TaxTMI 
TaxTMI 
1975 (4) TMI 58
X X X X Extracts X X X X
X X X X Extracts X X X X
....king 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. A 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 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....investments of Straw Products Ltd. will also prove unremunerative. (3)The working reports of Straw Products Ltd. placed before the shareholders do not reflect its correct financial position, in view of the fact that the paper industry, which is its main business, is also suffering from recession. (4)The convertible bonds of Straw Products Ltd. which are to be allotted under clause 8 of the scheme would be converted into equity shares at Rs. 20 per share against the present market value of the shares of Straw Products Ltd. of Rs. 17 to 18 per share. (5)The benefit of non-liability to capital gains tax will not be made available to the shareholders of the transferor-bank, but the entire benefit thereof would stand transferred to Straw Products Ltd. and its share holders; and (6)The dissenting shareholders are being paid an unfairly low amount of Rs. 110 per share only, which is Rs. 35 per share lower than the then market value of the package per share, viz., Rs. 145 which those who opt for the scheme will get. It may be mentioned that as far as Dhirajlal Maganlal is concerned, he has stated in clear terms that, according to him, the amalgamation of the transferor-bank ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er-company was quoted in the Bombay Stock Exchange at Rs. 84 and that when the said scheme of amalgamation of the petitioner-company with Straw Products Ltd. was announced, there was a big spurt in the share quotation on the stock exchange and the value of the share of the petitioner-company went up from Rs. 84 to over Rs. 100 which, according to the said Sumantrai Shah, clearly shows that the said scheme of amalgamation has popular approval and the future prospects of Straw Products Ltd. were considered by investors to be very bright. There is also the affidavit of Radhey Shyam Agrawal, the Central Manager of Straw Products Ltd., dated 23rd March, 1976, in paragraphs 3, 4 and 6 of which facts and figures similar to those set out in the affidavit of the said Sumantrai Shah have been affirmed in order to show that the said scheme of amalgamation would be considerably for the benefit of the shareholders of the petitioner-company. In view of these facts and figures, in my opinion, there is no substance in the first five contentions of the said Motishaw, and I do not accept the same. That leaves for my consideration only the sixth and the last contention in which, in my opinion, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reholders were paid over 18 per cent, and in the case of the Bank of Baroda Ltd., they were paid a little over 12 per cent, less than the value of the package per share. It is true that since the dissenting shareholders in schemes get spot cash which these days can be utilised in the investments at a high rate of return they must get substantially less than the value of the package per share which those who accept the schemes would get. The amount which the dissenting shareholders get per share must, however, have some correlation to what those who accept the scheme would get. In the present case, it is no doubt true that the amount of Rs. 110 per share which the dissentients would get under the scheme before me is well over of what was the market value of the share before the scheme was announced, but that, in my opinion, cannot be the sole criterion. Dhirajlal Maganlal, who is a leading share-broker of Bombay, has stated before me that the dissenting shareholders should, in his opinion, get only about 10 per cent, less than what those who accept the scheme would get by way of the value of the package per share. As against that the learned counsel who appeared both for the petitio....