CHALLA RAJENDRA PRASAD Vs. ASIAN COFFEE LIMITED SECUNDERABAD

JUDGEMENT

(1.) This application is filed in Company Petition No.1999 of 1998. The said Company Petition is filed by Asian Coffee Limited (ACL) and three other transferor Companies viz., Coffee Lands Limited (CLL), Charagni Limited (CL) and Veerarajcndra Estates Limited (VEL) (hereinafter referred to as "Transferor Companies"), for the approval of the scheme of amalgamation with Consolidated Coffee Limited (Conscqffee) (hereinafter referred to as Transferee Company). A counter is filed by one of the share-holders of Asian Coffee Limited (ACL) by name Mr. Challa Rajendra Prasad (hereinafter referred to "the applicant") objecting for such amalgamation. He has also filed the present Company Application No.6 of 1999 to direct the ACL to furnish the details of the valuation report and also the calculations as to how they have arrived at the exchange ratio, so as to enable the applicant to file a reply to the counter filed by the ACL. In the affidavit filed in support of the application, it is contended that he has already filed Company Application. No.674 of 1998 questioning the exchange ratio fixed by the ACL and the ACL has not furnished the details regarding the mathematical calculation as to how the value of the share is fixed for the purpose of amalgamation with the Conscoffee, transferee Company, and this material is necessary for filing a detailed reply to the counter filed by the ACL. Regarding his application in CA 674 of 1998, a detailed counter is filed by ACL denying the allegations made by the applicant stating that the present application is not maintainable and it is filed only with an intention to delay the approval of the scheme of amalgamation. It is also stated that the ACL has supplied the valuation report and this valuation report was explained to the share holders at the time of meeting. It is further submitted that the value of the shares has been fixed on the basis of the valuations done by M/s. N.M. Raiji and Company and M/s. A.F. Ferguson & Co., which has been accepted by ANZ Grindlays Bank Ltd. It is also stated that the valuer is an expert who considered the value of the shares by applying various methods It is further stated that in that process, the potentialities of the business of the Company, future outlook of the business of the Company and other various factors were considered by the valuer. It is also stated that the applicant being a competitor of the ACL, he is not a bona fide share holder of the Company. It is further stated that by asking for arithmetical calculations of the share exchange ratio, the applicant, who is a competitor, seems to extract vital and sensitive information about the future plans, prospects and workings of the Company and the publication of such information would help him as a competitor of the Company and as such the same cannot be furnished to the applicant and that the applicant is abusing the process of the Court for the purpose of his own business and advantage and if the application is ordered as prayed for, it would cause irreparable injury to the ACL. On the basis of these allegations, the ACL prays dismissal of the application.

(2.) By filing the reply affidavit, it is stated that as a share holder, the applicant is entitled to know the details as to how the exchange ratio is arrived at and how the exchange ratio has been fixed. The applicant lias requested the ACL to furnish the valuation report prepared by the Chartered Accountants, and a letter also was given to the Chairman appointed by this Court, who conducted the meeting of the share-holders on 23-10-1998 to furnish the same, but the ACL has failed to give the basis of the valuation of the exchange ratio. It is further stated that the valuation report submitted by M/s. N.M. Raiji and Company and M/s. A.M. Ferguson & Co., does not furnish the details as to how they have arrived at the exchange ratio. The applicant stated that he and his relatives are holding in all 61,364 equity shares of Rs.10.00 each and as shareholders, they are entitled for the details of calculation of the exchange ratio. He further stated; "I further deny that even though, I am in the same line of business I am not a competitor of the respondent Company", and the exchange ratio does not contain any sensitive information since the same has been worked out on the basis of the accounts of the transferors and the transferee Companies and as such the said information cannot be withhold from the share-holders, who are entitled for the same. He further stated that such information is necessary to file reply to the counter and if such information is not furnished, he will be put to irreparable loss and accordingly he prayed that his Company Application may be ordered.

(3.) The learned Counsel appearing for the applicant as well as the ACL urged their respective contentions in support of their stand taken in the pleadings by seeking assistance from certain provisions of the Companies Act and also some of the judgments of the High Courts and the Supreme Court, which I will be considering shortly.