DENA BANK LTD Vs. STATE OF MAHARASTRA

JUDGEMENT

(1.) This is a petition by a transferor-company under section 391 read with section 394 of the Companies Act for sanctioning a scheme of amalgamation under which the property, assets and liabilities of the petitioner-bank, the registered office of which is in Bombay, are to be transferred to a company, named Straw Products Ltd., registered in Orissa. The facts necessary for the purpose of the present judgment are that the issued, subscribed and paid up capital of the petitioner-company is Rs. 1,25,00,000 divided into 2,50,000 shares of Rs. 50 each fully paid. The principal object of the company was to conduct banking business, but the undertaking of the said company was taken over by the Central Government some time in July, 1969, under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, consequent on the nationalisation of certain banks in this country, and the petitioner-company received compensation amounting to Rs. 3.60 crores in respect of the same. As in the case of some of the other banks which were also nationalised, a scheme has now been proposed for the amalgamation of the petitioner-company with another company, viz., Straw Products Ltd., and it is that scheme which has now come up before me for sanction after being approved by 99.06% of the shareholders of the petitioner-company. The scheme of amalgamation is annexed as annexed as annexure "A" to the petition. In clause 8 of the scheme is set out what may be called the value of the package per share of the petitioner-company to be allotted in respect of the shares convertible and non-convertible and debentures of the transferor-company. It is unnecessary to set out the details thereof in this judgment. Suffice it to say, the undisputed position is that the value of the package per share of the petitioner-company computed in the manner stated in clause 8 of the scheme works out to Rs. 145. In clause 10 of the scheme, it is proposed that a sum of Rs. 110 per share be paid to the holder of every equity share who elects to exercise the cash option provided for therein in lieu of the entitlements provided for in clause 8 of the scheme.

(2.) At the meeting of the shareholders, which was held pursuant to the directions of the court on the 15th of November, 1975, which was presided over by an officer of the court who has made his report, 751 shareholders holding 1,68,437 shares of the value of Rs. 84,21,850 voted in favour of the resolution approving the proposal, and 7 shareholders holding 666 shares of the value of Rs. 33,300 voted against it. The votes of 2 shareholders were, however, declared invalid, and the position, therefore, is that the said resolution has been carried by well over the requisite statutory majority. The total number of shareholders of the petitioner-company is 2,802, out of which 472 shareholders elected for the cash option of Rs. 110 per share provided in clause 10 of the scheme. It may also be mentioned that the five financial institutions listed at serial numbers 1, 2, 3, 4, and 5 in schedule No. 1 annexed to the report of the chairman of the meeting which was held on the 15th November, 1975, holding between them 47.92% of the shares of the petitioner-company have supported the scheme. The deputy official liquidator has made a report which complies with the second proviso to section 394(1) of the Companies Act, 1956.

(3.) When this petition for sanctioning the scheme came up for hearing before me, two shareholders were permitted to appear in person and oppose the scheme, and they were permitted to appear in person and oppose the scheme, and they were one A. R. Motishaw and one Dhirajlal Maganlal. Both these persons have filed statements, and were heard by me in support of the same. The said Motishaw raised various contentions which may be summarised as follows :