabilities of the transferor companies such as Vedanta Aluminium Ltd and Sterlite Energy Ltd. It has been contended that there was no rationale at all behind proposing the present Scheme of amalgamation by the Petitioner-Company.

47. On the other hand, Mr. Chagla, the learned Senior Counsel appearing on behalf of the Petitioner-Company submitted that there was no provision in the said Act which prevented amalgamation of profit making Company and loss making Company. It is open for majority shareholders to take a decision and the commercial wisdom of such decision is not open for scrutiny by the Court.

48. The Objector has invited my attention to the losses which are incurred by Vedanta Aluminium Ltd. It has also been urged that the position of Vedanta Aluminium Ltd. over a period of one year has deteriorated further and liabilities have been increased. It has also been contended that position of Sesa Goa Ltd has deteriorated in the last one year since mining operations have been stopped in view of the orders passed by the Apex Court and since May 2012 mining operations have been stopped completely. In this context, financial position of all the Companies as per their audited accounts as of September, 2012 needs to be taken into consideration. It is submitted that from the said figures, it can be seen that, after amalgamation, position of the Petitioner-Company would dramatically increase even after absorbing the so-called loss making companies. It has to be remembered that when entrepreneurs take commercial decisions, it is not open for the Court to judge their commercial wisdom. Whenever entrepreneurs take a commercial l decision , there is always an element of risk 198 involved and businessmen take such calculated risk after taking into consideration various facts and circumstances and pros and cons of all situations. It has been consistently held that the Court is not expected to dissect and conduct a postmortem of such decisions which are based on business experience and commercial wisdom. The Court has to examine the Scheme on well settled parameters. The Court is expected to be an impartial umpire and is not expected to enter the arena and examine the Scheme under a microscope. Whenever decisions are taken there is bound to be some kind of variation in the situation in respect of functioning of both companies. This should not deter the Court from granting sanction to the Scheme. It has to be remembered that after advent of globalisation, it has become necessary for all companies all over the world to find out ways and means to survive in the market. The initial impact of globalisation was that large number of Indian Companies became bankrupt and had to be closed down. This was initially restricted to small-scale industries. However, soon, even the large companies were affected and they had to find out innovative means to survive in the global market. While taking decision, commercial wisdom of entrepreneurs on this post-globalisation scenario has also to be kept in mind and, as such, the need for amalgamation and consolidation of competing companies in one agglomeration sometimes becomes necessary, not for the purpose of creating monopoly but for the purpose of survival in the global market. In these circumstances, merely because one of the companies is a loss making company, that should not deter the Court from sanctioning the Scheme if the net result is going to increase the assets of the amalgamated company.

49. In my view, the said objections cannot be accepted. Both these Petitions are allowed in terms of prayer clauses (a) and (b). However, Company Applications taken out therein by the Objector are dismissed.

COPY OF THE ORDER DATED 12TH AUGUST, 2013 OF THE DIVISION BENCH OF THE HIGH COURT OF JUDICATURE AT BOMBAY, PANAJI BENCH.

Mr. Iqbal M. Chagla, Senior Advocate and Mr. A. N. S. Nadkarni, Senior Advocate with Mr. Riyaz Chagla, Mr. D. Lawande and Mr. Kaif Noorani , Advocates for respondent no.1. Mr. C. A. Ferreira, Advocate for respondent no. 2. Mr. P. Sridhar, Official Liquidator.

Heard the appellant in person, Mr. Chagla, learned Senior Counsel for respondent no. 1 and Mr. Ferreira, learned Assistant Solicitor General for respondent no. 2. Brief written submissions have also been filed by the appellant and respondent no. 1.

2. The above appeals are directed against the common Judgment and order dated 3rd April, 2013 whereby the learned Company Judge has sanctioned the scheme of amalgamation (concurrent scheme) of Ekaterina Limited (Transferor Company or Ekaterina) with Sesa Goa Ltd. (Transferee Company or SGL) sought in Company Petition no. 11 of 2012 and the scheme of amalgamation and arrangement (composite scheme) amongst Sterlite Industries (India) Limited (amalgamating Company 1 or SIIL), The Madras Aluminium Company Limited (amalgamating company 2 or MALCO); Sterlite Energy Limited (amalgamating company 3 or SEL); Vedanta Aluminium Limited (amalgamating company 4 or VAL) and SGL and rejected the objections filed by the appellant to the above schemes.

The Board of Directors of SGL and of Ekaterina (a company based in Mauritius), in their respective meetings held on 25/02/2012 approved the concurrent scheme including the share exchange ratio. On 204 the same date the Board of Directors of SGL and of SIIL, MALCO, SEL and VAL, in their respective meetings approved the composite scheme and the share exchange ratio. The approval of both the schemes was after considering the joint valuation report of M/s. Grant Thornton India, LLP and KPMG India Private Limited, independent valuers and the Fairness Opinion Report of Citigroup Global Markets India Private Limited (given to the Board of Directors of SGL) and DSP Merrill Lynch Private Limited (given to the Board of Directors of SIIL) on 02/04/2012 and 12/04/2012, respectively. The National Stock Exchange India Limited and the Bombay Stock Exchange Limited, respectively granted their no objection to the said concurrent and composite scheme. On 23/04/2012, the Competition Commission of India approved the proposed combination including the transaction as provided for in the concurrent scheme and the composite scheme. On 26/04/2012 the High Court of Judicature at Madras dispensed with the convening of the meeting of the Equity Share Holders of SEL in view of the consent affidavit given by all Equity Share Holders to the composite scheme. On 26/04/2012, the Madras High Court dispensed with the convening of the meeting of Equity Share Holders of VAL in view of the consent affidavit given by all Equity Share Holders and Preference Share Holders to the composite Scheme. On 19/06/2012, the Equity Share Holders of SGL approved the composite scheme at the Court convened meeting with the requisite majority as prescribed under Section 391(2) of the Companies Act, 1956 ( the Act , for short ). On 19/06/2012 itself, the equity shareholders of SGL approved the concurrent scheme at the Court convened meeting with the requisite majority as prescribed under Section 391(2) of the Act. On 21/06/2012, the equity share holders of SIIL approved the composite scheme at Court convened meeting. On 23/06/2012, the equity shareholders of MALCO approved the composite scheme at the Court convened meeting. Mr. G. D. Kamat, the learned retired Chief Justice of Gujarat High Court acted as the Chairman of the said meeting dated 19/06/2012 and reported the result of the equity shareholders of SGL of the said meetings by his report dated 04/07/2012 along with his affidavit in support thereof. On 29/06/2012 the Foreign Investment Promotion Board of India approved the transaction as proposed in the concurrent scheme. On 02/08/2012, the advertisement of petitions in accordance with rule 80 of the Companies (Court) Rules 1959 with respect to both the company Petitions were published in the local newspapers namely Navhind Times and Sunaprant. On 24/08/2012, the Supreme Court of Mauritius approved the concurrent Scheme. The company petitions filed by SIIL, MALCO, SEL and VAL, for sanction of composite scheme, have reportedly been heard by Madras High Court and the judgments have been reserved.

4. SGL had filed the company petition no. 11/2012 seeking sanction of the company Court to the concurrent scheme and company petition no. 12/2012 thereby seeking sanction of the Company Court to the 206 composite scheme. The appellant filed his objections to the said schemes on various grounds. The company petitions and objections raised by the appellant were extensively heard by the learned Company Judge and upon appraisal of the entire material on record, the learned Judge allowed the company petitions and rejected the objections of the appellant. The said common judgment and order dated 3/4/2013 is impugned in the present appeals.

the court may, on the application of the company or of 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 or class of members, as the case may be, to be called, held and conducted in such manner as the court directs.

(2) If a majority in number representing three-fourths 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 under the rules made under section 643, 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 :

Provided that 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 by whom an application has been made under sub-section (1) has disclosed to the court, by affidavit or otherwise, all material facts relating to the company, such as the latest financial position of the company, the latest auditor’s report on the accounts of the company, the pendency of any investigation proceedings in relation to the company under section 235 to 351, and the like.

(3) An order made by the court under sub-section (2) shall have no effect until a certified copy of the order has been filed with the Registrar.

(4) A copy of every such order shall be annexed to every copy of the memorandum of the company issued after the certified copy of the order has been filed as aforesaid, or in the case of a company not having a memorandum, to every copy so issued of the instrument constituting or defining the constitution of the company.

(5) If default is made in complying with sub-section (4), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to one hundred rupees for each copy in respect of which default is made.

(6) The Tribunal may, at any time after an application has been made to it under this section, stay the commencement or continuation of any suit or proceeding against the company on such terms as the court thinks fit, until the application is finally disposed of.”

(b) 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.

(2) If the Tribunal aforesaid 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 winding up the company, and such an order shall be deemed to be an order made under section 433 of this Act.

(3) The provisions of this section shall, so far as may be, also apply to a company in respect of which an order has been made before the commencement of the Companies (Amendment) Act, 2001 sanctioning a compromise or an arrangement.”

(1) Where a meeting of creditors or any class of creditors or of members or any class of members, is called under section 391,-

(a) with every notice calling the meeting which is sent to a creditor or member, there shall be sent also a statement setting forth the terms of the compromise or arrangement and explaining its effect; and in particular, stating any material interests of the directors, managing director managing agent, secretaries and treasurers or manager of the company, whether in their capacity as such or as members or creditors of the company or otherwise, and the effect on those interests, of the compromise or arrangement, if, and in so far as, it is different from the effect on the like interests of other persons; and

(b) in every notice calling the meeting which is given by advertisement there shall be included either such a statement as aforesaid or a notification of the place at which and the manner in which creditors or members entitled to attend the meeting may obtain copies of such a statement as aforesaid.

8. The appellant as well as the SGL, amongst others, have relied upon the following cases in which the principles laid down, are as under:-

(a) In the case of “Miheer H. Mafatlal Vs. Mafatlal Industries Ltd.” reported in [1996 (Vol. 87) Comp. Cases, 792], in the matter of sanctioning the scheme of amalgamation, the Apex Court has held that the compromise or arrangement between the company and the creditors and members is the commercial wisdom of the parties to the scheme who have taken an informed decision about the usefulness and propriety of the scheme by supporting it by requisite majority vote that has to be kept in view by the Court. The Court certainly would not act as a court of appeal and sit in judgment over the informed view of the parties concerned to the compromise as the same would be in the realm of corporate and commercial wisdom of the parties concerned. The Court has neither the expertise nor the jurisdiction to delve deep into the commercial wisdom exercised by the creditors and members of the company who have ratified the scheme by the requisite majority. Consequently the Company Court’s jurisdiction to that extent is peripheral and supervisory and not appellate. The Court acts like an umpire in a game of cricket who has to see that both the teams play their game according to the rules and do not overstep the limits. But subject to that how best the game is to be played is left to the players and not to the umpire. The supervisory jurisdiction of the Company Court can also be culled out from the provisions of Section 392 of the Act. Of course this section deals with post-sanction supervision. But the said provision itself clearly earmarks the field in which the sanction of the Court operates. It is obvious that the supervisor cannot ever be treated as the author or a policy-maker. Consequently the propriety and the merits of the compromise or arrangement have to be judged by the parties who as sui Juris with their open eyes and fully informed about the pros and cons of the scheme arrive at their own reasoned judgment and agree to be bound by such compromise or arrangement. The following are the broad contours of the scope and ambit of the jurisdiction of the Company Court enumerated by the Apex Court in the case of “Miheer Mafatlal”,(supra) which are stated to be illustrative and not exhaustive:-

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 meetings concerned of he 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 the necessary material indicated by Section 393(1)(a) is placed before the voters at the concerned meetings as contemplated by Section 391(1).

5. That all the requisite material contemplated by the proviso to sub-Section (2) of Section 391 of the Act is placed before the Court by the concerned applicant seeking sanction for such a scheme and the court gets satisfied about the same.

6. That the proposed scheme of compromise and arrangement is not found to be violative of any provision of law and is not unconscionable, nor contrary to public policy. For ascertaining the real purpose underlying the Scheme with a view to be satisfied on this aspect, the court, if necessary, can pierce the veil of apparent corporate purpose underlying the scheme and can judiciously x-ray the same.

7. That the Company Court has also to satisfy itself that members or class of members or creditors or class of creditors, as the case may be, were acting bona fide and in good faith and were not coercing the minority in order to promote any interest adverse to that of the latter comprising 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 requirements of a scheme for getting sanction of the Court are found to have been met, the Court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the Court there could be a better scheme for the company and its members or creditors for whom the scheme is framed. The Court cannot refuse to sanction such a scheme on that ground as it would otherwise amount to the Court exercising appellate jurisdiction over the scheme rather than its supervisory jurisdiction.”

(b) In the case of “Hindustan Lever and another Vs. State of Maharashtra and another” reported in [(2004) 9 SCC 438], the Apex Court reiterated the said contours and further observed as under:-

12. Two broad principles under lying a scheme of amalgamation which have been brought out in this judgment are:

1. that the order passed by the court amalgamating the company is based on a compromise or arrangement arrived at between the parties; and

2. that the jurisdiction of the Company Court while sanctioning the scheme is supervisory only i.e. to observe that the procedure set out in the Act is met and complied with and that the proposed scheme of compromise or arrangement is not violative of any provision of law, unconscionable or contrary to public policy. The Court is not to exercise the appellate jurisdiction and examine the commercial wisdom of compromise or arrangement arrived at between the parties. The role of the court is that of an umpire in a game, to see that the teams play their role as per rules and do not overstep the limits. Subject to that how best the game is to be played is left to the players and not to the umpire.

(c) In the case of “Bedrock Ltd.” reported in [1998 (4) Bom. C.R. 710], it has been held that a party seeking discretionary relief from the Court must come with clean hands; must not suppress any relevant fact from the Court; must refrain from making misleading statements and from giving incorrect information to the Court and that such conduct of the party is sufficient to entail an outright dismissal of the petition without going into the merits.

(d) In the case of “T. Mathew Vs. Smt. Saroj G. Poddar” reported in [(1996) 22 CLA Section II, 200], it has been held that one who comes to the Court must come with clean hands and that this position is well settled in “S. P. Chengalavarya Naidu V/s. Jagannath” [AIR 1994 SC 853] wherein, inter alia, it is observed that the courts of law are meant for imparting justice between the parties; that one who comes to the court must come with clean hands and that it can be said without hesitation that a person whose case is based on falsehood has no right to approach the court and he can be summarily thrown out at any stage of the litigation.

9. Mr. Chagla, learned Senior Counsel appearing on behalf of the respondent no. 1 submitted that before proceeding to deal with the objections raised by the appellant, it would be advisable to look into his conduct and bona fides. He vehemently urged that the present appeals require something more than dismissal as there is lack of bona fides; suppression of material facts and an attempt to mislead the Court, which ought not to be encouraged. He submitted that the appellant has not approached with clean hands. The learned Counsel pointed out that the appellant has filed Writ Petition No. 840/2012 before the High Court of Judicature at Bombay for enforcement of Serious Frauds Investigation Office (SFIO) report and for other reliefs, which is still pending. He further submitted that the appellant has filed Civil Suit no. 69 of 2012 before the District Court, at Panaji-Goa, based on the SFIO report, for a direction to the Registrar of Companies, Goa to delete the name of SGL from the register maintained by his office, for recovery of money and other reliefs, in which even interim relief for stay of amalgamation proceedings was asked for. He pointed out that in the Company Petitions, the judgment was reserved on 08/02/2013 but the said suit no. 60 of 2012 was filed before the District Judge on 07/12/2012 which shows that there is suppression of material facts. He submitted that the above facts have been suppressed from this Court and also they were suppressed from the Company Court. According to SGL, the material fact of filing of the said Writ Petition and Civil Suit has been suppressed with ulterior motive and malafide intention and with an attempt to procure orders from this Court. Learned Counsel pointed out that the appellant and his family members have increased their equity shareholding in SGL by purchasing additional shares after the court convened meeting of SGL and still the appellant says that the scheme is bad and detrimental to him and others. He submitted that the present appeals are filed with ulterior motive and that there is no ground for challenge of the impugned judgment and order. Learned Senior Counsel submitted that it is well settled that when a person comes with unclean hands, he is not entitled to any relief. In this regard, he relied upon “Bedrock Ltd.” and “Smt. Saroj G. Poddar” (supra). The appellant, in answer, submitted that the said Writ Petition and the Suit have no co-relation with the issues raised in the present proceedings. According to him, by the Writ Petition, he is trying to enforce the recommendations in terms of filing prosecutions under Indian Penal Code against delinquent officers of SGL and the Suit pertains to a contract that had been entered into by SGL in terms of buying shares of its erstwhile subsidiary viz Sesa Industries Ltd. and both do not come in the way of amalgamation proceedings. The Writ Petition No. 840/2012 was filed in or around April 2012 by the minority shareholders of SGL, including the appellant praying therein inter alia for a direction to the respondents therein to file proceedings under relevant provisions of Indian Penal Code and the Companies Act, on the basis of SFIO reports dated 29/4/2011, against the persons named therein and to reimburse the funds siphoned away from the Company (a mention of which is made in the reports dated 29/4/2012 of SFIO), back into its books. In Suit No. 69/2012, filed in December 2012, the appellant and his family members have, inter alia, prayed for direction to the Registrar Of Companies to take action against SGL under the relevant provisions of the Companies Act and to delete the name of SGL from the register and to restrain SGL from amalgamating or merging itself with any other company or voluntarily winding up itself, pending the hearing and final disposal of the suit. The learned Company Judge had reserved the Judgment in Company Petitions on 8/2/2013 and had sanctioned the schemes of amalgamation by order dated 3/4/2013. One of the objections taken by the appellant is that SFIO report, wherein siphoning of more than `1,000 crores has been discovered, was not considered by valuers. In our considered opinion, there is no merit in the submission canvassed by the appellant that the said Writ Petition and the Suit have no co-relation with the issues raised in the present proceedings.

10. The learned Senior Counsel appearing on behalf of SGL further submitted that the appellant and his family members who had opposed the sanctioning of the concurrent scheme, represented only 0.17% in number and 0.01% in value of the Equity shareholders present and voting at the Court convened meetings held on 19/6/2012 and insofar as composite scheme is concerned, they represented only 0.43% in number and 0.01% of the value of the Equity Shareholders present and voting at the court convened meeting held on 19/6/2012. Learned Senior Counsel then pointed out that the appellant and his family members have now purchased approximately 10,000 shares of SGL and have thus increased their equity shareholding in SGL after the Court convened meetings of SGL. Relying upon “Hindalco Industries Limited, In re” reported in [(2009) 151 Comp. Cases 446 (Bom)], learned Counsel, submitted that the appellant lacks bonafides. The appellant, on the other hand, submitted that he and his family members had sold more than 50,000 shares of SGL before the announcement of amalgamation and that they deal in stocks and shares on a regular basis and since the value of the shares of SGL plummeted post announcement of amalgamation and further once the appellant on reading the Explanatory Statement and on ascertaining the other facts of the case was convinced that the present amalgamations could never pass the test of law, they re-purchased approximately 10,000 shares of SGL, which were available at discount rate of ` 60/- per share. According to the appellant, frivolous arguments have been advanced by SGL only to prejudice this Court. Nobody trades into the shares knowing that they would ultimately go into loss. When it is the case of appellant that the schemes of amalgamation are detrimental to the minority shareholders and only the promoters and majority shareholders would stand to gain and when he wants that the schemes should not be sanctioned, purchasing of shares of SGL after amalgamation is contrary to the above case and prayer. In case of the appellant and his family members who claim to be dealing in stocks and shares, who sold more than 50,000 shares prior to the announcement of amalgamation, again purchasing 10,000 shares of the same company after amalgamation is all the more conspicuous and this certainly reveals lack of bona fides. In the case of “Hindalco Industries Ltd.”(supra), the second objector had only one share of the petitioner-company. He participated in the meeting and registered his objection. But the resolution was passed with overwhelming majority. On the one hand, he objected to the proposed scheme and on the other hand, after the meeting of the Equity Shareholders, he purchased additional 50 Equity Shares of the petitioner-company and that reflected his bona fides. Learned Company Judge held that no prudent person who had opposed the proposed scheme would think of acquiring additional shares of the same company. No doubt, It was observed that the fact that the objector possessed only one share on the relevant date does not mean that he is denuded of his right of raising objection. However still, substance was found in the stand taken by the petitioner-company that the complaint filed by this objector was not bona fide. It has been held that the person who has not approached with clean hands and have traded in the shares of the target company, cannot be heard to make grievance about the scheme. Therefore, we have no hesitation to hold that there is a serious doubt about the bona fides of the appellant in challenging the Scheme.

12. The appellant’s first objection is that there is violation of the provisions of Section 391 of the Act, on account of following:- (a) the schemes have been modified twice: firstly after the valuation was done and placed before the shareholders for approval and secondly after the filing of the Company Petitions in the Court; (b) the report of SFIO was not placed before the Company Court and hence there was violation of the proviso to Section 391(2) of the Act; (c) since one of the members who had allegedly cast a vote in favour of the scheme had died long back, there was misrepresentation of the shareholders of SGL; (d) the majority of the minority shareholders who were present and who had voted in the Court convened meetings had opposed the schemes; and (e) the majority of the Foreign Institutional Investors (FII) who held shares in SGL had voted against the scheme. His second objection is that the valuations are skewed and pre-determined. In this regard, he has contended as follows:- (a) SFIO report has discovered siphoning of more than ` 1,000/- crores but the same has not been considered by the valuers; (b) the valuers had considered the valuation of Cairns India Ltd. (CIL) and its associated debt but CIL is not part of merger which shows that there is modification; (c) Scheme that had been approved by the shareholders have been modified inasmuch as SGL has undertaken to take over Residual VAL’s liabilities; (d) the principles of the methodologies applied by the valuers whilst valuing the schemes and more specifically the “Price of Recent Investment” (PRI) methodology insofar as the valuation of VAL is concerned, has been most incorrectly applied by the valuers; (e) the subsequent developments in terms of the complete stoppage of operations at VAL post December, 2012 i.e during the course of the hearing of the present Petitions by this Court have completely rendered the valuations arrived at by the valuers as otiose; (f) the non-disclosure of many of the contingent liabilities of the transferor companies in their balance sheets have also rendered the valuations arrived at by the valuers as meaningless; (g) the valuations arrived at by the valuers only benefit the promoters of SGL at the cost of its minority shareholders; (h) the valuations arrived at by the valuers are arithmetically incorrect inasmuch as the shares of SIL have been valued differentially while valuing the said Company and whilst valuing the same as an investment made by another transferor company viz. MALCO; and (i) the valuations arrived at by the valuers were pre-determined inasmuch as the merchant bankers were already having draft reports of the schemes which were prepared at least two days prior to the issuance of the valuation report. Even the report submitted by the parent company of SGL to the London Stock Exchange was based on information that was gathered by it one day prior to the valuation report.

13. The next objection is that there is violation of the provisions of Section 393 of the Act inasmuch as:- (a) SFIO report was not shown to the shareholders despite being available with SGL; (b) the fairness opinion reports were not disclosed in the Explanatory Statement despite an undertaking given by SGL to the National Stock Exchange (NSE); and (c) Misleading statement made by SGL in the Explanatory Statement to the effect that the financial position of SGL would not be adversely affected if Ekaterina was merged into it. The fourth objection is that there is violation of Public Policy and Public Interest because of following:- (a) SFIO report exhibits the fact that the affairs of SGL have been managed by its management in a manner contrary to public policy and public interest; (b) the schemes mooted by SGL are a colourable device inasmuch as by the said schemes SGL and SIL are trying to claim refund of the taxes paid by them for yester years owing to the accumulation of the losses accrued in the other transferor companies which would then be transferred into the books of SGL and claiming of tax refunds otherwise is impermissible in law; (c) there is no element of public interest in the schemes mooted by SGL inasmuch as by the said schemes the interests of the minority shareholders of SGL would be severely affected. The fifth objection is that the schemes mooted by SGL are completely unconscionable in nature inasmuch as on the sanction of the same, SGL would be reduced to a debt laden status having no means to cater to the said debt and would thus be in no capacity to churn out any profits for distribution amongst its minority shareholders but the promoters of SGL would be relieved of the said debt and the responsibility to service the same. Sixth and the last objection of the appellant is that the schemes of arrangement have been proposed by SGL so as to somehow circumvent the action that is required to be taken by the Ministry of Corporate Affairs on the recommendations made by SFIO in its report since once a sanction is accorded by a Court to a scheme, it is presumed that the companies amalgamating were managing their affairs in a manner not prejudicial to their respective shareholders.

15. Per contra, it is the contention of learned Senior Counsel appearing on behalf of SGL that it is well settled that a Company Court is not expected to sit in appeal over the commercial wisdom of the majority shareholders of the company who have given their seal of approval to the schemes of amalgamation. The court is expected to act as an umpire and dispassionately consider whether the procedure which is laid down under the section has been followed meticulously, fairly and impartially and proper opportunity is given to all shareholders and the creditors of the company to ensure that sanction and approval is not obtained by suppression of material facts or that a decision is contrary to the interest of minority shareholders or creditors. It is submitted that the contours of the jurisdiction of the Company Court whilst sanctioning the scheme of amalgamation have been laid down by the Apex Court. Learned Counsel invited our attention to paragraphs 27, 28 and 29 of the judgment in the case of “Miheer Mafatlal”; paragraphs 3, 4 and 6 of the judgment in the case of “Hindustan Lever Employees’ Union Vs. Hindustan Lever Ltd. and others” (AIR 1995 SC 470) and paragraphs 11, 12, 13, 18 and 32 of the judgment in the case of “Hindustan lever and another”(supra). It is submitted that in the present case, the concurrent and composite schemes have been approved by the equity shareholders of SGL in accordance with the mandate of Section 391(2) of the Act and in accordance with the well settled position of law. According to the learned Counsel for SGL, there is no impediment to the sanction of the schemes in view of the following facts:-

(e) The scheme is just, fair and advances the interest of SGL and their shareholders and stakeholders.

16. Mr. Chagla, learned Senior Counsel appearing on behalf of the respondent no. 1, further submitted that the petitioner has argued all the objections before this Appellate Court as if these are original Petitions. He pointed out that almost all the objections which are now taken by the appellant before this Court were taken before the Company Court and have been dealt with by the said Court. He submitted that the judgment in the case of “Miheer Mafatlal” (supra) and “Hindustan Lever” (supra) were cited before the learned Company Court and have been duly considered by it. It was therefore submitted that no interference is called for.

17. Mr. Ferreira, the learned Assistant Solicitor General, appearing on behalf of the respondent no. 2, submitted that the respondent no. 2 has no role to play in these proceedings.

18. According to the appellant, the valuers who have arrived at swap/exchange ratio and the merchant bankers who have ascertained the fairness of the said valuation, have considered the valuation in terms of transfer of 38.8% stake in Cairn India Ltd. (CIL) from one of the subsidiaries of Vedanta Resources Plc. viz Twin Star Energy Holdings Ltd. (THEL) into one of the 100% subsidiaries of SGL along with the associated debt of $ 5,924 million. It is the contention of the appellant that this fact has been acknowledged by SGL in paragraph 25 of the Sur-Sur-Rejoinder, filed by it on 6/10/2012 read with a chart which is a part of Exhibit J-colly to the affidavit in rejoinder of SGA dated 13/9/2012. It is contended that the figures of SGL in respect of revenue, EBITDA and cash and current investment post the merger as mentioned therein correspond axiomatically with the figures stated in the said chart annexed to the rejoinder dated 13/9/2012, which aptly demonstrate the inclusion of financials related to CIL whilst arriving at the said figures of revenue, EBIDTA and cash and current investments of SGL, post merger. It is further submitted that the above fact is clear from the valuation report dated 24/2/2012 of Grant Thornton and KPMG India Pvt. Ltd., wherein according to the appellant, at page 1, the valuation of Twinstar Holding Ltd., which is not a part of the amalgamating companies has been considered. It was pointed out that at page 7, the valuers have used the word ‘transaction’ whilst qualifying that they have not, by the said valuation, addressed the relative merits of the said amalgamation and that the word ‘transaction’ as defined in the Fairness Opinion Reports include the valuation of CIL. The appellant further submitted that in the valuation report dated 24/2/2012, at page 8, the words “proposed restructuring”, which include the proposed schemes of amalgamation as also the inclusion of CIL and its associated debt, have been used whilst qualifying the report. It is further submitted that the merchant bankers (DSP Merrill Lynch and Citygroup), in their Fairness Opinion Reports, have mentioned that CIL and “Cairns Forecasts” have been considered by them whilst appreciating the valuation report dated 24/2/2012. The appellant canvassed that in the statutory report filed by Vedanta Resources Plc with London Stock Exchange, the entire scheme of amalgamation and the valuations conducted by SGL in respect thereto have been laid out in detail and CIL being part of the said valuations has been expressly stated in the said report. The appellant submitted that SGL whilst seeking approval of the proposed schemes from its shareholders as also from the Company Court varied the terms of the said schemes inasmuch as the original valuations arrived at by the joint valuers in respect of the companies forming part of the said schemes included the valuation of 38.8% stake in CIL and its associated debt whereas CIL was ultimately excluded from the gamut of companies forming a part of the proposed amalgamation and hence the swap/exchange ratio arrived at by the joint valuers was rendered meaningless in terms of the said modification rendered to the proposed schemes that were placed for approval before the shareholders of SGL and also before the Company Court.

19. Learned Senior Counsel appearing on behalf of SGL, during the course of arguments, made it clear that the Fairness Opinion dated 25/2/2012 of Citigroup Global Markets India Limited, which is at page no. 163A/Set IV has been inadvertently filed before the Court. He submitted that the opinion dated 25/02/2012 given by Citigroup Global Markets India Private Limited relied upon by the appellant is not for merger but for purchase of CIL. As pointed out by him, the said opinion finally says that based upon and subject to the foregoing, the experience of the Citigroup Global Markets India Private Limited, as Investment Bankers, their work as described above and other factors deemed relevant by them, they are of the opinion that as on the date mentioned in the report, the consideration is fair, from financial point of view to the SGL. Learned Senior Counsel submitted that the said 38.8% stake of cairn was to be purchased and that was a totally independent transaction. He further submitted that 20.1% of CIL was taken as investment in valuation. He submitted that said transfer of Vendanta’s direct holding of 38.8% in CIL to Sesa Goa was not a condition to the merger. According to him, the statement in the Affidavit in Sur Sur Rejoinder dated 6/10/2012, filed by SGL, with regard to CIL is read out of context. A perusal of the said opinion of Global Markets India Pvt. Ltd., pointed out by the appellant, reveals that it is in respect of the acquisition of the shares of CIL and has nothing to do either with the concurrent scheme or the composite scheme. With regard to the acquisition of CIL, it is seen that in the press release note issued by SGL on 25/2/2012, on ‘All-share Merger of Sesa Goa and Sterlite Industries, and Vedanta Group Consolidation”, on of the transaction highlights is mentioned as transfer of Vedanta’s direct holding of 38.8% in CIL to SGL, together with the associated debt of $5.9 billion, at cost and that post the transfer, Sesa Sterlite will have a 58.9% shareholding in Cairn India. Further, one of the proposed transaction steps has been stated as follows:-

“Vedanta will transfer its 38.8% direct shareholding in Cairn India to a wholly-owned subsidiary of Sesa Goa at a nominal consideration of $1, together with the associated acquisition debt of $ 5.9 bn (through the transfer of companies in which such debt and shareholdings are held). The debt will continue to be guaranteed by Vedanta. This transfer is not interconditional on the merger of Sesa, Sterlite, MALCO and VAL.”

Thus, it can be said that transfer of Vedanta’s direct holding of 38.8% in CIL to Sesa Goa, is an independent transaction. At page no. 3 of the joint valuation report dated 24/2/2012 of Grant Thornton and KPGD India Pvt. Ltd., with regard to proposed restructuring, it is specifically mentioned that the relative valuation of the equity shares of SGL, SIIL, MALCO and Ekaterina has been carried out with a view to arriving at a fair share exchange ratio of the equity shares of SIIL, MALCO and Ekaterina for the equity shares of SGL. At page no. 6 of the said report, it is mentioned that the Price of Recent Investment (PRI) approach has been considered in cases where an investment/transaction has taken place recently or the company has been acquired recently. It is stated that in such case the cost of such investment/acquisition has been considered as the fair market value and that PRI has been used to derive value of SGL’s investments in CIL. In view of the above, there is force in the submission of Mr. Chagla, learned Senior Counsel, appearing on behalf of SGL that the 38.8% stake of CIL is not the subject matter of the valuation report dated 24/2/2012 prepared by joint valuers and that what has been considered is only the investment in CIL.

20. The appellant further submitted that as per clause 3.3 of Chapter III of the Scheme in Company petition No. 12 of 2012, “Residual VAL” was supposed to take care of his own liabilities and the petitioner-Company was not required to own any liabilities of Residual VAL. The appellant submitted that in spite of above, in paragraph 3 of the affidavit dated 02/10/2012 filed by the petitioner-Company in Madras High Court it has been stated that all contractual/legal remedies including appellate remedies by Residual VAL shall be discharged by the amalgamating company to the extent that the Residual VAL is entitled to discharge the same. As provided in the composite scheme, the aluminium business of VAL will be demerged and transferred into SGL whereas Residual VAL will operate the power undertaking. In terms of Clause 3.3 of Chapter 6 of the Composite Scheme, in Company Petition No. 12/2012, Residual VAL which concerns the power business of VAL and MALCO (post merger), was supposed to take care of its own liabilities and SGL would in no circumstances be required to honour any liabilities of Residual VAL towards its secured/unsecured creditors. However, in an affidavit filed by SGL before the Madras High Court in Company Petition No. 167/2012, filed by VAL, SGL has undertaken to discharge the liabilities of Residual VAL to the extent Residual VAL was unable to discharge the same. On account of the above, it is the contention of the appellant that SGL has expressly modified the terms of the schemes of amalgamation, after having sought the approval from its shareholders. We find that there is absolutely no substance in the above objection of the appellant on alleged modification of the schemes. Insofar as, the affidavit filed before the Madras High Court, is concerned, the learned Counsel on behalf of SGL, submitted that the said undertaking given to the Court cannot be held as modification of the scheme. We agree with the learned Counsel, because, admittedly, there is no amendment moved to the Court for modification of the scheme. What is stated in the affidavit is post-merger and about taking over all liabilities post amalgamation. This point has been elaborately considered by the learned Company Judge. The learned Judge has observed that a perusal of the affidavit discloses that in order to give comfort to the Residual VAL which would become subsidiary of the amalgamated Company and to give assurance to its creditors that they would be taken care of, it was stated that after the scheme was sanctioned if the Residual VAL was not in a position to repay the debts of its creditors, in that event the said debts would be paid by the amalgamating company. Even otherwise, as pointed out by the learned Senior Counsel, as per the clause 3.3.1 of the scheme of Residual VAL, all the assets, liabilities and obligations pertaining thereto shall continue to belong to and be vested in and be managed by VAL. Clause 3.3.2 (ii) mentions that if proceedings are taken up against SGL in respect of the matters referred to in sub-clause 1(i) above, it shall defend the same in accordance with the advice of VAL and at the cost of VAL, and the latter shall reimburse and indemnify SGL against all liabilities and obligations incurred by SGL in respect thereof.

21. There can be no dispute that the procedural requirements of Section 391 of the Act must be satisfied before the Court can consider the acceptability of a scheme. Section 392 of the Act only gives power to the Court to make such modifications in the compromise or arrangement as it may consider necessary for the proper working of the compromise or arrangement and this cannot be understood as a power to make substantial modifications in the scheme approved by the members in a meeting called in terms of Section 391 of the Act. In the present case there is no violation of the provisions of Section 391 of the Act, as there is no modification of the schemes as alleged by the appellant. Reliance placed by the appellant in the cases of “M/s. Meghal Homes Pvt. Ltd.”; and “Bengal Bank Ltd.”(supra) is misplaced. As pointed out by Mr Chagla, the learned Senior Counsel, in paragraph 11 of the judgment in the case of “M/s. Meghal Homes Pvt. Ltd.”(supra), the Apex Court has observed that the Division Bench had allowed the appeals, set aside the judgment of the Company Court and sanctioned the scheme as modified and as further modified during the course of hearing before the Division Bench, by way of two affidavits filed by the Director of Lodha Builders Pvt. Ltd. and therefore the said scheme with modification had to go back to the General Meeting of the members, called in accordance with Section 391 of the Act and for obtaining requisite majority. Therefore, the judgment of the Apex Court in the case supra is clearly distinguishable. The learned Company Court, in paragraph 34 of the impugned judgment, has distinguished the facts of the present cases with those in “Meghal Homes Pvt. Ltd.”(supra). There is no modification of the schemes in the present cases. The ratio of the judgment in case supra is not applicable to the facts of the present cases. In the case of “Bengal Bank Ltd.”, a scheme was sanctioned by the majority under Section 153(2) of the Companies Act, 1913. But that scheme was modified by the Reserve Bank. The changes were substantial and not just nominal. It was held by the Calcutta High Court that if a scheme has been sanctioned under Section 153(2) of the Companies Act and that scheme has not been certified as it is, but has been modified by the Reserve Bank and that modified scheme is presented to the Court for confirmation, without being sanctioned as required under Section 153(2), the Court has no jurisdiction to grant sanction to such a scheme. No such thing has happened in cases before us. Hence, the case of “Bengal Bank Ltd.”(supra) is also not applicable.

22. In view of the discussion supra, the contention of the appellant that there is violation of the provisions of Section 391 of the Act inasmuch as SGL has modified the schemes with regard to CIL and that CIL is considered for valuation therefore there was modification to the proposed schemes before seeking approval of the shareholders of SGL as also before the Company Court and further that the schemes have been modified after filing the petitions before the Company Court in view of affidavit filed in Madras High Court, is without legal sanctity, and liable to be rejected.

23. Further, for the same reasons as above, the contention of the appellant that since the scheme had been valued by considering the valuation of CIL and its associated debt though CIL is not part of merger, due to which the scheme is modified and therefore the joint valuation is skewed and predetermined, has no force. Similarly, the submission that since Residual VAL’s liabilities have been undertaken by SGL, the scheme stands modified and hence the joint valuation is skewed and predetermined, has also no merit.

24. The appellant submits that there is violation of the provisions of Section 391(2) of the Act inasmuch as SGL has suppressed the SFIO report which pertains to the investigation regarding SGL under Section 235 of the Act, from the Company Court as well as the shareholders. According to the appellant, SGL has misled them by making false statements in the Explanatory Statement thereby driving them to take an uninformed decision. It is contended that despite being in possession of the SFIO report, SGL failed to even refer to the same in the Explanatory Statement but on the contrary made a statement that the investigation before the SFIO was pending. Thus, the appellant submitted that there is violation of the provisions of Section 393 of the Act. It is further the contention of the appellant that SFIO report, dated 29/4/2011, wherein a siphoning of more than ` 1,000 crores has been discovered, has not been considered by the valuers, and therefore the valuation is skewed, predetermined, disproportionate and belies even the methodologies used by the valuers and such ratios cannot be imposed upon the minority shareholders of SGL by sanctioning the schemes. It is also a contention of the appellant that the said SFIO Report exhibits the fact that the affairs of SGL have been managed by its management in a manner contrary to public policy and public interest since the said siphoning of amount of more than ` 1,000 crores is in respect of iron exports of iron ore which is a national wealth.

25. As far as the SFIO report dated 29/4/2011, is concerned, the learned Senior Counsel appearing on behalf of SGL, submitted that the said report had not culminated into prosecution and had to go to the Central Government for approval. He submitted that the said report was only provisional and therefore not required to be disclosed. The learned Counsel further submitted that in spite of the same being provisional, SGL had disclosed to the National Stock Exchange that there was investigation. He submitted that it was for National Stock Exchange to raise objection, if any, about the non-disclosure of the SFIO Report. He also stated that in the Explanatory Statement as also in the Company Petition filed before the Company Court, SGL had disclosed the pendency of the proceedings, before the SFIO, under Sections 235 to 251 of the Act.

26. A perusal of the Explanatory Statement dated 19/5/2012 reveals that there is reference to the pending investigation. It is further mentioned in this Statement that any voter could take inspection of the document referred to in this Statement, by visiting Company’s office. According to the appellant there was no investigation pending since SFIO had already submitted its report dated 29/4/2012. But the said report, unless approved by the Ministry of Corporate Affairs, could not have attained finality. SGL had sent its representations against the allegations made in the said provisional report. The learned Company Judge has observed that it is quite well settled that even if the report is filed and if any action has to be taken, further investigations have to be done for the purpose of taking recourse to criminal proceedings and the report has to be filed in the Court. Therefore, merely because the word ‘pending’ has been used in the Explanatory Statement, it cannot be said that there is suppression of material fact and an attempt to mislead the equity shareholders. We do not find anything wrong in the above observations made by the Company Court. Be that as it may, the said SFIO report could not have come in the way of amalgamation, since Company remains and the erring directors, officers, etc of SGL would be subject to the consequences that would arise from that report. During the course of arguments, the appellant had fairly conceded that the SFIO report is not relevant and does not come in the way of sanction of the schemes. Hence, there cannot be any need to file the SFIO report along with the Company Petitions for sanction of Schemes. The appellant had himself filed the report along with his reply to the Petition. According to the appellant, though the SFIO report was with him, however, the same was not with any other shareholder. As has been rightly contended by the learned Senior Counsel for SGL, the other equity shareholders had not raised any objection regarding non disclosure of SFIO report.

27. The joint valuation report is dated 24/2/2012. The valuers, in the letters dated 9/1/2013 and 14/1/2013, have specifically mentioned that they had received the copy of SFIO report dated 29/4/2011 and representations made by SGL to the Secretary, Ministry of corporate Affairs in response to the SFIO report and that they have considered the information provided by SGL including the SFIO report while recommending the swap exchange ratio vide joint swap letter dated 24/2/2012 and that this should be read along with the joint swap letter dated 24/2/2012. These letters were produced by SGL before the learned Company Court. Besides the above, there are subsequent events. The SFIO has prepared another report after considering the representations and submissions sent by SGL to the Secretary, Ministry of Corporate Affairs, thereby explaining the stand of SGL on the allegations made in SFIO’s report and denying those allegations. In the fresh report, it is stated that had these representations been there prior to the preparation of the first report, then the conclusions in that report would have been different with regard to under invoicing, over invoicing and other aspects and these conclusions would have been in favour of SGL. By letter dated 10/5/2013, the Ministry of Corporate Affairs has stated that they have advised SFIO not to file prosecution against SGL, for alleged violations.

28. Therefore, there is no merit in the objection raised by the appellant, regarding the alleged suppression of the SFIO report dated 29/4/2011 from the shareholders or the Company Court or about the alleged non-consideration of the same by the joint valuers. Further, the contention of the appellant that the joint valuation is skewed since the valuers have not considered the alleged siphoning of more than ` 1,000/-crores disclosed in the SFIO report dated 29/4/2012, has also no merit at all. There is also no substance in the allegation that there is violation of public policy and public interest, since alleged siphoning of huge amount was in respect of national wealth i.e. iron ore.

29. Next contention of the appellant is that in the only methodology that could apply for arriving at the valuation of Ekaterina as per the valuation report submitted by the joint valuers was the PRI methodology since neither the Company Ekaterina is a listed Company nor does it have any positive net asset value and also it does not have any positive cash flow for any other methodologies, used by valuers to arrive at the valuations, to apply to Ekaterina. According to the appellant, Ekaterina had valued the shares of VAL at the rate of ` 16.50/- per share as on 24/2/1012 whilst issuing its own shares in exchange for the acquisition of shares of 70.50% stake in VAL from other subsidiaries of Vedanta Resources Plc. It is further stated that this was the most recent investment made by any company in the shares of VAL. It is contended that despite making a categorical statement that the cost of any such investment made by the said amalgamating companies has been considered by the valuers as fair value, however, the valuers have on the same day valued the shares of VAL at ` 27. 60/- per share thereby completely defying the application of their methodology in terms of PRI. It is therefore contended that the entire valuation report is untrustworthy and unreliable. It has been further contended that the valuers have arithmetically arrived at some absurd valuations and swap/exchange ratios.

30. With regard to the above difference between the value of VAL shares at ` 16.50 per share by Ekaterina and the value of VAL at ` 27.60/-per share arrived at by the Joint-valuers for the amalgamation, learned Counsel appearing on behalf of SGL submitted that the comparison is wholly incorrect since the prior transfer of VAL’s share from the said subsidiaries of Vedanta Resources Plc, namely Twinstar Holdings Ltd. and Welter Trading Ltd. to Ekaterina was a transfer amongst the holding Company and wholly owned subsidiaries and no one else was concerned. It was not a market value but a notional value and therefore, not required to be at a fair value. It is contended that the joint-valuers had arrived at a valuation of VAL based on the inherent value of VAL’s shares, in determining the share exchange ratio which was based on factors stated in the joint valuation report. swap value was ` 27.60/- and that was relevant.

31. Learned Company Judge has observed that the above submissions of the objector (appellant) are nothing but conjectures and surmises and the own opinion of the objector in respect of the valuation and fairness report and his own analysis as to how the swap ratio which is arrived at by the valuers is incorrect. The Company Court has observed that there is no material on record to show that minority shareholders would suffer by this ratio whereas the promoters would stand to gain, since this ratio is applicable to all the equity shareholders without making any exception either in respect of promoter shareholders or any other category of equity shareholders. The valuers were not before the Company Court. There may not be any provision in the Act enabling the objector to propose an amendment to the scheme in the Court convened meeting, but he can very well produce his own valuation report prepared by some experts, for showing that the valuations considered for schemes were not correct. In the present cases in addition to Joint valuation report prepared by experts, there are fairness opinion reports prepared by by other experts stating that the share exchange ratio as arrived in the joint valuation report is fair. Therefore the appellant cannot be heard to say that the valuation is skewed since the methodology insofar as the valuation for VAL is concerned, has been incorrectly applied.

32. It is further submitted by the appellant that the balance sheets of VAL and SEL (which are the transferor companies in the present schemes of amalgamation) have not shown, either in the liability and/or the contingent liability heads, many of the claims of persons who are the creditors of the said companies (some of whom had also sought to intervene in the present proceedings). According to the appellant, the claims of such persons which amounted to more than ` 2,000 crores do not reflect in the financial statements of any of the aforesaid amalgamating companies. Thus, the appellant says that the valuers as also the merchant bankers who have assessed the said valuation report whilst giving their opinion have not been able to assess such hidden claims against the amalgamating companies and have therefore been misled whilst arriving at their respective valuations of either of these companies. This, according to the appellant, renders the said valuations a nullity. Learned Counsel for SGL, in answer to the above, has alleged that there has been necessary disclosure of the contingent liabilities of the transferor companies in their audited financial statements and the joint valuers have appropriately considered these contingent liabilities. We have serious doubts whether contingent liabilities need to be taken into account. Even otherwise, in this regard, a perusal of the joint valuation report dated 24/2/2012 at its page no. 6, reveals that based on the information made available to the valuers, contingent liabilities as on the date of valuation have been considered. Thus, there is no force in the contention of the appellant that the joint valuers and the merchant bankers have been misled whilst arriving at the valuation. The valuation report cannot be held to be skewed on such ground.

33. It is then contended by the appellant that the valuations arrived at by the valuers and affirmed by the merchant bankers only sub-serve the interests of the ultimate promoters of Vedanta Resources Plc. and enriches them at the cost of minority shareholders of SGL. According to the appellant, a perusal of the charts disclose that the relative holding of the minority shareholders in SGL would come down from 100% to 29.30% whereas the relative holding of the promoters of Vedanta Resources Plc. would increase from 55.1% to 58.3% and the relative holding of the minority shareholders of SGL in VAL and SEL (financially sick companies) go up from 0% to 29.30% whereas that of the promoters in VAL would come down from 87.60% to 58.30%, if the present schemes of amalgamation are sanctioned. Therefore, according to the appellant, the entire scheme is so orchestrated that the ultimate promoters of Vedanta Resources Plc. gain at the cost of the minority shareholders of SGL and the liabilities of the transferor companies (especially that of VAL, SIIL and SEL) which at present are the sole responsibilities of either of the said companies and/or the ultimate parent company viz. Vedanta Resources Plc. is shifted and transferred to SGL much to the detriment of its minority shareholders. Indisputably, the valuers namely KPMG India Pvt. Ltd. and Grant Thornton India LLP have independently worked on the analysis of the swap/exchange ratio and then have arrived at a consensus swap ratio. Thereafter the merchant bankers namely Merrill Lynch, a subsidiary of Bank of America Corporation, have assessed the joint valuation report and opined that the Exchange Ratio provided for in the Merger is fair, from a financial point of view, to the Sterlite Shareholders and the merchant bankers namely Citigroup Global Markets India Pvt. Ltd. have assessed the said joint valuation report and opined that the Exchange Ratio is fair from a financial point of view to SGL. The capabilities and also bona fides of the valuers and the merchant bankers have not been challenged. As submitted by the learned Counsel for SGL, the swap/exchange ratio arrived at by the joint valuers is equally applicable to all classes of the shareholders, without making any exception either in respect of promoter shareholders or any other category of equity shareholders. The learned Company Judge has observed that there is no material on record to show that minority shareholders would suffer whereas the promoters would stand to gain by the ratio. There is no convincing reason for us to differ from the said view of the Company Court.

34. The appellant has further contended that the valuers have even arithmetically arrived at some absurd valuations and swap/exchange ratios for some transferor companies and that the said valuations even mathematically do not tally with the swap/exchange ratios arrived at by them for inter related transferor companies that contain identical nature of shares as that of companion transferor companies. The appellant, by way of an example, has taken the valuation of the shares of SIIL and MALCO. During the course of arguments, the appellant sought to explain by figures as to how the valuers have allegedly arrived at absurd valuations. According to him, there is a difference of approximately ` 2,619 crores in the valuation of the shares of Sterlite Industries Ltd., if the swap/exchange ratios arrived at by the valuers for the shares of SIIL and MALCO (which essentially is an investment company and holds 3.56% in the shares of Sterlite Industries Ltd.) with SGL are considered on their standalone basis. In this regard, the learned Senior Counsel appearing on behalf of SGL rightly submitted that the two values cannot be compared as the valuation of the joint valuers based on the market price as contained in balance sheet as on 31/03/2012 is not relevant to a valuation done on 24/02/2012. It is the contention of SGL that the inherent value of SIIL as on the date of valuation was considered and has been set out in the joint valuation report and not the market price as of 31/03/2012. In the case of “Hindustan Lever Employees’ Union”(supra), it has been observed that the jurisdiction of the Court in sanctioning a claim of merger is not to ascertain with mathematical accuracy if the determination satisfied the arithmetical test. It has been observed that the Company Court exercises a jurisdiction founded on fairness and is not required to interfere only because the figure arrived at by the valuer was not as better as it would have been if another method would have been adopted. What is imperative is that such determination should not have been contrary to law and that it was not unfair for the shareholders of the company which was being merged. It has been further held that the Court’s obligation is to be satisfied that valuation was in accordance with law and it was carried out by an independent body. In the present cases, it is not the case of the appellant that the valuers were not independent.

35. The appellant submitted that a bare perusal of the contents of the Fairness Opinion Reports reveals that a draft scheme of amalgamation between the transferor companies along with CIL and SGL was already prepared and was in existence as on 22/2/2012 i.e. even before the swap/exchange ratio arrived at by the valuers was known to anybody. The appellant submitted that the valuers had filed their valuation report on 24/2/2012. He pointed out that it is qualified in the Fairness Reports that the final terms of the scheme of merger ought not to materially vary from those set forth in the draft or else the opinion Report would not stand good. It is further contended by the appellant that from the records it is clear that the ultimate promoters of SGL also knew the swap/exchange ratio that was yet to be arrived at by the valuers at least a day in advance i.e. on 23/2/2012 since while making the representation at the London Stock Exchange, Vedanta Resources Plc. whilst declaring the swap/exchange ratios to London Stock Exchange categorically stated that the information contained in the said representation was as on 23/2/2012. Therefore, according to the appellant, the said ratios were pre-decided / pre-determined. In this regard, Mr. Chagla, the learned Senior Counsel appearing on behalf of SGL submitted that the draft report which is mentioned in the Fairness Report of 25/2/2012 is the draft scheme of amalgamation and arrangement and there has been no pre-determination of the valuation report as alleged. What should be understood to have been stated by the merchant bankers in this Fairness Report is that the representatives of the Vedanta Group have advised them and they have further assumed that the final terms of the scheme of arrangement will not vary materially from those set forth in the draft scheme of amalgamation. It is seen, as rightly pointed out by learned Counsel appearing on behalf of SGL, that the report which is at pages 406-407 of set II mentions the date of 24/2/2012. This report was uploaded on 27/2/2012 after the Board had approved the scheme on 25/2/2012. Hence, there is nothing wrong in the observation of the learned Company Court that merely because the date “23/02/2012” has appeared in one of the documents, on the basis of that date it is not possible to arrive at the conclusion that prior to the approval given by the Board of Directors, swap ratio was already known on 23/02/2012.

36. Relying upon the principles of valuation laid down in the cases of “Miheer Mafatlal”; “Hindustan Lever Employees’ Union”; “Smt Saroj G. Poddar”; and “Larsen and Toubro” (supra), the appellant contended that the valuations conducted and the swap ratios arrived at, apart from being unfair, unjust, predetermined and to the disadvantage of the shareholders of SGL, was a result of incorrect and suppressed financial data being supplied to the valuers thereby resulting into a fallacious exchange ratio being reached by them and further that the same included financial data of companies which do not form part of the present scheme/merger. According to the appellant in any event, the subsequent events that have transpired during the pendency of the present proceedings have made the swap/exchange ratios so arrived at by the valuers/merchant bankers meaningless and otiose.

37. What is settled in view of the above judgments is that unless material is shown and produced on record to show that the valuation, as done, was unfair or contrary to the record or material, the Court has no reason to interfere with such experienced opinion in proceedings like these.

In the present case, instead of himself producing material in the form of valuation done by some other experts in the field of accountancy, before the Company Court, for understanding as to how the report of joint valuers was unreliable, the appellant wanted the Company Court to appoint fresh valuers at his cost in the event the Court was of the opinion that it could not go into the conclusion reached by the expert valuers. we accept the submission made by Mr. Chagla, learned Senior Counsel for SGL that swap value is for the valuers to evaluate and the same is not an exercise that the Court would embark upon. Valuation cannot be the job of Counsel for the parties or even of the Court as the same requires expertise. It is a complex technical problem which should be left to the consideration of experts in the field of accountancy. It was pointed out by learned Counsel for SGL that the petitioner is not a Chartered Accountant whereas the renowned Chartered Accountants have carried out the valuation and in addition to the said valuation there are fairness reports given by internationally acclaimed groups of Chartered Accountants in accordance with the SEBI regulations. No mala fides have been attributed against these valuers. The method of valuation is not challenged. Nothing had prevented the appellant to engage any expert valuer and to show the discrepancies. Mr. Chagla, learned Counsel, pointed out that even in the present appeals the appellant has not produced any report of the expert valuer and on the contrary the appellant is asking the Court to send the matter for fresh valuation. He further submitted that the said valuers are not here for cross-examination.

Almost all the same contentions on valuation and fairness opinion reports, canvassed before this Court, were raised before the Company Court which has held that the submissions are nothing but conjectures and surmises and the own opinion of the Objector (appellant) in respect of valuation and fairness report and his own analysis as to how the swap ratio which is arrived at by the valuers, is wrong. We do not find any error in the above finding.

38. A Company Court does not exercise an appellate jurisdiction. It exercises a jurisdiction founded on fairness. It is not required to interfere only because the figures arrived at by the valuer were not as better as it would have been if another method would have been adopted. What is imperative is that such determination should not have been contrary to law and that it would not unfair for the shareholders of the company which was being merged. The Court’s obligation is to be satisfied that valuation was in accordance with law and it was carried out by an independent body. There is no dispute that the joint valuers were independent experts. Their bona fides have not been challenged. There is no merit in the submission of the appellant that the Company Court ought to have appointed a valuer from the panel of valuers to ascertain the correct valuations of the companies involved in the schemes of amalgamation. We do not see any reason to interfere with the valuation arrived at by the joint valuers.

39. According to the appellant, there was misrepresentation of the share holders of SGL inasmuch as at least one of the members namely Mr. Bimal S. Gandhi, who had allegedly cast a vote in favour of the scheme, had died a decade ago. The appellant submitted that the counting of such a vote squarely breaches the provisions of Section 391(2) of the Act. He expressed fear that many more such invalid votes might have been counted or that there may be many other discrepancies. In this regard, learned Senior Counsel for SGL submitted that the shareholding of said late Mr. Bimal was under transmission pursuant to the request of Ms. Ramila Gandhi, the mother of late Bimal, who on 9/5/2012 sought issuance of duplicate certificates. Ms. Ramila executed a proxy to vote at the Court convened meeting though that transfer had not taken effect. The shares of Bimal have thereafter been transmitted in favour of Ms. Ramila Gandhi. It was submitted that the mother of the late Bimal had wrongly voted and even if the said 12800 shares are deducted from the voting result, the Concurrent scheme stands approved by 92.31% in number and 79.07% in value present for the meeting and voting and in respect of Composite scheme stands approved by 91.70% in number and 79.12% in value present and voting. The above approval by requisite majority even after excluding invalid vote of Ms. Ramila, has not been denied. We are inclined to believe that it was by sheer inadvertent mistake that Ms. Ramila executed a proxy to vote. The fact remains that even if the said vote is not considered, the schemes stand approved by 3/4th majority of the shareholders. Fear of the appellant that there might have been many such invalid votes has no legal basis and is nothing but an imagination.

40. Another contention of the appellant is that if the majority vote of the promoters of SGL, which comprises 55.13% of the total issued and subscribed capital of SGL, is excluded from the counting of the votes of persons who have allegedly voted in favour of the scheme, then both the schemes have miserably failed to garner the support of the minority shareholders of SGL and only 18% of the shareholders present and voting had cast their votes in favour of the schemes in terms of the value of their votes and 82% of the shareholders had cast their votes against the sanctioning of the schemes. Thus, according to the appellant, majority of the minority shareholders have voted against the schemes. According to the appellant, considering the above facts, the Petitions for amalgamation ought to have been dismissed. The appellant also submitted that most of the FIIs have voted against the schemes. In the case of “Re Hellenic and General Trust Ltd.”(supra), relied upon by the appellant, it has been held that when the vendors meet to discuss and vote whether or not to accept the offer, it is incongruous that the loudest voice in theory and the most significant vote in practice should come from the wholly owned subsidiary of the purchaser. The Apex Court in “Miheer Mafatlal”(supra), with reference to the above decision of the English Court, observed that the said decision is a pointer to the fact that what was required to be considered while sanctioning the scheme was the bona fides of the majority acting as a class and not of one single person. The said decision of the English Court in the case of “Hellenic and General Trust Ltd.”(supra), has been followed in the case of “Bedrock”(supra). There can be no dispute that unless a separate and different type of scheme of compromise is offered to a sub-class of a class of creditors or shareholders otherwise equally circumscribed by the class, no separate meeting of such sub-class of the main class of members or creditors is required to be convened. In the present case, as submitted by learned Senior Counsel for SGL, no separate scheme was offered to the sub-class of shareholders which would require separate meeting. Both the schemes had offered the same compromise or arrangement to all the equity shareholders and hence one class meeting of equity shareholders was convened to consider the concurrent scheme and composite scheme. There was only one class of equity shareholders, whether promoter, or public or minority which class had been treated identically by the schemes. The same share exchange ratio was applicable to all its equity shareholders and there was no benefit to the promoters of SGL, at the cost of minority shareholders. The objection of the appellant to the manner in which the FIIs voted both in favour of and against the scheme, has no merit in view of Section 183 of the Act which provides that on a poll taken at a meeting of a Company, a member entitled to more than one vote, or his proxy, or other person entitled to vote for him as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses. The learned Company Judge, in paragraph 31 of the impugned Judgment, has dealt with this objection. In the circumstances above, the case of “Hellenic and General trust Ltd.”(supra), is not applicable here.

41. According to the appellant, as of today all manufacturing businesses of VAL relating to alumina and aluminium have come to a halt and this eventuality has occurred in the interregnum period i.e. from the time the present schemes of amalgamations had been announced/proposed and till the time the same are being heard in the various Courts of law. The appellant submitted that such a financially disastrous development which occurred during the interregnum period ought to have been looked into by the Company Court so that the minority shareholders of SGL are not emburdened with any unnecessary hardship despite the knowledge of the Company Court of such an eventuality. Relying upon the observations of the Division Bench of Gujarat High Court in paragraph 13.3 of the judgment in the case of “Satyesh James Parasad and Others”(supra), the appellant canvassed that the Company Court could not have turned blind eye at such subsequent development. With regard to the above subsequent development as alleged, SGL has made it clear that the said stoppage of the operation of the alumina refinery of VAL in Lanjigarh is a temporary suspension due to lower availability of bauxite. It has been further stated that the operation of the aluminium smelter is going on and in January 2013 to March 2013 the production was approximately 1,33,000 MT as against corresponding quarter in the financial year 2011-2012 which was approximately 1,15,000 MT. It is further pointed out by SGL that the fourth quarter production was 16% higher than corresponding quarter in the financial year 2011-2012. In view of the above, there is no substance in the fear of the appellants that the minority shareholders of SGL would be emburdened with unnecessary hardship.

42. The appellant submitted that there is violation of the provision of Section 393 of the Act as the Fairness Opinion Reports were not disclosed in the Explanatory Statement despite an undertaking given by SGL to the National Stock Exchange. In this regard, SGL has stated that the above objection is without any merit, in terms of the NOC dated 02/4/2012 of the National Stock Exchange of India Ltd. A disclosure is found to have been made in the Explanatory Statements dated 19/5/2012 with respect to the concurrent as well as composite scheme that the share exchange ratio was approved by the Board of Directors of SGL after considering the Valuation Report and Fairness Opinion Reports. It is further found stated in the said Explanatory Statements that the Valuation Report and the Fairness Reports are available for inspection. According to SGL, the same were also been placed on the website of SGL at “Sesagoa.com”. Hence, there is no force in the contention of the appellant that the Fairness Opinion Reports were not disclosed in the Explanatory Statements.

43. The appellant submitted that there is a completely false and misleading statement made by SGL in the Explanatory Statement by saying that the financial position of SGL would not be prejudicially affected if Ekaterina was amalgamated into it. According to the appellant, the affidavit dated 6/10/2012 filed by SGL reveals that the net worth of VAL which is the only investment of Ekaterina as on 31/3/2012 was in the negative by a sum of ` 1938 crores and thus the financial position of SGL would admittedly deteriorate if Ekaterina (whose only asset is 70.50% stack of VAL) was amalgamated into it much to the converse of what had been stated by SGL in the Explanatory Statement issued to its shareholders. In this regard, it is specifically stated in the Fairness Opinion Report dated 25/2/2012 given by Citigroup Global Markets India Pvt. Ltd. that as more fully described in the scheme of amalgamation, Ekaterina, a company incorporated in Mauritius as an indirect 100% subsidiary of Vedanta Resources Plc and which will own 70.5% equity ownership in VAL will be merged with and into SGL and pursuant to the merger, 0.04 fully paid up equity shares, par value ` one per share, of SGL will be issued to the shareholders of Ekaterina for every one fully paid up equity share par value US $ 0.1 per share of Ekaterina held by the shareholders of Ekaterina. Thus net worth of Ekaterina was positive due to its 70.5% equity holding of VAL as a whole (including residual VAL). Hence, it is not correct to say that a false and misleading statement was made by SGL in the Explanatory Statement made to the shareholders. Therefore there is no violation of the provisions of Section 393 of the Act, on this ground.

44. According to the appellant, the present schemes have been mooted under the influence of the ultimate promoters of the said companies and only for two purposes. The first motive is to somehow hive away VAL from the books of Vedanta Resources Plc,. so that it is relieved from the guarantees and other undertakings given by it for the said company. The appellant submitted that the element of ‘public interest’ includes the ‘shareholders interest’. He further submitted that Vedanta Resources Plc. has given its own corporate guarantees for the loans of approximately Rs. 34,500 crores amassed by VAL which in turn has also taken loans worth Rs. 2,900 crores (which are included in the total figure of ` 34,000 crores), either directly and/or indirectly from Vedanta Resources Plc. It is the submission of the appellant that since the operations of VAL have come to a stand still and since VAL is now on the verge of an impending default both on its principle repayments as also on its interest payments, the present schemes have been mooted so as to hive away all the obligations that are likely to accrue owing to the default of VAL onto the shoulders of the minority shareholders of SGL thereby completely tramping upon the interests of the minority shareholders of SGL. The second motive, according to the appellant, is that the present schemes are being used as device by the amalgamating companies so that the losses accumulated in VAL and Sterlite Energy Ltd. Over the last few years (not just the previous year) could be adjusted against the profits made by SGL and SIIL and thus the taxes paid by these profit making companies with the exchequer can be reclaimed as refunds on account of offset of losses incurred by the aforesaid two companies. The appellant pointed out that the appointed dates for each of the amalgamating companies are:- 1/04/2012 for Ekaterina; 1/04/2011 for SIIL; Effective date of Sanction for MALCO; 1/01/2011 for Sterlite Energy Ltd.; and 1/04/2011 for VAL(Aluminium business). According to the appellant, as per the Income Tax Act and more particularly Section 72(A), the companies involved in an amalgamation proceedings can merge their accounts from the previous preceding year from which the amalgamation was effected i.e. the date of sanction. Reliance has been placed by the appellant on paragraphs 17, 45 and 46 of the judgment of the Apex Court in the case of “Mcdowell & company Ltd.”(supra) and paragraphs 68, 69 and 70 of the judgment of Apex Court in “Vodafone International Holding BV” (supra), for his contention that colourable devices cannot be a part of tax planning and it is wrong to encourage the belief that it is honourable to avoid payment of taxes by resorting to dubious methods. Relying upon “Wood Polymer Ltd.”(supra), the appellant contended that companies do not amalgamate for the fun of it and they must amalgamate or would like to amalgamate or may be amalgamated to achieve some purpose or object and such purpose must have some correlation to public interest. He read out relevant portions of page no. 622 of the above citation for understanding the meaning of the expression “Public Interest” , as given by the Gujarat High Court in the judgment in “Wood Polymer Ltd.”(supra). The appellant submitted that it is a settled principle of law that what cannot be done directly is not permitted to be done indirectly. Therefore, according to the appellant, the schemes are both against public policy and against public interest.

45. There is no material produced by the appellant, on record, to show that either SGL or the companies which are parties to the composite scheme have defaulted in repayment of loans or advances received from the financial institutions. The joint valuers, who are experts, cannot arrive at the share exchange ratios without considering all relevant factors including the debts and liabilities, along with the assets. It should be kept in mind that the said swap ratios have been assessed and approved by expert merchant bankers and the same have been duly approved by the majority of the equity shareholders. The allegations of the appellant appear to be based on his surmises.

46. Learned Senior Counsel appearing on behalf of SGL, on the other hand, relied upon Section 72A of the Income Tax Act, 1961 which provides for carrying forward and setting off of accumulated loss and unabsorbed depreciation allowance in amalgamation or demerger, etc.. He submitted that it is clear from paragraphs 147 to 149 of the judgment of the Apex Court in “Azadi Bachao Andolan”(supra); paragraph 45 of “Mcdowell and company Ltd.”(supra); and paragraphs 68 to 70 of “Vodafone International Holdings BV” that it cannot be said that all tax planning is illegal/illegitimate/impermissible. Tax planning may be legitimate provided it is within the frame work of law. Every attempt at tax planning cannot be held to be illegitimate though the evasion of tax by use of colourable devices and by resorting to dubious methods and subterfuges is not permissible. The learned Company Judge has observed that even after a scheme is sanctioned, it is always open for the tax authorities to scrutinize returns and issue notices. The learned Judge, in paragraph 40 of the impugned judgment, has reproduced paragraphs 147 to 179 of the judgment of the Apex Court in “Azadi Bachao Andolan”(supra) and in paragraph 43 of the impugned judgment, paragraph 68 of the judgment in “Vodafone International Holdings BV”(supra). Learned Judge has observed that the judgment of the Gujarat High Court in the case of “Wood Polymers Ltd.”(supra) is no longer good law. The learned Company judge has held that it cannot, therefore, be said that the scheme is against the public policy. There is no ground shown to us by the appellant to differ from the findings given as above by the learned Company Judge.

47. According to the appellant, the present schemes are of unconscionable nature and the interest of the minority shareholders of SGL has been completely overlooked. He pointed out that as per Clause III(12) of the memorandum of association of SGL, it is entitled to enter into arrangement and/or amalgamation with any other person/concern so as to carry out or engage in any business which would directly/indirectly be beneficial to it. He submitted that the present schemes neither directly nor indirectly benefit the interests of SGL but on the contrary they tremendously deteriorate the financial condition of SGL and turn it into a negative figure apart from inflating its debt to unmanageable levels. The contention of the learned Counsel appearing on behalf of SGL, in this regard, is that the net worth of SGL would, in fact, increase from ` 12,910.8 crores to ` 36,923.63 crores, post merger, thereby making the minority shareholders of SGL richer by three folds(100%) and hence the schemes could never be termed as unconscionable. Learned Company Judge has observed that the financial position of all the companies as per their audited accounts as of September, 2012 needs to be taken into consideration and from these figures, it can be said that after amalgamation, position of SGL would dramatically increase even after absorbing the so-called loss making companies. The Company Judge has observed that when entrepreneurs take commercial decisions, it is not open for the Court to judge their commercial wisdom. It is observed that when entrepreneurs take a commercial decision, their is always an element of risk and businessmen take such calculated risk after taking into consideration various facts and circumstances and pros and cons of all situations. The company Judge has further observed that it has been consistently held that the court is not expected to dissect and conduct a postmortem of such decisions which are based on business experience and commercial wisdom. The Court has to examine the scheme on well settled parameters. The Court is expected to be an umpire and is not expected to enter into arena and examine the scheme under a microscope. Whenever decisions are taken there is bound to be some kind of variation in the situation in respect of the functioning of both companies. This should not deter the Court from granting sanction to the schemes. The above observations of the learned Company Judge are based on the well settled principles laid down by the Apex Court in various cases. The contention that the schemes are unconscionable has no merit.

48. The appellant lastly submitted that the proposed scheme of amalgamation is a ruse to stifle further action required to be taken by the Ministry of Corporate Affairs in terms of report dated 29/4/2011 compiled and filed by the SFIO. According to the appellant, once the present schemes are sanctioned by the Company Court, the Ministry of Corporate Affairs would refrain from initiating any action against the delinquent management of SGL as has been the case in respect of a prior amalgamation of Sesa Industries Ltd. with SGL wherein despite the damning findings against the managements of the said companies in the said SFIO report, the SFIO, in its supplementary report, had refrained from taking any action on the ground that both the said companies have been amalgamated and therefore the action that was required to be taken against the misdeeds of either of them has lost its relevance in the wake of amalgamation. Insofar as the above, contention is concerned, the said provisional SFIO report dated 29/4/2011 had not culminated into prosecution and had to go to the Central Government for approval. SGL had made representations to the Secretary, Ministry of corporate Affairs in response to the said SFIO report. The SFIO then prepared another report after considering said the representations and submissions sent by SGL to the Secretary, Ministry of Corporate Affairs, thereby explaining the stand of SGL on the allegations made in SFIO’s report and denying those allegations. In the fresh report, it is stated that had these representations been there prior to the preparation of the first report, then the conclusions in that report would have been different with regard to under invoicing, over invoicing and other aspects and these conclusions would have been in favour of SGL. By letter dated 10/5/2013, the Ministry of Corporate Affairs has stated that they have advised SFIO not to file prosecution against SGL, for alleged violations. There is therefore no force in the submission of the appellant that the schemes are a ruse to stifle the further action that was required to be taken by the Ministry of Corporate Affairs, in terms of the recommendations made in the SFIO report dated 29/4/2011.

49. We make it clear that though we have not referred to each and every judgment relied upon by the parties, however, we have considered the principles laid down in each of them.

50. Taking over all view of the matter, we are of the considered view that all the statutory requirements were complied with. The schemes do not violate any of the provisions of the Act and also do not violate any principles of natural justice and cannot be termed as against public policy and public interest. We do not find any infirmity in the impugned Judgment. The objections have been rightly rejected by the learned Company Judge and the schemes have been sanctioned by applying the settled principles laid down by the Supreme Court. Therefore, no interference is called for. The appeals deserve to be dismissed and hence are dismissed. Needless to mention that the applications for interim relief also get dismissed, accordingly. No order as to costs.

Petition(s) for Special Leave to Appeal (Civil) No(s). 26086/2013 (From the judgment and order dated 12/08/2013 in COA No. 5/2013 in COP No. 11/2012 of The HIGH COURT OF BOMBAY AT PANAJI)

(With appln(s) for exemption from filing c/c of the impugned Judgment and with prayer for interim relief)

(With appln.(s) for exemption from filing c/c of the impugned judgment and permission to file synopsis and list of dates and with prayer for interim relief and office report)

COPY OF THE ORDER DATED 12TH MARCH, 2015 OF HIGH COURT OF JUDICATURE AT BOMBAY, PANAJI BENCH MADE UNDER SECTION 394 OF THE COMPANIES ACT, 1956, IN THE MATTER OF THE SCHEME OF AMALGAMATION OF GOA ENERGY LIMITED WITH SESA STERLITE LIMITED ANNEXED TO THE MEMORANDUM OF ASSOCIATION PURSUANT TO SECTION 391(4) OF THE COMPANIES ACT, 1956.

A Report of the Official Liquidator and Affidavits filed by the Regional Director and the Registrar of Companies, are taken on record.

2. Upon hearing Mr. Sudin Usgaonkar, learned Counsel appearing for the petitioner Company, Mr. Mahesh Amonkar, learned Central Govt. Standing Counsel appearing for the Regional Director and upon perusal of the petition, the scheme and the documents filed by the petitioner/Transferor Company, it is ordered as follows:

3. It appears that the sanctioning of the scheme will be for the benefit of the Petitioner/Transferor Company and its members and will also enable the Transferee Company to carry on its business activity efficiently and work profitably.

4. The Petitioner/Transferor Company being a wholly owned subsidiary of the Transferee Company, this Court vide its order dated 30/07/2014 in Company Application (Main) No.33/2014 was pleased to dispense with the filing of a separate Company Application for dispensation of the meeting of its shareholders and creditors, Company Petition for approval of the Scheme and a separate process by the Transferee Company.

5. The Regional Director has filed an affidavit dated 4th March, 2015 stating therein that save and except as stated in paragraph 6 of the said affidavit, it appears that the scheme is not prejudicial to the interest of shareholders and public.

6. An observation has been made in paragraph 6 of the Affidavit dated 4th March, 2015 of the Regional Director that the tax implication if any arising out of the scheme is subject to final decision of Income Tax Authorities and that the approval of the scheme by this Court may not deter the Income Tax Authorities to scrutinize the tax return filed by the Transferee company after giving effect to the Scheme. The Petitioner/Transferor Company is bound to comply with all applicable provisions of Income Tax Act, and all tax issues arising out of the said Scheme will be met and answered in accordance with law. The same is acceptable to the Petitioner/Transferor company.

7. As far as the observations made in paragraphs 3(b) of the Affidavit dated 4th March, 2015 of the Regional Director pertaining to the comments/views/remarks on tax aspects if any on the Scheme and the same to be communicated to the Directorate of Regional Director within 15 days from the date of service of notice are concerned, the Counsel appearing for the Petitioner/Transferor Company states that till date, no specific or adverse comments have been received from the 270 concerned Income Tax Authorities with respect to the Scheme though upon service of notice on the concerned Income Tax Authorities through the Petitioner/Transferor Company on 03/09/2014 and 02/02/2015 and also upon issuance of the reminder letter by the Regional Director to the concerned Income Tax Authorities on 26/09/2014 and 05/02/2015 to offer their comments/views/remarks on the tax aspects of the Scheme.

8. Moreover, the Petitioner/Transferor Company undertakes to comply with all statutory requirements, if any, as required under the Companies Act, 1956 and the relevant provisions of the Companies Act, 2013 and the Rules made thereunder. The said undertaking is accepted.

9. In view of the above, the Court is satisfied that the scheme deserves to be sanctioned, subject to the above.

10. Subject to the above, the petition is made absolute in terms of the prayer clauses (a) and (b) of the present petition.

12. Costs of Rs.25,000/- to be paid to the Regional Director and Rs.25,000/- to be paid to the Official Liquidator by the petitioner/Transferor Company within four weeks from the date of receipt of this order.

a) That the Scheme of Amalgamation (the ‘Scheme’) of Sterlite Infra Limited (“Petitioner Company” or “the Amalgamating Company” or “SIL”) with Sesa Sterlite Limited (“the Amalgamated Company” or “SSL”) and their respective shareholders, be sanctioned toy this Hon’ble High Court with effect from April 01, 2014, or such other date as determined in terms of the Scheme so as to be binding on all the shareholders of the Petitioner Company and the Amalgamated Company.

The Company Petition coming on this day before this court for hearing in the presence of Mr. Aravind Datar, Senior counsel for M/s.Ramasamy, Advocate for the Petitioner herein and of Mr.M.Gopikrishnan, ACGSC appearing for Ministry of Corporate Affairs, Southern Region, Chennai, and Mr.P.Atchutha Ramaiya, Official Liquidator, High Court, Madras, and upon reading the Company Petition, and the affidavit of B.K.Bansal, Regional Director, Southern Region, Ministry at Corporate Affairs, Chennai, and the advertisements of the Company Petition having been made in one issue of English Daily viz., “Business Standard”, dated 3/9/2014 and also in one issue of Tamil Daily viz., “Malai Malar” dated 3/9/2014, and this court by order dated 13th July 2014 in C.A.Nos.762 and 763 of 2014, dispensed with the convening, holding and conducting of the meeting of the shareholders for the purpose of considering and if thought fit, approving with or without modification, the scheme of amalgamation of the Amalgamating Company with the transferee company and was also observed that the transferee company need not file separate Company Petition, since it hold 100% share in the petitioner company and the interest of the shareholders of both company and the creditors interest not going to be affected adversely as the net worth of the transferee company in the post amalgamation is more sufficient to meet the entire liabilities and the Amalgamated company has not filed any separate petition under Section 391/394 of the Companies Act, 1956 before the Honourable High Court of Maharashtra. Considering the fact that the Amalgamating company is

wholly owned subsidiary of the Amalgamated company, it is immaterial whether the transferee company has obtained the sanction from the Maharashtra High Court and the Regional Director, Ministry of Company Affairs has tiled his report dated 27th February, 2014 raising objections in paragraph 6 and 7 stating that the objects of the amalgamated company is not in consonance with the objects of the amalgamated company. However, after examining the reply to the objections filed by the petitioner company, a Rejoinder statement has been filed by the Regional Director on 25.03.2015 and found that the reply is satisfactory and further stated that they do not have any objection to the schema of amalgamation and the Official Liquidator has filed his report along with the report of the Chartered Accountant. It is stated that the records maintained in the office of the Registrar of Companies were also caused to be inspected by the said Chartered Accountant. The report of the Chartered Accountant states that the affairs of the Amalgamting company have not been conducted in a manner prejudicial to the interest of its members or to public interest and they do not come across any act of misfeasance by the Directors attracting the previsions of Sections 542 and 543 of the Companies Act, 1956 and in the absence of any materials that the affairs of the Amalgamating company were being conducted in a manner prejudicial to the interest of its members or public interest, and in the absence of any comments that the affairs of the Amalgamating company conducted in a manner prejudicial to its members, the Official Liquidator has filed his report before this Court for orders and this court have perused the Scheme filed in the company petition. The Scheme contains no objectionable feature detrimental either to the

employees of the Amalgamated company. The said scheme is not violative of any statutory provisions. The scheme is fair, just, sound and is not against any public policy or public interest and no proceedings are pending under Sections 231 to 237 of the Companies Act, 1956. All the statutory provisions are complied with and this Court doth hereby sanctioned the scheme of amalgamation annexed herewith with effect from 1/4/2014, and declare the same to be binding on all the shareholders of the petitioner company and the amalgamated company, this court doth further order as follows:

(1) That, the Petitioner Company herein, do file with the Registrar of Companies, Chennai, a certified copy of the order within 30 days from this date.

(2) That, the parties to the Scheme of Amalgamation or any other person interested shall be at liberty to apply to this Court for directions that may be necessary in regard for carrying out this Scheme of Amalgamation annexed herewith.

(3) That the petitioner company viz., Sterlite Infra Limited, shall stand dissolved without winding up.

(4) That the learned Additional Central Government standing counsel appearing on behalf of the Regional Director be and hereby is entitled to a fee of Rs.5,000/- (Rupees five thousand only) from the petitioner company.

This Scheme of Amalgamation is presented under Sections 391 to 394 and other applicable provisions of the Companies Act, 1956 (“the Act”) for amalgamation of Amalgamating Company into and with Amalgamated Company (“the Scheme”). The Scheme also provides for various other matters consequential or otherwise integrally connected herewith.

In this Scheme, unless repugnant with the subject, context or meaning thereof, the following words and expressions shall have the meaning as set out herein below:

Terms and expressions which are used in this Scheme but not defined herein shall, unless repugnant or contrary to the context or meaning thereof, have the same meaning ascribed to them under the Act, the Securities Contract Regulation Act, 1956, the Depositories Act, 1996 and other applicable laws, rules, regulations, bye-laws, as the case may be, including any statutory modification or re-enactment thereof from time to time.

The entire share capital of the Amalgamating Company is held by the Amalgamated Company and its nominees.

Post March 31, 2014, Amalgamating Company has issued 25,00,000 optionally convertible debentures of Rs. 1,000/- each (inclusive of premium) to Amalgamated Company.

The Scheme set out herein in its present form, with or without any modification(s), as may be approved or imposed or directed by the High Court or made as per Clause 3.2 of the Scheme, shall become effective from the Appointed Date but shall be operative from the Effective Date.

On the Scheme becoming effective and with effect from the Appointed Date, the Amalgamated Company shall account for the amalgamation in its books of accounts as under:

“The Authorised Share Capital of the Company is Rs. 51,267,000,000 (Rupees Five Thousand One Hundred Twenty Six crore and Seventy Lacs only) divided into 51,267,000,000 number of (Rupees Five Thousand One Hundred Twenty Six crore and Seventy Lacs) equity shares of Re. 1/- each.

Any matter filed with Registrar of Companies, Regional Director, Income Tax authority or the Central Government under the Companies Act, 1956, before the notification of the corresponding provisions under the Companies Act, 2013 and not fully addressed at that time shall be concluded by the

WITNESS, The Hon’ble Thiru SANJAY KISHAN KAUL, The Chief Justice of Madras High Court, aforesaid this the 25th day of March, 2015.

From 25th September 2008 the Registry is issuing certified copies of the Orders/Judgments/Decree in this format.

The following regulations comprised in these Articles of Association were adopted pursuant to members’ resolution passed by Postal Ballot on 30th March, 2015 in substitution for, and to the entire exclusion of, the earlier regulations comprised in the extant Articles of Association of the Company.

(1) No regulations contained in Table F, in the First Schedule to the Companies Act, 2013, or in the Schedule to any previous Companies Act, shall apply to this company, except in so far as the same are repeated, contained or expressly made applicable in these Articles or by the said Act.

(2) The regulations for the management of the Company and for the observance of the Members thereof and their representatives, shall, subject to the exercise of any statutory powers of the Company with reference to the repeal or alteration of, or deletion of or addition to, its regulations by Resolution, as prescribed or permitted by the Companies Act, 2013, be such as are contained in these Articles.

(b) on all shares (not being fully paid shares) standing registered in the name of a member, for all monies presently payable by him or his estate to the Company:

Provided that the Board may at any time declare any share to be wholly or in part exempt from the provisions of this clause.

(a) may, if it thinks fit, receive from any member willing to advance the same, all or any part of the monies uncalled and unpaid upon any shares held by him; and

(a) increase the share capital by such sum, to be divided into shares of such amount as it thinks expedient;

(a) the holders of stock may transfer the same or any part thereof in the same manner as, and subject to the same Articles under which, the shares from which the stock arose might before the conversion have been transferred, or as near thereto as circumstances admit:

(a) to make such provisions, by the issue of fractional certificates/coupons or by payment in cash or otherwise as it thinks fit, for the case of shares or other securities becoming distributable in fractions; and

A vote given in accordance with the terms of an instrument of proxy shall be valid, notwithstanding the previous death or insanity of the principal or the revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the shares in respect of which the proxy is given:

Provided that no intimation in writing of such death, insanity, revocation or transfer shall have been received by the Company at its office before the commencement of the meeting or adjourned meeting at which the proxy is used.

The Company may exercise the powers conferred on it by the Act with regard to the keeping of a foreign register; and the Board may (subject to the provisions of the Act) make and vary such regulations as it may think fit respecting the keeping of any such register.

The foreign register shall be open for inspection and may be closed, and extracts may be taken therefrom and copies thereof may be required, in the same manner, mutatis mutandis, as is applicable to the register of members.

(2) The seal of the Company shall not be affixed to any instrument except by the authority of a resolution of the Board or of a Committee of the Board authorised by it in that behalf, and except in the presence of at least one director or the manager, if any, or of the secretary or such other person as the Board may appoint for the purpose; and such director or manager or the secretary or other person aforesaid shall sign every instrument to which the seal of the Company is so affixed in their presence.

(2) The Board may retain dividends payable upon shares in respect of which any person is, under the Transmission Clause hereinbefore contained, entitled to become a member, until such person shall become a member in respect of such shares.

The waiver in whole or in part of any dividend on any share by any document (whether or not under seal) shall be effective only if such document is signed by the member (or the person entitled to the share in consequence of the death or bankruptcy of the holder) and delivered to the Company and if or to the extent that the same is accepted as such or acted upon by the Board.

We, the several persons, whose names and addresses are subscribed, are desirous of being formed into a company in pursuance of this articles of association, and we respectively agree to take the number of shares in the capital of the company set against our respective names:—

“RESOLVED THAT pursuant to the provisions of Sections 5, 14 and 15 and all other applicable provisions, if any, of the Companies Act, 2013 (the Act), Schedule I thereto , read with Companies (Incorporation) Rules, 2014 (including any statutory modification(s) or re-enactment thereof, for the time being in force), the new set of Articles of Association pursuant to the provisions of the Act primarily based on the Form of Table F under the Act, be and is hereby approved and adopted as new set of Articles of Association of the Company in place and instead of the existing Articles of Association of the Company.

RESOLVED FURTHER that the Board of Directors and/or Company Secretary be and are hereby authorised to do and perform or cause to be done and performed all such acts, deeds, matters and things, as may be required or deemed necessary or incidental thereto including signing and filing all the e-forms and other documents with any statutory authorities and to settle and finalise all issues that may arise in this regard, without further reference to the shareholders of the Company.”

4) - Acid Orange 2

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