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United Bank of India Ltd. Vs. United India Credit and Development Company Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberCompany Petition No. 261 of 1970 (Company Application No. 256 of 1972)
Judge
Reported in[1977]47CompCas689(Cal)
ActsCompanies Act, 1956 - Sections 53, 53(3), 173, 372, 372(13), 372(14), 391, 392, 393 and 394; ;Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 - Section 6; ;Banking Regulation Act, 1949; ;Enemy Properties Act, 1968 - Sections 2, 7(3) and 8(1)
AppellantUnited Bank of India Ltd.
RespondentUnited India Credit and Development Company Ltd.
Cases ReferredHari Krishna Lohia v. Hoolungooree Tea Co. Ltd.
Excerpt:
- salil k. roy chowdhury, j.1. this is an application under sections 391, 392, 393 and 394 of the companies act, 1956, for sanction of a scheme of amalgamation and other consequential orders and directions.2. the facts of the case shortly are : that the petitioner, united bank of india ltd. (hereinafter referred to as the ' petitioner-bank ') was incorporated in the year 1918 and carried on banking business in the eastern region of india. three other banking companies, comilla banking corporation ltd., comilla union bank ltd., and hooghly bank ltd. were amalgamated and/or merged with the pstitioner-bank with effect from 18th december, 1950, under the provisions of section 44a of the banking companies act, 1949. the registered office of the petitioner-bank is situate at no. 24, park street,.....
Judgment:

Salil K. Roy Chowdhury, J.

1. This is an application under Sections 391, 392, 393 and 394 of the Companies Act, 1956, for sanction of a scheme of amalgamation and other consequential orders and directions.

2. The facts of the case shortly are : That the petitioner, United Bank of India Ltd. (hereinafter referred to as the ' petitioner-bank ') was incorporated in the year 1918 and carried on banking business in the Eastern region of India. Three other banking companies, Comilla Banking Corporation Ltd., Comilla Union Bank Ltd., and Hooghly Bank Ltd. were amalgamated and/or merged with the pstitioner-bank with effect from 18th December, 1950, under the provisions of Section 44A of the Banking Companies Act, 1949. The registered office of the petitioner-bank is situate at No. 24, Park Street, Calcutta. The authorised capital of the petitioner-bank is Rs. 4,00,00,000 divided into 5,00,000 ordinary shares of Rs. 20 each and 30,00,000 shares of Rs. 10 each. The amount of capital of the petitioner-bank paid up or credited as paid up is Rs. 2,68,77,119.

3. The objects of the petitioner-bank for which it was incorporated as appears from the memorandum of association of the company was mainly for carrying on banking business. The petitioner-bank commenced its business since its incorporation and was carrying on banking business until 18th of July, 1969, when the undertaking of the petitioner-bank was taken over under the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.

4. The petitioner No. 2, United India Credit and Development Company Ltd., (hereinafter referred to as the ' petitioner-company ') was incorporated on the 28th July, 1970, under the Companies Act, 1956. The registered office of the petitioner-company is situate at No. 41, Free School Street, Calcutta. The authorised capital of the petitioner-company is Rs. 5,00,000 divided into 1,00,000 equity shares of Rs. 5 each. The amount of capital of the petitioner-company paid up or credited as paid up is Rs. 6,6000.

5. The objects of the petitioner-company for which it has been incorporated, as appears from the memorandum of association of the petitioner-company, are, inter alia, to carry on the business of merchant-cum-development banking in all its aspects provided that the petitioner-company shall not carry on the business of banking as defined in the Banking Regulation Act, 1949, and also to carry on business of assisting industrial enterprises in general, etc. The memorandum of association of both the said companies, viz., the petitioner-bank and the petitioner-company, are annexed to the petition being annexures A & B thereof. It is alleged that the petitioner-company intends to carry on business of preparing schemes for diversification by existing traditional industries such as tea, sugar and jute industries, such schemes being financed by funds raised against mortgage of existing assets and issue of capital to be raised by the petitioner-company from the market ; studying cases of various companies in the Eastern region which are closed and not functioning well, etc., as stated in paragraph 11 of the petition. It is alleged that the directors of both the companies consider that it is in the best interest of the petitioner-bank and the petitioner-company and their respective shareholders that the petitioner-bank be merged or amalgamated with the petitioner-company and that the petitioner-bank be dissolved without winding up under Sections 391 and 394 of the Companies Act, 1956. It is alleged that proposed amalgamation has become necessary and will be beneficial for, inter alia, the following reasons :

(a) petitioner-bank was one of the foremost banking concerns of the Eastern region in India and banking business being nationalised with effect from 10th of July, 1969, under the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, the undertaking of the petitioner-bank became vested in the corresponding new bank, viz., United Bank of India.

(b) Under the said Acquisition Act of 1970 the petitioner-bank is entitled to a compensation of Rs. 4,20,00,000. The petitioner-bank having applied for payment of compensation in 5 1/2% Banks (Acquisition and Transfer) Compensation Bonds, 1999, payment has been made to the petitioner-bank by the Government of India. The entire undertaking of the petitioner-bank including all assets, rights, powers, authorities and privileges and all property movable and immovable, cash balances, reserve funds, investments and all other rights and interests in or arising out of such property as were immediately before the commencement of the said Banking Companies (Acquisition ani Transfer of Undertakings) Act, 1970, under the ownership, possession, power or control of the petitioner-bank in relation to the undertaking, whether within or without India and all books of accounts, registers and records and all other documents of whatever nature relating thereto including all borrowings, liabilities and obligations have been taken over and/or acquired under the said Acquisition Act.

(c) In the circumstances, the petitioner-bank started new books on and from July 19, 1969, and has prepared its balance-sheets for the years ended 31st December, 1969, 31st December, 1970, and 31st December, 1971. The said balance-sheets and profit and loss accounts for the said years have been approved and adopted by the shareholders of the petitioner-bank in its annual meetings.

(d) The petitioner-bank by reason of the nationalisation of the banking business has either to diversify its business and change its name to carry on other business or to send itself in voluntary liquidation and arrange for distribution of its assets in specie among its contributories.

(e) The board of directors of the petitioner-bank are alleged to have carefully considered the situation and are of the opinion that if the petitioner No. 1 is amalgamated or merged with the petitioner No. 2 it will be benefit for the petitioner No. 1 and its shareholders. The said compensation money can be utilised for commencing business of merchant-cum-development banking business.

(f) The shareholders of the petitioner-bank as shareholders of the petitioner-company in the event of the amalgamation coming through would get adequate returns for their investments and be provided with the continuous source of income instead of just receiving lump sum payment in the form of Government securities out of the said compensation money.

(g) Although the amalgamated unit or the petitioner-company will not be carrying on commercial banking business, there is ample scope and prospect of carrying on business as financial institutions and the large sum of money available by way of compensation can be properly utilised. The amalgamated unit if it comes to an existence will primarily function as a merchant-cum-development bank.

(h) In view of the competitive conditions and recession prevailing in the country, the amalgamated unit will be in a more advantageous position to commence and continue its business and the combined resources can be utilised more profitably.

(i) The proposed amalgamation will bring about considerable economies in secretarial expenses and the same would enable the registered office to deal with one company instead of two companies. The proposed amalgamation will mean that lesser number of returns will have to be filed and lesser clerical work will have to be done. The said amalgamation will reduce overhead expenses, clerical expenses, etc., to a considerable extent, and, lastly,

(j) The proposed amalgamation is beneficial and would enable the proposed business to be carried on more efficiently and conveniently.

6. The said reasons are set out in paragraph 13 of the petition.

7. Therefore, it is alleged that the scheme of amalgamation has accordingly been proposed in which the existing assets and liabilities of the petitioner-bank will be transferred to and/or vested in and/or acquired by the petitioner company. The initially proposed scheme of amalgamation, a copy of which is annexed to the petition and marked with the letter ' C', provided, inter alia :

(I)The transferee-company shall take over the assets and liabilities of the transferor-company as per the balance-sheet of the transferor-company as at 31st of December, 1969. The reserves and surplus as shown in the balance-sheet of the transferor-company as at 31st of December, 1969, amounting to Rs. 1,51,22,881 is proposed to be reallocated as specified below prior to the scheme of amalgamation coming up for consideration by the shareholders :

Rs.

(i)To dividend fund (1969)...20,10,889.50(ii)To deferred annual distribution reserve for payment to shareholders in proportion to the share held for the years 1970-1975 in six equal instalments..60,32,668.50(iii)To general reserve, subject to payment of capital gains tax or any other tax the receipt of compensation may attract.70,79,323.00

Such reallocation as aforesaid being approved by the shareholders of the transferor-company the same shall form part of this scheme.

(2) (i) The transferee-company shall allot to the shareholders of the transferor-company for every Rs. 10 paid up in the capital of the transferor company :

(a) One fully paid up equity share of Rs. 5, and

(b) One fully subscribed debenture of Rs. 5 carrying interest from 1st January, 1970, at such rate as the Central Government may approve but not exceeding 9% per annum payable annually.

(ii) As regards such shares of the transferor-company as are paid up to the extent of Rs. 9 only and carrying a liability for the balance sum of Re. 1 as calls-in-arrear the transferee-company shall allot to the holders of each such share of the transferor-company :

(a) One equity share of Rs. 5 credited as paid-up to the extent of Rs. 4 and carrying a liability for the balance sum of Re. 1 as call in arrear, and

(b) One fully subscribed debenture of Rs. 5 carrying interest as aforesaid.

(iii) The transferee-company shall issue fully subscribed debentures of the value of Rs. 2.25 each to the shareholders of the transferor-company carrying interest from 1st January, 1970, at such rate as the Central Government may approve but not exceeding 4 1/2% per annum payable annually in lieu of the claim of the shareholders of the transferor-company for payments out of the deferred annual distribution reserve mentioned above. The debentures will rank in priority over the debentures of Rs. 5 mentioned above and 1/6th of the principal sum of Rs. 2.25 secured by each such debenture will be repaid by the transferee-company together with interest due thereon every year commencing from 1970.

(iv) All the aforesaid debentures will rank next to the loans, deposits and other liabilities of the transferee-company.

(3) The debentures of Rs. 5 each referred to above shall be convertible into fully paid up equity shares of Rs. 5 each of the transferee-company at the option of the holders of such debentures to be exercised by them after the 12th year from the date of the issue of the said debentures and before the expiry of the 15th year from the date of such issue and upon their complying with the conditions mentioned in the said debentures. Such debentures or so much thereof as may not have been converted into shares as aforesaid will be redeemed by the transferee-company on payment of the principal moneys and interest thereon then outstanding on the 1st day of the 30th year from the date of issue of the said debentures.

(4) For the purpose of giving effect to the provisions of Clause 2 above, the transferee-company will increase its authorised share capital and obtain the necessary sanction of the Controller of Capital Issues as also of the Central Government. Allotment of the shares and debentures as mentioned above will be made by the transferee-company within six months from the date of transfer without any further application from the shareholders of the transferor-company.

8. The basis of amalgamation is that the shareholders of the petitioner No. 1 will get for every share of Rs. 10 each held by them in the capital of the petitioner No. 1 :--

I. One fully paid-up share of Rs. 5 in the capital of the petitioner No. 2, and

II. One unsecured debenture of Rs. 5 carrying interest at such rate as the Central Government may approve but not exceeding 9% per annum payable annually. These debentures are convertible to equity shares of the petitioner No. 1 at the option of the debenture-holders after the 12th year and before 15 years from the date of issue of debentures and such of the said debentures as might not be so converted into equity shares of the petitioner No. 1 will be redeemed by the petitioner No. 2 on the 1st date of the 30th year after the date of issue of the said debentures. Further, the said debentures will be transferable free from any equity between the transferee and the person to whom the same shall be issued and will rank next to the loan deposits and other liabilities of the transferee. I have set out the statements in paragraph 14 of the said petition.

9. It is alleged that as the directors and auditors of both the petitioner-bank and the petitioner-company (sic) that the basis of exchange is reasonable and fair, and the proposed scheme of amalgamation is fair, reasonable and practicable. The directors of the petitioner-bank's shareholding have been set out in paragraph 17 of the petition and the directors of the petitioner-company's shareholding have been set out in paragraph 18. It appears that Shri K.C. Das is a common director of both the companies. It is also alleged that the petitioner-company has acquired 2 lakhs ordinary shares of Rs. 10 each paid-up in the share capital of the petitioner-bank and such shares would stand cancelled upon amalgamation of the said two companies. The petitioner-bank and the petitioner-company have not issued any debentures. The said scheme of amalgamation is a scheme between the petitioner-bank and the petitioner-company and their respective members. It is alleged that the assets of the petitioner-bank and the petitioner-company are more than sufficient to meet the liabilities of the said two companies and the scheme will not affect the rights or interests of the creditors of the petitioner-companies. In fact, the petitioner-companies do not have any creditors at the present moment. The latest audited balance-sheet and profit and loss account of the petitioner has been annexed to the petition and marked with the letter ' D'. It is alleged that the petitioner-company was incorporated only on the 28th of July, 1970, and it has issued 11,200 equity shares of Rs. 5 each and it has not yet acquired any fixed assets and has no outstanding liabilities. A copy of the latest balance-sheet and profit and loss account of the petitioner-company has been annexed to the petition and marked with the letter ' e '. There is the usual averment that no investigation proceedings are pending against the petitioners under the provisions of Sections 235 to 251 of the Companies Act, 1956, or any other provisions thereof. It is further alleged that the proposed amalgamation is not within the mischief of the Monopolies and Restrictive Trade Practices Act, 1969.

10. By an order made on the 28th of August, 1970, in the said Company Application No. 256 of 1970, meeting of the shareholders of the petitioner-bank was directed to be held on 29th September, 1970, under the chairman as provided in the said order. The said order also provided for a separate meeting of the shareholders of the petitioner-company to be held on 29th September, 1970, under the chairman as provided in the said order. It is alleged that notices of the said meetings were sent individually to each shareholder concerned as required by the said order together with the copy of the scheme and the statement required under Section 393 of the Companies Act, 1956, and the proxy form. Notices of the said meetings were duly advertised in the newspapers as directed by the said order dated the 28th of August, 1970. It is alleged that the meeting on the 29th of September, 1970, was duly held but a pandemonium was created at the said meeting and as such the same was adjourned by the chairman without transacting any business thereat. Copies of the reports of the said meeting by the chairman, appointed under the said order dated the 28th of August, 1970, are annexed to the petition being annexures I and K. It appears that the petitioner-bank on the 17th of October, 1970, caused an announcement to be published in The Statesman and other newspapers, inter alia, to the effect that certain modifications will be proposed at the meeting of the shareholders of the petitioner-bank to be held for considering the scheme of amalgamation. The proposed modification also made provision with regard to provision being made for payment to the dissentient shareholders and it was also announced that, in the event of the scheme being approved, the proposed board of directors of the petitioner-company would include eminent persons named therein. Thereafter, directions were sought from the court for holding the said meeting and/or fresh meeting of the companies and ultimately the matter came up before me and by an order dated the 7th of January, 1972, the adjourned meeting of the said petitioner-bank was directed to be held on 30th of March, 1972. It is alleged that the notices of the said meeting which was to be held on the 30th of March, 1972, pursuant to the order dated the 7th of January, 1972, were sent individualy to each shareholder concerned and were also advertised in The Statesman, Jugantar and Daimk Viswamitra. The meetings of the companies were held on the 30th of March, 1972, but the same were adjourned till 8th of May, 1972, and, thereafter, on the 8th of May, 1972, the adjourned meetings were held and it is alleged that the said scheme of amalgamation was passed by the requisite majority with certain modification. The chairman of the meetings of the said two companies have filed their reports and are marked as O and Q to the petition. Thereafter, on the 23rd of June, 1972, the present application for confirmation of the said scheme of amalgamation has been made and after directions being given for filing of affidavits the matter has come up before me for disposal.

11. Mr. R. Chowdhury with Mr. S. C. Sen and Mr. S. B. Mukherjee appeared for the petitioners. Mr. S. B. Mukherjee who started the arguments on behalf of the petitioners submitted that the opposing shareholders of the petitioner-bank (sic) ground of challenge of the said scheme of amalgamation mainly are :

(1) no notice of the said meeting has been served on the Pakistani shareholders ;

(2) the petitioner No. 2, that is, the petitioner-company, is a worthless company ;

(3) the shareholders of the petitioner-bank are now entitled to the compensation money payable under the said Banking Company Acquisition Act, 1970 ;

(4) the ratio of exchange is unfair ;

(5) the explanatory statements under Section 393 of the Companies Act, 1956, are tricky and untrue ;

(6) the petitioner-bank has no power under its memorandum of association to amalgamate with other companies ; and lastly

(7) the application is not bona fide.

12. Regarding the question raised by the opposing shareholders as to the notice to the Pakistani shareholders which is alleged by them to be about 25% of the shareholding of the petitioner-bank, Mr. Mukherjee submitted that notices of the meetings were duly served on the shareholders-of the petitioner-bank at their respective addresses when the meeting was originally convened to be held on the 28th of September, 1970, and he referred to the affidavit of service and certificate of posting filed in court in respect of such service. Mr. Mukherjee, thereafter, submitted that correspondence was exchanged between the Custodian of Enemy Property and the petitioner-bank by which the Custodian insisted on notice being served on him and dividend being paid to him in respect of the shares held by Pakistani nationals inasmuch as the shares have been vested in the Custodian of Enemy Property under the Enemy Properties Act of 1968, It is contended by Mr. Mukherjee that when, the adjourned meeting was called notices were sent to the Custodian of Enemy Property in respect of shares held by the Pakistani nationals now in Bangladesh. Mr. Mukherjee referred to the provisions of the Enemy Properties Act, 1968, Sections 5, 7, 8, 10, 12, 13, 20 and 22, and he submitted, if necessary, that the petitioner may be given liberty to file affidavit to put the said facts on record. He further submitted that, according to the petitioner-bank, only about 3.7% of the shareholders of the petitioner-bank are Bangaladesh nationals whereas according to the opposing group of shareholders it is about 25% of the shareholding of the petitioner-bank. Mr. Mukherjee also referred to Section 53 of the Companies Act, 1956, wherein the mode of service of documents on members of a company has been provided. He submitted that, according to the said provisions, if a member has no registered address in India, such notice may be served if any address within India has been supplied by such member. He referred to Sub-section (3) of Section 53 of the Companies Act, 1956, which provides that a document advertised in the newspaper in the neighbourhood of the registered office of the company shall be deemed to be due service, on the date on which such advertisement appears, on every shareholder of the company who have not registered address in India and has not supplied any address in India. In that view of the matter Mr. Mukherjee rightly submitted that the decision cited by Mr. Prabir Sen and Mr. Bachawat on the question of service to the Pakistani nationals has no application in the facts of this case.

13. Regarding the question that the petitioner-company, being the petitioner No. 2, is a worthless company, Mr. Mukherjee submitted that the directors of the petitioner-company are not permanent directors and a new board will be elected after the amalgamation takes place by the shareholders of the petitioner-bank who will become the shareholders of the petitioner-company if the scheme of amalgamation is sanctioned. There is no question of producing the letters of consent of the proposed directors of the petitioner-company ; if necessary, such letters of consent can be produced as Mr. Mukherjee alleged. Mr. Mukherjee submitted that there are various procedures of amalgamation : one of them is by the method which is sought to be adopted in this case, that is, by floating a new company and amalgamating the old company with the new company. Mr. Mukherjee submitted that the procedure adopted in this case has a good deal of justification, because, by following such procedure, several objects can be attained at once, viz, (a) alteration of name, (b) alteration of memorandum and articles, and (c) alteration of capital structure. Further, Mr. Mukherjee submitted that if the same thing can be done by several methods, the fact that the parties have chosen a particular method is no reason why it should be construed as a factor against the petitioners. There is no secret about the fact that the petitioner-company is only a new company which has been incorporated solely for the purpose of taking over the shares of the petitioner-bank under the said scheme of amalgamation. Mr. Mukherjee further referred to In re Mackinnon Mackenzie & Co. Pvt. Ltd. [1967] 37 Comp Cas 516 (Cal) for the proposition that the court should not speculate about the future working of the amalgamated company but only see whether it is feasible and practicable. He further submitted that for the proposed scheme of amalgamation, no sanction of the Central Government under the Capital Issues Control Act as provided under Section 81(3) of the Companies Act, 1956, is required. He referred to Form No. 35 at page 1086 of A. Ramaiya, A Guide to The Companies Act, sixth edition. Mr. Mukherjee also contended that the scheme may be sanctioned by the court subject to conditions. As such, the question of obtaining the sanction of the Central Government at this stage or negotiating for such sanction does not arise because if the scheme is not sanctioned it may not be necessary to issue further capital by the petitioner-company. Similarly, Mr. Mukherjee rightly submitted that the question of obtaining sanction under Section 81(3) of the Companies Act, 1956, with regard to the issue of debentures is premature unless and until the scheme has been sanctioned. Mr. Mukherjee referred to an order by S.C. Ghose J. in the Company Petition No. 343 of 1968 connected with Company Application No. 286 of 1968 (Associated Electrical Industries (India) Ltd. and the General Electric Company of India Ltd.) decided on the 7th of February, 1969. He also submitted that for the said scheme of amalgamation no sanction of the Reserve Bank is required and as such the question of obtaining the sanction of the Reserve Bank does not arise as the business intended to be started is merchant banking business which does not come under the purview of the Reserve Bank sanction. It is further alleged that the petitioner No. 2, that is, the petitioner-company has not obtained its certificate of commencement of business which Mr. Mukherjee submitted is not correct as the certificate of commencement of business was obtained on the 28th of August, 1970, under Section 49(3) of the Companies Act, 1956. The said certificate is conclusive evidence and can be produced if necessary. Regarding the contention that the petitioner No. 2, that is, the petitioner-company, in purchasing shares of the petitioner-bank of the face value of Rs. 25 lakhs has violated the provisions of Section 372 of the Companies Act, 1956, Mr. Mukherjee submitted that the said provision of Section 372 does not apply in the instant case and the purchase of shares of Rs. 2 lakhs by the petitioner No. 2 of petitioner No. 1 is not within the mischief of Section 372 and in any event it is within the exception mentioned in Section 372(13) and (14) of the Companies Act, 1956. In short, Mr. Mukherjee submitted that the petitioner No. 2, that is, the petitioner-company, with whom the petitioner-bank is sought to be amalgamated being a new company floated for the said purpose of taking over the petitioner-bank, cannot be said to be a worthless company because it will depend entirely on the future working of the company after it is amalgamated--an entirely speculative aspect which cannot be gone into by the court at this stage. Regarding the question that the shareholders of the petitioner-bank are entitled to the compensation money as the banking business which was the only business of the petitioner-bank before it was acquired by the Central Government under the said Banking Company Acquisition Act, 1970 (Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970) and there is no other business which the petitioner-bank used to carry on before such acquisition, Mr. Mukherjee rightly submitted that by such acquisition of the undertaking of the petitioner-bank, the company, that is, the petitioner No. 1, did not cease to exist but it is very much in existence under the Companies Act, 1956, being entitled to receive the compensation money in terms of the said Banking Company Acquisition Act, 1970. Mr. Mukherjee referred to the provisions of the said Banking Company Acquisition Act, 1970, and submitted that the corporate existence of the petitioner-bank is clearly maintained and it is only the undertaking, that is, the banking business together with all its assets and liabilities of the petitioner-bank, has been taken over on payment of compensation to the petitioner-bank as a company. He referred to the decision in the matter of Central Bank of India and Tata Locomotive Co. reported in [1972] 42 Comp Cas 72 (Bom). As such, Mr. Mukherjee submitted rightly that there is no substance in such contention that the shareholders are entitled to the compensation money paid to the petitioner-bank under the said Banking Company Acquisition Act, 1970. Had that been so, Mr. Mukherjee rightly contended then it would not have been paid to the petitioner-bank but would have been directed to be paid to the shareholders individually under the Banking Company Acquisition Act, 1970, itself. It is only on the winding-up of the petitioner-bank by sending it into voluntary liquidation that the shareholders can have any right to the compensation money pro rata according to the provisions of the Companies Act, 1956, and rules made thereunder in respect of voluntary winding-up of the companies. Mr. Mukherjee, therefore, rightly submitted that there is no substance in the contention of the opposing shareholders that they are entitled to the compensation money and the company is existing only for the purpose of the said distribution of the compensation money of the shares to them.

14. Regarding the question of the ratio of exchange being unfair Mr. Mukherjee submitted that shareholders of the petitioner-bank would be allotted one ordinary share of Rs. 5 fully paid up or Rs. 4 each partly paid up, as the case may be, and one debenture of Rs. 5 which will carry interest. The debenture of Rs. 5 will ensure interest being paid every year and if the amalgamated company does good business, then there is no reason why dividend should not also be paid on the shares. He rightly submitted that it is not possible in any event to demonstrate the future working of a company in a court of law. He referred to In re Mackinnon Mackenzie & Co. Pvt. Ltd.'s case [1967] 37 Comp Cas 516 (Cal), again on this aspect of the matter. He further submitted that the idea that unless a company has vast resources, it cannot act as a financial institution is misleading and unreal and is not the proper approach to the problem. He submitted that apart from financing, the merchant-banking organisations render various types of advice to their constituents which are very paying propositions. He further submitted that, in any event, the charge that surplus funds will evaporate is absolutely baseless because, according to Mr. Mukherjee, the surplus funds would stand transferred to the transferee-company. The shareholders of the petitioner-bank will become shareholders of the new company and they will be the persons who will elect the directors to conduct the business of the new company to be formed after such scheme of amalgamation is sanctioned. Mr. Mukherjee submitted that the terms ' the debentures will rank after the loans of the transferee-company' obviously means the existing loans as on the date of the sanction of the scheme or the court can modify the scheme to specify the loans as on a particular date and to this the petitioner-companies have no objection. Mr, Mukherjee submitted that assets and liabilities of one company have been transferred to the corresponding new company and the other company is still in its nascent stage and has yet to commence business on a large scale. Therefore, according to Mr. Mukherjee, the normal tests applied in arriving at the ratio of exchange of two existing companies of the same stature or two running companies cannot be applied in the instant case. Mr. Mukherjee submitted in answer to the allegation that no provision for payment to the dissentient shareholders has been made in the scheme that the petitioner-company has no objection to such provision being made with regard to the payment made to the dissentient shareholders. Mr. Mukherjee submitted that in fact this offer was made right at the beginning that the court should fix a date on which a deadline should be drawn for the purpose of finding out who are the real dissentient shareholders and they may be directed to sell their shares at a price to be fixed by an independent valuer or at a price to be mutually agreed upon. Therefore, Mr. Mukherjee rightly submitted that there is no question of any unfair ratio of exchange of the shares of the said company as it is entirely a question of future working of the petitioner-company which has been formed for the purpose of taking over the shares of the petitioner bank under the said scheme of amalgamation.

15. Regarding the question of explanatory statement under Section 393 of the Companies Act it has not disclosed material facts and in particular the interest of Mr. S. N. Sen ; as such the explanatory statement being tricky and misleading, Mr. Mukherjee submitted that the explanatory statement under Section 393 has been settled by the Assistant Registrar o Companies of this court. He submitted that all material facts have been placed in the explanatory statement, that is to say, facts material for the purpose of considering the scheme and which are likely to affect the scheme has been stated. The principles applicable to an explanatory statement under Section 173 of the Companies Act, 1956, are not the same as that applicable to an explanatory statement under Section 393 of the Companies Act, 1956, is the submission of Mr. Mukherjee. He further submitted that the interest of all the directors also has been disclosed and in any event it is not shown as to any of the shareholders who have been misled or prejudiced. Further, if the fact relating to the pandemonium created in the first meeting has been stated in the explanatory statement, that would have been a factor deterring the shareholders from attending the meeting. Mr. Mukherjee also contended that one who is aware of the business to be transacted at the meeting and is aware of the material facts cannot complain about the notice or the explanatory statement. For the said proposition he referred to the decision in Parashuram Detarm Shamdasani v. Tata Industrial Bank Ltd. AIR 1928 PC 180, head-note, b. Therefore, Mr. Mukherjee submitted that there is no substance in the said contention that the explanatory statement is tricky and misleading and not true.

16. Mr. Mukherjee, therefore, submitted that the scheme should be sanctioned as all the requirements of the statute have been complied with and it has been sanctioned and approved by requisite majority of the shareholders of the petitioner and the court should grant the relief as asked for and sanction the scheme with or without modification as the court thinks fit and proper.

17. Mr. R. C. Deb with Mr. B. K. Bachawat and Mr. H. K. Mitter appearing for one of the respondents opposing the application for sanction of the scheme contended that the purchase of shares on deferred payment basis cannot be sanctioned by the court. Mr. Deb submitted that the transferee-company is a mushroom company having no business experience, capacity or standing and the present application has been made with lack of candour and suppression of material facts as no information to shareholders opposing about the nature of the business and the standing of the transferee-company and the application is not made in good faith. Mr. Deb submitted that about 25% of the shareholders are Pakistanis, now Bangladesh citizens, as alleged in paragraph 4 of the affidavit-in-opposition of Rajaram Sharma and others and para. 107 of affidavit-in-reply affirmed by Mr. K. C. Das on behalf of the petitioner. Mr. Deb submitted that the notice of the Custodian of Enemy Properties has not been stated either in the petition or in the affidavit-in-reply and, as such, such submission should not be taken into account. Thereafter, Mr. Deb submitted that only 17% to 25% of the shareholders of the petitioner-bank have voted in the meeting. For that purpose he analysed the shareholding and the number of shareholders casting their votes at the meeting. Mr. Deb also submitted that the Custodian of the Enemy Properties has not been served with the notice of this application ; at least nothing has been stated in the petition. I may record here that Mr. Mukherjee appearing for the petitioner produced documents to show that in fact notice has been served on the Custodian of the Enemy Properties representing the Bangladesh shareholders and submitted that if necessary a supplementary affidavit incorporating the said documents may be filed if required by court. Thereafter, Mr. Bachawat continued and submitted that the scheme is unfair and should not be sanctioned. He pointed out that the memorandum of association of the petitioner No. 2 makes it clear that it did not carry on any business and it is a new mushroom company and as such no intelligent and honest shareholders would approve the said scheme of amalgamation of the said petitioner-company. He submitted that the scheme is highly speculative and the prospects of the business of the petitioner-company is dubious. He referred to Alabama's case [1891] 1 Ch D 213 (CA), In re Hindustan General Electric Corporation [1959] 29 Comp Cas 46 (Cal), In the matter of Patiala Starch and Chemical Works Ltd. [1958] 28 Comp Cas 111 (Punj) and In re Sidhpur Mills Co. Ltd. : AIR1962Guj305 . Relying on those decisions he submitted that applying the principles deduced from the said decisions to the facts of this case, the scheme cannot he approved by the court and should be rejected. Mr. Bacha-wat referred to paragraph 13 of Rajaram Sharma's affidavit-in-opposition and also paragraphs 24, 25 and 32 of the petition and affidavit-in-opposition of Rajaram, paragraphs 4, 7,14,18, 19 and affidavit-in-reply, paragraph 56(1) and paragraph 134 in support of his contention. Mr. Bachawat thereafter submitted that the ratio of exchange is not fair and he referred to paragraph 14 of the petition and Rajaram Sharma's affidavit-in-opposition, paragraphs 23 to 25, para. 29(b), 34 and 47. He also referred once again to the passage at pages 239 and 247 of Lindley J., in Alabama's case [1891] 1 Ch D 213 (CA) on the question, to decide as to what is fair and reasonable. Mr. Bachawat has drawn my attention once again to the said decision in Patiala Starch & Chemical Works, In re [1958] 28 Comp Cas 111 (Punj), Palmer's'Company Law, 21st edition, page 704, Section 81 of the Companies Act, 1956, and statement required to be made under Section 393 of the Companies Act, 1956. He also submitted that the said scheme of amalgamation is subject to sanction of the Capital Controller under the Capital Issues (Control) Act, 1974, Sections 2, 3, 5 and 13 to which Mr. Bachawat referred me. Mr. Bachawat submitted that the scheme is illegal under Section 81(3)(a) as it would appear from para. 14 of the petition and it is admitted that no sanction of the Central Government has been obtained and he referred to paragraph 13(d) of the petition. Mr. Bachawat has drawn my attention to Pennington's Company Law, second edition, page 438, as to alternative remedy and also referred to Buckley on the Companies Acts, 13th edition, page 404, and submitted that the scheme of amalgamation is ultra vires the company. Mr. Bachawat has drawn my attention to Clause (k) of the memorandum of association of the petitioner-bank giving power to the company to take over another company but does not give power to be taken over by another company and as such the said scheme of amalgamation cannot be sanctioned being ultra vires the petitioner-bank. Mr. Bachawat cited the decision in In re Crown Bank [1890] 44 Ch D 634 at 644 (Ch D). That was a case of a banking business. He also cited In re Oceanic Steam Navigation Co. Ltd. [1939] 9 Comp Cas 229 (Ch D) and Palmer's Company Law. 21st edition, page 698, Halsbury's Laws of England, sixth edition, page 415, Carron Tea Co. Ltd. [1966] 2 Comp LJ 278 (Cal), Parashuram Detaram Shamdasani v. Tata Industrial Bank Ltd. AIR 1928 PC 180 in support of his contention that the scheme of amalgamation is ultra vires the company and cannot be sanctioned. Mr. Bachawat also submitted that under the Companies Act, 1956, Section 17(1)(g) read with Section 391(1) refers to power to amalgamate. He also referred to Palmer's Company Law, 21st edition, page 24. Thereafter, Mr. Bachawat submitted that the meeting of the shareholders is not properly held for reasons : (a) pandemonium on 30th March, 1972, as referred to in the report of the chairman, para. (1)(a)(i) and affidavit-in-opposition of Rajaram Sharma and others, para. 51 ; (b) order for police help was not circulated and as such a proper notice was not served to the shareholders who were scared away by the rowdy and unruly elements in the infructuous meeting dated the 30th of March, 1972. Thereafter, Mr. Bachawat submitted that the scheme cannot be sanctioned as there was no valid and proper meeting of the shareholders sanctioning the scheme of amalgamation according to the provisions of the statute. Mr. Bachawat thereafter submitted that the original scheme framed in 1970 is unfair and resolution for modification of the said scheme clearly showed that the original scheme is unfair. Relying on those contentions, Mr. Bachawat submitted on behalf of Rajaram Sharma and others that the scheme cannot be sanctioned by the court. Thereafter, Mr. Bachawat submitted written notes on the arguments put forward by him at my request by which he contended, firstly, that the scheme is unfair and no intelligent and honest man can support the scheme. Analysing the said contentions he pointed out that the petitioner-bank received compensation in 5 1/2% bonds of the value of Rs. 4,19,83,100 as would appear from the balance-sheet of the bank for the year ending 31st December, 1971. The said bonds are readily saleable and convertible in money and the petitioner-bank has no liability whatsoever. Thereafter, he submitted that the transferee-company has been incorporated only for the purpose of taking over the assets of the petitioner-bank. As such the transferee-company has not commenced any business. He referred to the balance-sheet of the transferee-company for the year ending 30th of September, 1971. He thereafter pointed out that the transferee-company has not only no asset but it has a huge liability of more than Rs. 25 lakhs ; that is expressly stated in paragraph 35 of the affidavit-in-opposition of Rajaram Sharma and others affirmed on the 28th of August, 1972, and according to Mr. Bachawat that has not been denied in paragraph 31 of the affidavit-in-reply. Mr. Bachawat also submitted that there was complete suppression of material fact relating to liability of the transferee-company not only in the petition and in the balance-sheet annexed to the petition but also in the affidavit-in-reply and as such there is a complete lack of candour. Mr. Bachawat submitted that the transferee-company has no business experience and the company has not commenced its business and the business possibility of the transferee-company is wholly untested in India. He submitted that no material has been produced to show the possibility of commercial success of the main object of the transferee-company. He submitted that it is inconceivable that a business organisation would earn profit by reviving sick industries. There are various statutory organisations controlled by the Government, as for example, Industrial Reconstruction Corporation of India, Financial Corporation of India, State Financial Corporation of West Bengal and others with the object similar to those of the transferee-company. Mr. Bachawat submitted that the Finance Corporation and organisation has not been able to make any profit and does not aim in making any profit, and, as such, the business of the transferee-company cannot be successfully carried out in competition with the said statutory organisations. Mr. Bachawat referred to paragraphs 24 and 25 of the affidavit of Rajaram Sharma and others. Mr. Bachawat submitted that the object of the transferee-company is of multifarious and varied nature and it can carry on all kinds of conceivable business. The object clause of the transferee-company is extravagant. Unless the members can ascertain the precise nature of the business of the transferee-company it should not be called upon to invest their money in it. Mr. Bachawat also submitted that the proposed directors of the transferee-company has no business experience whatsoever. A number of respectable persons have been named as proposed directors of the transferee-company but materials have not been produced in spite of challenge in that behalf to show that they would have been ready and willing to act as directors of the transferee-company. He referred to paragraphs 32 and 47 of the petition and paragraph 134 of the affidavit-in-reply. Mr. Bachawat submitted that no reason whatsoever has been shown in the petition for the proposed scheme of amalgamation and the grounds put forward for amalgamation are all spurious and unreal. He referred to paragraphs 13, 15, 16 and 22 of the petition. He analysed the said reasons set out in paragraph 13 and its sub-paragraphs as merely imaginary and he referred to the affidavit-in-opposition of Rajaram Sharma in support of his contention. He submitted that the other banks which have been nationalised have been amalgamated with well-established and reputed companies, as for example, Central Bank of India with Tata Engineering and Locomotive Company and Bank of India with Calico Mills Ltd. and Union Bank of India with Mahindra and Mahindra Ltd. He referred to paragraph 56(f) of the affidavit-in-opposition of Rajaram Sharma and others in support of his contention. Lastly, he submitted that the scheme must be such that an intelligent and honest man must support the same as otherwise the court would not sanction the scheme. For this principle he cited Alabama Railway Company's case [1891] 1 Ch D 213 to 247 (CA).

18. Next, on the question of ratio ol exchange being unfair, Mr. Bachawat submitted that if the petitioner-bank is wound up and its capital is distributed in specie, in that event, each member would be entitled to Rs. 15.61 per share being the break-up of the compensation money among the shareholders. But by the scheme it is proposed to allot a share of Rs. 5 and an unsecured debenture of Rs. 5 in a mushroom company with no proved prospects. Members completely lose Rs. 5.61 per share of Rs. 50 immediately and with a fair possibility of losing everything in future. Mr. Bachawat, lastly, submitted on this question of ratio of exchange that it is not a sound business proposition. No investors of any intelligence would be agreeable to receive papers worth Rs. 10 only in lieu of cash of Rs. 15.61. Next point urged by Mr. Bachawat is that the shareholders of the amalgamated company would not get a fair return if the scheme is sanctioned as the transferee-company does not propose to make any profit for at least a period of 5 years and payment of dividend has been proposed out of the capital of the petitioner-bank and the said dividend when calculated amounts to 3% but a higher return can be obtained from any other investment. He referred to paragraph 14(1) of the petition. He submitted that in any event the shareholders of the petitioner have a present right to the reserve fund out of which the dividend is proposed to be paid. In fact no dividends are paid. Shareholders of the petitioner-bank are proposed to be paid back an insignificant part of their own money in the garb of dividend proposed to be declared by the transferee-company. The proposal to pay dividend is merely an eye-wash to have the scheme sanctioned by the court. Mr. Bachawat submitted that as the business possibility of the transferee-company is unreasonable, it cannot be predicatable at all if the transferee-company would earn any profit in future. On the materials placed before the court it is apparent that the transferee-company have no prospect to earn profit at all in future. Mr. Bachawat submitted that the debentures proposed to be issued are unsecured and no fixed rate of interest is being proposed to be paid. The company may not grant any interest at all. The scheme proposes that an interest not exceeding 9% per annum would be paid. He referred to the petition, paragraph 14(2)(i) and (g). According to the scheme the debenture-holders would take only after the creditors of the transferee-company which, as mentioned above, is more than Rs. 25 lakhs and the debenture is redeemable after 12 years. Therefore, the debenture-holders would not get anything if the transferee-company is wound up, of which there is every possibility in the meantime. Mr. Bachawat also submitted that the members of the petitioner-bank would be compelled to invest their money in a mushroom company which has not commenced any business and has no business prospect. As such no reasonable and intelligent investors would invest their money in such a company. He referred to In re Alabama Railway Company [1891] 1 Ch D 213 at pages 238 to 239 and 247 (CA) and In the matter of Patiala Starch and Chemical Works [1958] 28 Comp Cas 111 (Punj)and In the matter of Carron Tea Co. Ltd. [1966] 2 Comp L J 278 (Cal). Thereafter, Mr. Bachawat submitted that the scheme of amalgamation is provisional as the same depends upon the sanction of the Controller of Capital Issues and the Central Bank. He referred to the petition, paragraph 14 and statements under Section 393 of the Companies Act, 1956, para. 8 and the scheme of amalgamation, para. 5. He referred to Sections 3 and 5 of the Capital Issues (Control) Act, 1947, whereunder there is a complete prohibition of issues of shares without permission of the Controller of Capital Issues and the Central Bank may impose conditions therefor. Mr. Bachawat submitted that if the Central Bank does not grant permission, then the scheme becomes infruc-tuous. But assuming the Central Government grants permission, the same may be conditional and which may render the sanction of the scheme wholly infructuous or materially different from the one sanctioned by the court. Mr. Bachawat further submitted that the issue of debenture which is convertible into shares of the company requires sanction of the Central Government under Section 81(3) of the Companies Act, 1956. He submitted, that no materials have been placed before the court to show what steps, if any, have been taken to obtain the permission of the Controller of Capital Issues under the Capital Issues (Control) Act, 1947, or Section 81 of the Companies Act, 1956.

19. Mr. Bachawat next submitted that there has been no proper representation at the meeting held on the 8th of May, 1972, to find out what happened at the meeting held on the 8th of May, 1972. He submitted that one has to look to the events which happened at the infructuous meeting dated the 30th of March, 1972. He thereafter has drawn my attention to the report of the chairman for the meeting held on the 30th of March, 1972, which forms part of the report of the chairman for the meeting held on 8th of May, 1972. He submitted that from the said report it clearly demonstrates that there is also intrinsic evidence in the report of the chairman to show that pandemonium was caused by the persons interested in the petitioner. The said pandemonium and disturbance at the meeting held on 30th of March, 1972, was widely reported in the press. He submitted that by the order dated the 3rd of May, 1972, the court directed the directors of the bank to obtain police protection at the said meeting. The said order was not communicated to the members or advertised in the press and in view of the violence and pandemonium in the meeting held on 30th of March, 1972, a very small percentage of the members attended the meeting held on 8th of May, 1972. A very large number of persons opposing the scheme stayed away. Only 6 lakhs and odd shares out of 35 lakhs issued shares voted, thus representing only about 16% to 18% of the total shareholding of the petitioner-bank. He referred to paragraphs 51 and 52 of the affidavit-in-opposition of Rajaram Sharma and others. He submitted that there is a complete lack of candour and suppression of material fact on the part of the petitioner-bank and the proposed scheme of amalgamation is not bona fide.

20. Mr. Bachawat lastly submitted that the scheme of amalgamation is not bona fide as there has been a complete lack of candour and suppression of materials on behalf of the petitioner as the facts relating to purchase of shares by the transferee-company and its liability to the tune of about Rs. 25 lakhs has been suppressed. Mr. Bachawat also alleged that the financial position of the petitioners has not been disclosed but has been deliberately suppressed. He referred to the auditors' report attached to the balance-sheet of the transferee-company. Thereafter, Mr. Bachawat submitted that in the first statement under Section 393 of the Companies Act, 1956, Rs. 70,79,325 has been earmarked for capital gains tax. Though the amount of tax, if any, payable on the compensation money would remain the same in the balance-sheet of the petitioner-bank for the year ending 31st of December, 1971, and in the scheme of amalgamation finally proposed Rs. 1,31,11,999.50 has been shown thereby showing an increase of about a sum of Rs. 60 lakhs for which no reason has been given anywhere. Mr. Bachawat also contended that although the petitioners had two years to ascertain as to whether or not capital gains tax is payable on the compensation money the same has not yet been ascertained and no reason has also been put forward.

21. Thereafter, Mr. Bachawat submitted that the proposed scheme is ultra vires the petitioner-bank and as such the same cannot be sanctioned. He submitted that the main object of the petitioner-bank was to carry on banking business and he referred to Sub-clauses 3(c), (d) and (e) of the memorandum of association of the petitioner-bank. He submitted that the other clauses of the petitioner-bank are merely ancillary to the said main object. He referred to the decision of Crown Bank [1890] 44 Ch D 634 (Ch D). He submitted that the name of the bank also formed part of the memorandum of association. ' Bank ' has been used in the name of the bank as name is material to ascertain the paramount object of a company. Mr. Bachawat then submitted that the only relevant clause under the object clauses is Sub-clause 3(k) of the memorandum of association of the petitioner-bank. According to Mr. Bachawat this clause postulates that the petitioner-bank would continue to be a going concern and would cease to exist, by. virtue of any amalgamation. That sub-clause, therefore, does not authorise the petitioner-bank to effect the proposed amalgamation. The proposed amalgamation involves dissolution of the petitioner-bank. Thereafter, Mr. Bachawat referred to the decisions in Parashuram Detaram Shamdasani v. Tata Industrial Bank Ltd. AIR 1928 PC 180, Nagaisuree Tea Company Ltd. v. Ramachandra Karnani [1966] 2 Comp LJ 208 (Cal), In the matter of Canon Tea Co. Ltd. [1966] 2 Comp LJ 278 (Cal), Associated Hotels of India Ltd., In re [1968] 2 Comp LJ 292 (Cal), Hari Krishna Lohia v. Hoolungooree Tea Co. Ltd. [1970] 40 Comp Cas 458 (Cal), Oceanic Steam Navigation Co. Ltd. [1938] 3 All ER 740 ; [1939] 9 Comp Cas 229 (Ch D).

22. Relying on those decisions Mr. Bachawat submitted that the scheme of amalgamation in the present application cannot be sanctioned as the same is not authorised by the object clause of the petitioner-bank.

23. Making those submissions Mr. Bachawat contended that the present application must be dismissed.

24. Mr. S. B. Chakraborty, appearing for Mr. Niranjan Das Mohan and others, opposing the application for sanction of the scheme of amalgamation submitted, firstly, that the chairman of the meeting had no power of adjournment and he referred to regulation 53A of Table A to the Companies Act, 1956, and regulation 91 of the articles of association of the petitioner-bank and also drew my attention to Buckley on the Companies Acts, 13th edition, page 334, wherein a decision in Catesby v. Burnett [1916] 2 Ch 325 (Ch D) has been referred. Mr. Chakraborty submitted that in the instant case the meeting was held on the 29th of September, 1970, under an order of this court and the said meeting is alleged to have been adjourned by the chairman as it was not possible to conduct the meeting due to pandemonium created in the said meeting. Mr. Chakraborty referred to the chairman's report dated the 11th of November, 1970, and affidavit of Kamal Saminathe Rangaswami, Junior, affirmed on the 5th of December, 1970, paragraphs 5, 6, 7, 9 and 11 and the said adjournment was an adjournment sine die by the chairman. Mr. Chakraborty submitted that the chairman had no authority to adjourn the said meeting sine die as the order of the court dated the 29th of August, 1970, did not contain any power to adjourn the meeting conferred on the chairman. He referred to a decision of John v. Rees [1969] 2 WLR 1294 ; [1969] 2 All ER 274 (Ch D) in support of his proposition. He, therefore, submitted that this court had no jurisdiction to direct the adjourned meeting of both the petitioners to be held and as such the subsequent order was void and of no effect as the meeting held pursuant to the subsequent order of this court is illegal. Therefore, no scheme can be sanctioned on the basis of the said meeting. The second point urged by Mr. Chakraborty was that United Bank of India Ltd. is not a company which can be wound up under the Companies Act, 1956, and, therefore, cannot come within the scope of Sections 391, 393 and 394 of the Companies Act, 1956, his contention being that the United Bank of India Ltd. carried on banking business till the 18th of July, 1969, and as and from the said date the petitioner-bank denuded of its everything leaving the company in name only. According to Mr. Chakraborty, United Bank of India Ltd. completely vested in United Bank of India under Sections 4 and 5 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. The 'undertaking' of the bank has been defined in Section 36AE and Sub-clause (3) of the Banking Regulation Act, 1949. Therefore, Mr. Chakraborty submitted that the United Bank of India Ltd. was completely denuded and was paid the compensation money for being so denuded. He submitted, therefore, that the United Bank of India Ltd. has been completely wound up statutorily by the statute of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, except it was not dissolved. In the premises, Mr. Chakraborty submitted that on or after 19th July, 1969, the United Bank of India Ltd. had two alternatives (a), to liquidate or dissolve the company by payment to the shareholders of the sum of Rs. 4,20,00,000 which works out at Rs. 15'61 per share, or (b) to commence business agreed to by shareholders after alteration of the object in its memorandum of association and after changing its name suitably to the altered business with the consent of the shareholders. This would mean commencement of a business by a new company. The petitioner-bank in Clause 3 of the statement issued under Section 393 of the Companies Act, 1956, along with the notice dated the 31st of August, 1970, has admitted the said alternatives. Mr. Chakraborty submitted that the petitioner-bank has not done either of the two alternatives up to date. It has not engaged itself in any business since 19th of July, 1969 ; yet it has shown annual report with balance-sheet and profit and loss account declaring dividends for the years 1969-70 and 1970-71. Mr. Chakraborty submitted that the said annual reports of the petitioner-bank are illusory and should be rejected as a document of no validity. He submitted that the petitioner-bank is now seeking to amalgamate with the petitioner No. 2 company which is mala fide and unconscionable. Thereafter, Mr. Chakraborty submitted that the petitioner-bank has no power of amalgamation in its object clause and he adopted the arguments of Mr. Deb and Mr. Bachawat on this point. Mr. Chakraborty also submitted that the exchange ratio is unfair and unreasonable and he also adopted the arguments of Mr. Bachawat, Mr. Prabir Sen and Mr. Gupta. Lastly, Mr. Chakraborty submitted that the meeting held on the 8th of May, 1972, is invalid on the ground, (1) no notice to shareholders in Bangladesh was given as required under Section 172 of the Companies Act, 1956 ; (2) in view of the alleged pandemonium and violence at the first meeting, the said adjourned meeting could not be attended by members who wished to attend as they were scared away ; (3) alleged notice to Custodian of Enemy Property is not a notice under Section 172 of the Companies Act, 1956 ; (4) no list of shareholders is prepared who were Pakistanis or foreigners for whom excuse is sought to be made out that no notices were necessary to be given to them, and, lastly, (5) the existence of foreign shareholders of the United Bank of India Ltd., if any, has been throughout the prior proceedings, even in the proceedings taken by the bank for directions to hold the alleged adjourned meeting and order obtained. Relying on those submissions Mr. Chakraborty submitted that the present application should be dismissed.

25. Mr. Prabir Sen appearing for some of the opposing creditors of the petitioner-bank submitted that the scheme of amalgamation should be rejected and no sanction should be accorded by this court as requirements of the statute have not been complied with. He submitted that under Section 391, Sub-section (2), of the Companies Act, 1956, it is obligatory to disclose all material facts relating to the company such as the latest financial position of the company and the latest auditors' report on the accounts of the company. If there is a failure of compliance of the said requirements of the statute the court has no jurisdiction to sanction the scheme. He submitted that there is no allegation in the petition even disclosing the latest financial position of the company or auditors' report on the accounts of the petitioner-bank. Profit and loss account of 31st December, 1971, has been annexed and so far as the United Credit and Development Company Ltd. is concerned the balance-sheet as at 30th September, 1971, has been annexed. He pointed out that in the balance-sheet there is a remark of the auditor ' in terms of our attached report of even date '. The said report has not been annexed to the petition and no reference has been made. Mr. Sen submitted that in any event the said balance-sheet does not disclose the latest financial position of the company as there is no auditors' report at all on the accounts of the petitioner No. 2 company. Therefore, ex facie, the scheme cannot be sanctioned. Secondly, Mr. Sen submitted that Section 393 of the Companies Act, 1956, enjoins that with every notice calling the meeting there shall be sent also a statement setting forth in particular any material interests of the directors, managing directors or managers of the company. He submitted that Mr. S. N. Sen is a director of the petitioner No. 2 and he is also a solicitor of the petitioner-bank ; as such he is materially interested both professionally and financially and that has not been disclosed in the explanatory statement and by failing to disclose the same the meeting has been vitiated and a mandatory provision of Section 393 of the Companies Act, 1956, has been clearly violated. He submitted whether such non-disclosure will have any effect on the scheme of amalga-tion or not, is not the question but the requirements under Section 393, Sub-section (1)(a) is quite specific and should have been complied with. Thereafter, Mr. Sen submitted that assuming but not admitting that the requirements of the statute have been complied with, sanctioning of the scheme is in the discretion of the court and, in the facts and circumstances of this case, the court should not sanction the scheme as the scheme is unfair, unconscionable and no reasonable person will approve the scheme. He submitted that on the face of it the petitioner No. 2 company having subscribed capital of Rs. 5,600 only is wrongfully purporting to amalgamate with a company having assets of over more than Rs. 4 crores. The new company has not even started business and no proposal has been disclosed as to the manner in which it will carry on the business. The prospective liability or profitability of the business has not at all been disclosed and to force the scheme upon the dissentient shareholders by taking shares and debentures in the new company in the manner proposed would be highly prejudicial and injurious to the dissentient shareholders. Mr. Sen submitted that the petitioner admits that the new company has been formed only for the purpose of taking over the petitioner-bank under the present scheme. Mr. Sen submitted that there are efficacious and simpler methods by changing the name of the company and altering the memorandum and articles of the company under Section 17 of the Companies Act, 1956. The petitioners are, without following the course, surreptitiously trying to get the scheme passed through this hon'ble court. Mr. Sen thereafter submitted that the court should not exercise its discretion in passing the scheme inasmuch as the purported majority at the meeting was not truly representative of class for which they voted. Thereafter, he analysed the votes cast in the said meeting and submitted that the majority was acting not for the benefit or the interest of the class they were representing but for the personal interest and aggrandisement of the delinquent management. Thereafter, Mr. Sen submitted that the scheme admittedly purports to bind the shareholders all over the country as well as the shareholders residing outside India. He submitted that Bangladesh shareholders have not been served either by advertisement or otherwise according to law. He referred to Rules 76 and 78 of the Companies (Court) Rules, 1959. Mr. Sen submitted that the application for the scheme is based on the chairman's report which is conclusive on the point of service of notice. He contended that from the chairman's report nothing appears which shows any notice has been served on the Bangladesh shareholders or to the Custodian of Enemy Property or by advertisement. He submitted that notice to the Custodian of Enemy Property is illusory and would not afford protection to the numerous shareholders in Bangladesh. Thereafter Mr. Sen submitted that the ratio of exchange is extremely inequitable and unfair and there is no auditors' report or a report of the valuer recommending that the exchange ratio is fair. He submitted that the new company proposed to carry on business of merchant-cum-development bank. For the said business sanction of the Reserve Bank is a condition precedent to such scheme and this court should not sanction the scheme as there is no such sanction from the Reserve Bank. He submitted that the grounds on which the scheme should be rejected have been set out in paragraph 9 and several sub-paragraphs thereunder of the joint affidavit of Sarat Chandra Seal and 67 other shareholders dated the 20th of August, 1972. Mr. Sen referred to the decisions reported in Calcutta Industrial Bank Ltd., In re [1948] 18 Comp Cas 144 ; 52 CWN 425, 429 and at pages 432 and 439 (Cal), Bengal Bank Ltd. v. Suresh Chakrawarthy [1951] 21 Comp Cas 315 ; 55 CWN 206 at pages 209-210 and 215 (Cal), Sovereign Life Assurance Co. v. Dodd [1982] 2 QB 573 at pages 582 and 583, (CA), Carron Tea Co. Ltd., In re [1966] 2 Comp LJ 278 (Cal), and Indian Crescent Bank Ltd., In re [1949] 53 CWN 183 (Cal) and submitted that the present scheme should not be sanctioned by the court.

26. Mr. R. C. Nag, appearing for Mr. M. D. Jalan and Smt. Sarala Jalan, shareholders of the petitioner-bank, submitted that there is no substance in the contention on the opposing group that the scheme of amalgamation is ultra vires the power of the United Bank of India Ltd., that is, the petitioner-bank. He submitted that in most of the cases there is an amalgamation of the two running companies, whereas in this case the petitioner-bank is not a company within the meaning of Sections 391, 393 and 394. He referred to the distinction between powers and objects and cited Cotman v. Brougham [1918] AC 514 (HL), where it has been held that amalgamation is a power to amalgamate and not an object of a company. Mr. Nag referred to the decision in Tata Bank AIR 1928 PC 180 at 184, where it was held that so far as the transferor-company (Tata Bank) was concerned, power to amalgamate was derived from status under Sections 208 and 215 of the old Companies Act, 1913, and absence of power in the memorandum was held to be irrelevant and so far as the transferee-company, that is, the Central Bank, was concerned, it had power to amalgamate in its memorandum. Mr. Nag, thereafter, cited the decision in In re Oceanic Steam Navigation Co. Ltd. [1938] 3 All ER 740 at 743 ; [1939] 9 Comp Cas 229 (Ch D), where the ratio of the said decision was not the absence of power to amalgamate but absence of power in the company's memorandum to sell and dispose of its whole undertaking whereas in the instant case Mr. Nag rightly pointed out that the object Clauses (j), (k), (i) of the memorandum of the United Bank of India clearly empowers the company to do so. Then he referred to Crown Bank, In re [1890] 44 Ch D 634 at 664 (Ch D) and submitted that the same was a case for winding up of a company on the shareholders' application that the company carried on ultra vires business. The present case is not a case where winding-up petition being presented. Mr. Nag submitted that even then the court has jurisdiction. Merchant-cum-development business is authorised by Sub-clauses (f) and (m) of the United Bank of India Ltd.'s memorandum of association. Referring to the decision in Carron Tea Co. [1966] 2 Comp LJ 278 at 296-297 (Cal) Mr. Nag submitted that in that case the transferee-company had no power to amalgamate whereas in the present case it is not so. That is the transferee-company has power to amalgamate. He submitted that the observation of the learned judge at page 296 of the said report regarding Tata decision in AIR 1928 PC 180 was per incuriam. Mr. Nag, thereafter, referred to Nagaisuree Tea Company's case in [1966] 2 Comp LJ 208 at 218 (Cal) and submitted that reference to Tata Bank's case of the Privy Council in AIR 1928 PC 180 was per incuriam and he has also drawn my attention to page 212 of the said report where it has been hejd that mala fide opposition to Section 17 application to have high purchase value of shares not permissible (sic). Thereafter he referred to Associated Hotels of India Ltd., In re [1968] 2 Comp LJ 292 at 300, last paragraph, and submitted that it was a correct reading of the Privy Council decision in Tata's case AIR 1928 PC 180. Mr. Nag, thereafter, referred to Halsbury (Halsbury's Laws of England), volume 6, page 415, footnote (m), and submitted that the said decision in European Society Arbitration Acts, In re [1878] 8 Ch D 679 (CA) is distinguishable from the present case on the ground that there is power in the memorandum of the United Bank of India Ltd. to sell its undertaking and here the transaction relating to purchase of shares has been approved by the shareholders of the purchasing company. Mr. Nag referring to Palmer's Company Law, page 698, and Buckley (Buckley on the Companies Acts), page 40, submitted that the authority for ultra vires proposition is based on Oceanic Steam Navigation Co. Ltd., In re [1938] 3 All ER 740 at 743 ; [1939] 9 Comp Cas 229 (Ch D) which Mr. Nag has already dealt with. Mr. Nag submitted that even on basis of allegation of contesting shareholders in this application that the substratum of the petitioner-bank has disappeared, the said bank is still a company within the meaning of Section 390 of the Companies Act, 1956, having shareholders, creditors, assets and liabilities. He submitted that Telco's case (Union of India v. Tata Engg. and Locomotive Co. Ltd.) reported in [1972] 42 Comp Cas 72 (Bom) is inapplicable in the present case as here the transferee-company has been openly floated to take over the transferor-company. He referred to Hoolungooree : AIR1969Cal312 . Mr. Nag, thereafter, referred to Wienburg on Takeover and Amalgamation, at pages 1 and 2, where it has been stated that incorporation of a new company to effect amalgamation is permissible. He also referred to Chapter 7, page 7, Article 701 of the said book where a new company was initially formed even as a private company with very small capital has been referred. Mr. Nag thereafter cited Moon's Business Mergers and Take-over Bids, at page 173, where it has been stated that a new company may be formed for amalgamation and take over of an old company. Mr. Nag thereafter dealt with the contention of the contesting shareholders that the notice and explanatory statement under Section 393 of the Companies Act, 1956, are defective. He submitted that complaint as to invalidity of the notice cannot be taken at the hearing unless the objection is taken at the meeting. He referred to the decision in In re Rivers Steam Navigation Co. Ltd. [1967] 71 CWN 854, 889, 890 (Cal). He also referred to Rule 69 of the Companies (Court) Rules and Form 35 and also Rule 73 and Form 36 and submitted that the notices are settled by the court under the provisions of the said rule. He, thereafter, referred to Palmer's Company Law, 21st edition, pages 705-706 and footnote 12 at page 706 and rightly submitted that the dual capacity of Mr. S. N. Sen, the solicitor of the petitioner-bank, is immaterial having no effect on the scheme. He submitted that Section 391(1) provides that only ' material interests ' of directors are required to be disclosed. He referred to Buckley on the Companies Acts, 13th edition, page 332, where meaning directors' interests advantage by reason of fiduciary position (sic). Referring to the decision in Sidhpur Mills Co. Ltd., In re : AIR1962Guj305 , headnote (e), at page 306, last paragraph and paragraph 26 at page 315, Mr. Nag submitted that it is necessary to disclose under Section 303 material interests of directors, etc., in the scheme and effect on the scheme of those interests if different from material interests of other persons interested in the same scheme. He rightly submitted that according to the decision in Rivers Steam Navigation Co. Ltd., In re [1967] 71 CWN 854 at 889 (Cal), paragraph 91, objection as to separate meeting or conduct of meeting cannot be taken at the hearing unless taken at the meeting. The said decision Was affirmed by the appeal court in Inland Steam Navigation Worker's Unionv. Rivers Steam Navigation Company Ltd. [1967] 71 CWN 897 ; [1968] 38 Comp Cas 99 (Cal). Mr. Nag later rightly submitted that particulars of admitted pandemonium in the previous meeting were not relevant fact but could have been relevant for a criminal court. He thereafter referred to the Privy Council decision in Tata's case (Parashuram Detaram Shamda-sani v. Tata Industrial Bank Ltd.) AIR 1928 PC 180 at 185, where it has been held that elaborate detail in explanatory circular could not be informative to shareholders but might be detrimental to company's interest and if the complainant has knowledge of the matters complained of, non-disclosure of such matters are not fatal. He also referred to the decision in In re Carron Tea Co. Ltd. [1966] 2 Comp LJ 278 at 297 and 298 (Cal) for the proposition that itis Section 393 and not Section 173 of the Companies Act, 1956, that governs the explanatory statement. In that decision the contention that the Registrar did not apply his mind in settling the notice and explanatory statement under Section 393 failed. Regarding the contention that no notice was served on Bangladesh shareholders, Mr. Nag rightly submitted that notice on Custodian of Enemy Property was sufficient under the Enemy Property Act, Section 2(c), Section 7(3), Section 8(1) and Section 2(i). Thereafter, he dealt with the decision cited by the contesting shareholders on the question of non-service of notice on the Pakistani shareholders, now Bangladesh shareholders, being In the matter of Calcutta Industrial Bank Ltd. [1948] 18 Comp Cas 144 ; 52 CWN 425 at 430 (Cal), In re Indian Crescent Bank Ltd. [1949] 53 CWN 183 (Cal), Bengal Bank Ltd. v. Suresh Chakravarthy [1951] 21 Comp Cas 315 ; 55 CWN 206 (Cal) and submitted that those are all distinguishable on the facts and not applicable to the instant case.

27. Regarding the contention of the opposing creditors that there was no fair representation of 'class' of shareholders after excluding interested votes and as such no statutory majority, he rightly submitted, on analysing the votes cast, that there is no substance in such contention. The total votes cast is 6,75,836 from which deducting the interested votes being 2,90,397, the total comes to 4,75,439 from which the votes cast against the scheme being 13,381 being deducted, the balance votes in favour of the scheme is 4,02,058 which is more than 75% of the votes cast. He rightly submitted that persons supporting the scheme cannot and do not constitute a different class from those opposing the scheme. He rsferred to the meaning of ' class ' in Sarkar and Sen Companies Act, page 397, and United Provident Assurance Co. Ltd., In re[1910] 2 Ch 477, 480 (Ch D). He referred to the passage ' shareholders who have separate and distinct rights ', viz., fully paid up shareholders as opposed to partly paid up shareholders. He also referred to Sovereign Life Assurance Co. v. Dodd [1892] 2 QB 573 at 582 (CA) which case is clearly distinguishable where in fact two different classes were referred to. Thereafter, he referred to Palmer's Company Law, 21st edition, page 705, where he stated that statutory majority is an indication that the scheme is a fair one. Regarding the discretion of the court and the court not being a rubber stamp he referred to Gower's Company Law (The Principles of Modern Company Law), 3rd edition, page 640-642. He submitted that the order of this court directing adjourned meeting to be held is not appealed from as the court has inherent power to pass further interlocutory orders. He also referred to Buckley on the Companies Acts, 13th edition, page 334, and submitted that there is an implied power of adjournment of a meeting. He also referred to Crew, The Conduct of and Procedure at Public, Company and Local Government Meetings, Chapter 18, page 155 and also Frank Shacketon's The Law and Practice of Meeting, 5th edition, page 58 and Palmer's Company Law, 21st edition, page 486, for the proposition that power to hold a meeting implied a power to adjourn a meeting. Thereafter, Mr. Nag referred to the decision in Dormcm Long & Co., In re [1934] Ch 635 at 637 ; [1935] 5 Comp Cas 30 (Ch D), where it has been held that a complicated scheme requires careful scrutiny by court. Mr. Nag rightly submitted that the present scheme as such is not complicated. It is also held in the said decision that the main fact is required to be stated in the explanatory statement, Referring to the decision in English, Scottish and Australian Chartered Bank, In re [1893] 3 Ch 385 at 414 and 415 (CA) and the observation of Lopez L. J., Mr. Nag submitted that proper statutory majority can bind the minority. Reasonableness of a scheme is to be judged in the light of the alternative. Referring to London Chartered Bank of Australia, In re [1893] 3 Ch 540 at 545 (Ch D), Mr. Nag submitted that a scheme should be sanctioned unless there is something ex facie wrong about it or material over-sight or miscarriage of justice. Thereafter, referring to the decision in Alabama, New Orleans and Texas Railway Co., In re, [1891] 1 Ch 213 (CA), Mr. Nag submitted that objection to scheme must be reasonable and not hypothetical or problematical. The whole test is whether a scheme in a commercial sense is extremely advantageous to the majority approving the scheme.

28. He thereafter referred to the decision'in Caruth v. Imperial Chemical Industries Lid. [1937] 2 All ER 422 to 423, 460 ; [1938] 8 Comp Cas 181 (HL), where it has been held that there could be waiver of irregularity at meeting. Relying on the said decision Mr. Nag rightly submitted that it is always open to the shareholders of the company to waive the irregularities at a meeting. If it is held that there was any irregularity in holding the said meeting that has been clearly and unequivocally waived.

29. Regarding the contention that the scheme is unfair on merits, impracticable, conditional, hypothetical, illegal in violation of Sections 149 and 372 of the Companies Act, 1956, Mr, Nag rightly submitted that it is for the businessmen to judge the said scheme and they are the best judges. He referred to Palmer's Company Law, 21st edition, page 705, He submitted that the merchant-cum-development banking is not radically different from the United Bank of India's, i.e.. the petitioner-bank's, actual business at the date of acquisition and nationalisation of its undertaking. This is a recognised mode of business. He submitted that Mr. S. N. Sen is a well-known economist being Ph. D in economics with special contribution to money and banking. He further submitted that consent of all proposed new directors of the transferee-company is available. Test of reasonable man is not the test of dialetic. Mr. Nag rightly pointed out that the opposing shareholders in the past never alleged about mismanagement of the United Bank of India Ltd. by the directors. He submitted that some of the dissentient shareholders have purchased the shares from the market during the pendency of this application.

30. Thereafter, he contended that there is no question of violation of Section 372 as the instant case is covered by the exception under Section 372(14)(c). He submitted that Sections 372 and 373 of the Companies Act, 1956, indicate that the bar of Section 372 is only for purchase of investment. Mr. Nag thereafter submitted that a scheme can be sanctioned conditionally as there is express power to the court under Section 392(1)(b) and also in scheme to impose conditions. He referred to Section 394 of the Companies Act, 1956, and rules, Form No. 36. He also drew my attention to Gower's Company Law 3rd edition, page 641, footnote 87, for the said proposition. He submitted that liabilities of the petitioner-company as on the date of the application is the question which has been disclosed with no uncertainty. He thereafter referring to the said decision in Carruth v. Imperial Chemical Industries Ltd. [1937] 2 All ER 422, 462 ; [1937] AC 707 ; [1938] 8 Comp Cas 181 (HL) rightly submitted that the onus is on the dissentient to show the scheme is unfair. Fairness or unfairness of the scheme is not for the court's discretion in a technical sense but is a matter to be decided on evidence --Test being whether it is for the interest of future commercial interest of the company, court cannot substitute its own views for the directors and experts. Unanimous opinion of directors is a relevant factor. He rightly submitted that predominant combined holdings of shares by directors are irrelevant consideration for the court. He also referred to Hindustan General Electric Corporation, In re : AIR1959Cal679 on the same proposition that onus is on persons opposing the scheme to show that the scheme is unfair. Mr. Nag contended that the court will not judge commercial merits of a scheme. He referred to Palmer's Company Law, 21st edition, page 705. He contended that the initial onus on the petitioners is discharged by obtaining directions from court for holding the statutory meetings after placing all material facts and if the scheme is sanctioned at the meeting held under the directions of the court under Section 391(1) of the Companies Act, 1956, and is sanctioned by statutory majority, the onus that the scheme is not fair shifts on to the dissentient shareholders and creditors. He referred to the decision in Sewa Singh v. Tara Chand AIR 1956 Punjab 30 at pages 34-35, where scheme of amalgamation was sanctioned after a fresh meeting with modification of exchange ratio in view of obvious defect in evaluation of shares. The decision in Mohanlal Saraf v. Cnttack Electric Supply Co. Ltd. AIR 1964 Orissa 191, head-note (a), was referred to by Mr. Nag, where it has been held that the substratum of the company did not disappear merely because the entire undertaking was sold. Mr. Nag also rightly submitted that if there are alternative modes of achievement of the same object there is no bar if the petitioners have chosen one of them. He referred to Pennington's Company Law, second edition, page 338, and also Carruth v. Imperial Chemical Industries Ltd. [1937] 2 All ER 422 at pages 438 and 439 ; [1938] 8 Comp Cas 181 (HL) and In re National Bank Ltd. [1966] 1 All ER 1006 ; [1966] 1 WLR 819 ; [1966] 36 Comp Cas 626 (Ch D).

31. Lastly, Mr. Nag submitted that the contention of the opposing shareholders of suppression of material facts as to Bangladesh shareholders being interested, source of funds and terms of purchase of shares by the transferee-company in the petitioner-bank and Mr. S. N. Sen's dual capacity, that he is director-cum-solicitor of United Bank of India, the petitioner-bank, in the explanatory statement, Mr. Nag contended that the facts must be material in facts and in law having regard to the effect of suppression. He cited Jagannath Gupta & Co. P. Ltd. v. Mulchand Gupta : AIR1969Cal363 .

32. Mr. Nag after his elaborate arguments which I have noted above submitted that the scheme should be sanctioned with or without modification as the court thinks fit.

33. Mr. S. C. Sen in reinforcement of the arguments on behalf of the petitioners submitted that it is for the industrial and economic growth and advancement of the State of West Bengal the scheme should be sanctioned in the present set up. He submitted that court must take a practical view prevailing at the date of making the order whether the scheme envisages to carry out the aim and object of the country as a whole. He referred to a Government of India publication 1972 being the Report of the Banking Commission at page 396 under Chapter 16, 'The need for specialised financial institutions'. He read out Articles 16.3 at page 395 of the said report, 16.6 at page 397 and 16.10 at page 398 which are as follows :

' 16.3 Merchant banking type of institutions in foreign countries are financial intermediaries which offer varied services like the promotion and syndication of industrial projects, investment management and advisory services. In the U. K. they also undertake acceptance business to enable the bills of their clients to be discounted at low rates of interest. The questions which required examination are whether such institutions are required in India and if so, what should be their functions and the best form of their organisation.

16.6 These institutions which should give their services to Indian Companies and to Indian joint ventures abroad would be required to perform the following functions. On the basis of examination of a project, the institutions should design and negotiate a financial package which would meet the specific type and terms of financing needed by the client. In appropriate cases, they may also agree to guarantee the loans obtained by a company. They should also offer various services involved in the syndication of projects like assisting in the reorganisation of companies, negotiation about mergers, making feasibility studies of a project and giving advice on the rules and regulations of stock exchanges. The proposed institutions will be particularly useful to medium-sized business which finds it very difficult to float an issue in the market. In such cases merchant banking institutions can help by placing issues privately with financial institutions at reasonable terms.

16.10 Once the need for setting up merchant-banking institutions is accepted the questions of their structure and administration arise.

In the Commission's view, initially there could be four merchant banking institutions located in Bombay, Calcutta, Madras and New Delhi, set up by commercial banks and specialised financial institutions ; later branches can be set up by these institutions at other important centres also. Subject to proper safeguards to ensure the integrity of operations and depending on investment expertise and management standards, other agencies may also be allowed to set up merchant banking institutions. It may be emphasised that for the successful working of the proposed merchant banking institutions it will be necessary to organise a training programme for their staff because the major resources for these institutions will have to be their skill and expertise.'

34. The said report in its introduction in Chapter 1 has given a genesis of the Banking Commission and has reviewed the growth and development of banking business in India and the previous report in 1931. It has been observed :

' The various changes in the banking system and in the Government policy affecting banks reflect, in a large measure, the changing political and economic climate of the country. The adoption by the country of a specia-listic ideology gave rise to a change in the public attitude towards banks and in the expectations of the public regarding services which the banks could render to the community at large.'

35. Relying on the said report and special reference to the merchant banking type of institutions which has been noted in the said report, Mr. Sen rightly submitted that the present scheme envisages the progressive and current trend of industrial and economic advancement of the country having a socialistic ideology and should be sanctioned. He also quite rightly submitted that most of the shareholders who are objecting to the sanction of the scheme are mere speculators who have acquired the shares from the market at a low price and trying to get a higher amount by way of compensation and thereby earn a huge profit, if possible. He rightly submitted that the objections are not bona fide and neither tenable in law or in fact. The scheme should be sanctioned as it is in conformity with the statute and the policy of our country in the present set up.

36. Mr. D. P. Gupta with Mrs. Ruma Pal appearing for the State of West Bengal has also supported the said application for sanction of the scheme. Various other shareholders also supported the said application for sanction of the scheme and appeared through Mr, Sankardas Banerjee, Mr. M. A. Latif, Mr. Somnath Chatterjee with Mr. Dipankar Ghosh and Mr. S. K. Acharya with Mr. J. N. Haldar.

37. Various other shareholders appeared through their respective counsel and opposed the application for sanction of the scheme and adopted the arguments of Mr. Bachawat, Mr. Prabir Sen and Mr. R. C. Deb.

38. I have set out before the arguments in support of the petitioners and also arguments of the opposing group as and when through their respective counsels.

39. Considering the matter very carefully and without going into the details of the mass of the decisions cited by both the groups before me, I am of the view that the court in this application is only to consider before sanctioning the scheme whether the three conditions are satisfied. Firstly, statutory requirements under Section 391 of the Companies Act, 1956, have been complied with ; secondly, there is a fair and free representative voting at the statutory meeting held under the directions of the court and, lastly, whether the scheme is such which an intelligent and honest man of business would reasonably approve.

40. On the first question whether the statutory requirements have been complied with or not, a contention was raised by Mr. S. B. Chakraborty that the chairman of the meeting had no power to adjourn the meeting directed to be held by him under the first order dated the 29th August, 1970, and a meeting held on 29th of September, 1970. The decision in John v. Rees [1969] 2 All ER 274 (Ch D) cited by Mr. Chakraborty in support of his contention that the chairman had no power to adjourn the meeting sine die, is really against this proposition as Megarry J. in dealing with a question of validity of a meeting and the adjournment of the same of an unincorporated body according to its rules where there was a disorder in the meeting which was adjourned by the chairman, it was observed at page 290 of the said report (See [1969] 2 All ER 274 ; [1969] 2 WLR 1314) as follows :

' ..... I have to consider the question of law whether the chairman of a meeting has an inherent power to adjourn it for disorder. Counsel for the plaintiff contends that there is such a power, though he accepts that if it is improperly exercised, the adjournment is ineffective. Counsel for the defendants primarily contends that the chairman has no such inherent power. However, if that submission is wrong, he has a battery of alternative submissions. '

41. And after discussing the respective contentions and the large number of decisions cited, Megarry J. quoted with approval a passage from a book, A Practical Arrangement of Ecclesiastical Law, F. N. Rogers Q.C. at page 292 of the said report (See [1969] 2 All ER 274 ; [1969] 2 WLR 1316) as follows :

' by no means interferes with the right which every chairman has to make a bona fide adjournment, whilst a poll or other business is proceeding, if circumstances of violent interruption make it unsafe, or seriously difficult for the voters to tender their votes ; nor of adjourning the place of polling, if the ordinary place used for that purpose be insufficient, or greatly inconvenient. In most of such cases, the question will turn upon the intention and effect of the adjournment, if the intention and effect were to interrupt and procrastinate the business, such an adjournment would be illegal ; if, on the contrary, the intention and effect were to forward or facilitate it, and no injurious effect were produced, such an adjournment would, it is conceived, be generally supported. '

42. And then again in page 293 it is observed as follows (See [1969] 2 All ER 274 ; [1969] 2 WLR 1317) :

'The first duty of the chairman of a meeting is to keep order if he can. If there is disorder, his duty, I think, is to make earnest and sustained efforts to restore order, and for this purpose to summon to his aid any officers or others whose assistance is available. If all his efforts are in vain, he should endeavour to put into operation whatever provisions for adjournment there are in the rules, as by obtaining a resolution to adjourn. If this proves impossible, he should exercise his inherent power to adjourn the meeting for a short while, such as 15 minutes, taking due steps to ensure so far as possible that all present know of this adjournment. If instead of mere disorder there is violence, I think that he should take similar steps, save that the greater the violence the less prolonged should be his efforts to restore order before adjourning. In my judgment, he has not merely a power but a duty to adjourn in this way, in the interests of those who fear for their safety. I am not suggesting that there is a power and a duty to adjourn if the violence consists of no more than a few technical assaults and batteries. Mere pushing and jostling is one thing ; it is another when people are put in fear, where there is heavy punching, or the knives are out, so that blood may flow, and there are prospects, or more, of grievous bodily harm. In the latter case, the sooner the chairman adjourns the meeting the better. At meetings, as elsewhere, the Queen's Peace must be kept.

If, then, the chairman has this inherent power and duty, what limitations, if any, are there upon its exercise First, I think that the power and duty must be exercised bona fide for the purpose of forwarding and facilitating the meeting, and not for the purpose of interruption or procrastination. Second, I think that the adjournment must be for no longer than the necessities appear to dictate. If the adjournment is merely for such period as the chairman considers to be reasonably necessary for the restoration of order, it would be within his power and his duty ; a longer adjournment would not. One must remember that to attend a meeting may for some mean travelling far and giving up much leisure. An adjournment to another day when a mere 15 minutes might suffice to restore order may well impose an unjustifiable burden on many ; for they must either once more travel far and give up their leisure, or else remain away and lose their chance to speak and vote at the meeting.'

43. Thereafter, on the facts of that case, the learned judge held that the adjournment fell far short of what the law required.

44. In my view, from the chairman's report dated the 11th of November, 1970, and the affidavit of the said Rangaswami, junior, affirmed on the 5th of December, 1970, makes it quite clear that the adjournment of the said meeting was not only necessary but the only course left open to the chairman and he was right in doing so and as that was a statutory meeting to be held under an order of the court, a fresh order was required or at least thought to be proper for holding the adjourned meetings. In fact in such an application being made by the petitioners, which was opposed by Mr. S. B. Chakraborty, I have made an order on the 7th of January, 1972, overruling the identical contention of Mr. Chakraborty. Regarding the power of adjournment by the chairman and court's jurisdiction to direct fresh meetings or the adjourned meetings to be held, I am not setting out the reasonings again which I have given for the said order in my judgment dated the 7th of January, 1972, directing the adjourned meeting to be held. And pursuant to which the meetings have been finally held on the 8th of May, 1972, where the scheme of amalgamation has been passed by requisite majority with certain modifications and the chairmen have duly filed their reports.

45. Therefore, I have no hesitation in holding that the chairman had implied power to adjourn the meetings and, in any event, the order dated the 7th of January, 1972, gave clear mandate to the chairman by the court in terms of Section 391(1) of the Companies Act, 1956, to hold the statutory meeting which was finally held on the 5th of May, 1972, pursuant to the said order. There is no substance in the contention of Mr. S. B. Chakraborty that the chairman had no power to adjourn the meetings and held the same pursuant to the order of the court.

46. Regarding the next contention of Mr. Chakraborty that from the appointed day under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, the banking company, viz., United Bank of India Ltd., ceased to exist as its entire undertaking being the banking business was taken over by the Central Bank under the said Act, I also find no substance in the same. Mr. Chakraborty's further contention was that the company after the acquisition under the said Act existed only for the purpose of distribution of the compensation to be paid under the said Act and for no other purpose. Such a construction is not only absurd but unwarranted and unknown in any principle of law. The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, has not made any provision for dissolution of the United Bank of India Ltd. and winding up of the same. On the other hand, in the definition in Section 2(f) ' existing bank ' is defined as meaning a banking company specified in column 1 of the First Schedule being a company, the deposits of which, as shown in the return as on the last Friday in June, 1969, furnished to the Reserve Bank under Section 27 of the Banking Regulation Act, 1949, were not less than Rs. 50 crores. The said definition makes it perfectly clear that the banking company being the United Bank of India Ltd., which is the seventh name in column 1 of the First Schedule to the said Act, is clearly kept alive as a company under the Companies Act, and its banking business and assets is the undertaking taken over by the Central Bank under the said Act on payment of compensation. The said word ' existing bank ', that is, the United Bank of India Ltd., is given the right to get compensation under Section 6 of the said Act in the manner provided therein. There is nothing in the said Act to show that the existing bank was dissolved whereas it is just the contrary and indicates that the company continued its corporate existence under the company law and its banking business and its assets is only substituted by the compensation money. That seems to me the only effect of the said Act taking over the banking companies mentioned in column 1 of the First Schedule of the said Act. Further, the decision in the case of Central Bank of India Ltd. and United Bank of India Ltd. regarding amalgamation with existing companies of the Bombay High Court which has been referred to at the bar by both the parties clearly indicates that there is no question of the United Bank of India Ltd. ceasing to exist as a company under the Companies Act, 1956. On the other hand, from the said decisions it is quite clear that those existing banks continued to be governed by the Companies Act, 1956, as existing companies being the existing banks under the said Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. Therefore, in my view, there is no substance in the said contention of Mr. Chakraborty that the United Bank of India Ltd. ceased to exist as a company on and from the appointed day, i.e., 19th July, 1969.

47. The other question seriously argued was whether the United Bank of India Ltd. had power to amalgamate under the object clauses of its memorandum of association as, if there was no such power, the scheme of amalgamation cannot be sanctioned without the amendment of the object clause incorporating a clause giving power to amalgamate with the petitioner-bank. Firstly, in my view, the combined effect of Clauses (j), (k), (m) and (n) of the memorandum of association of the United Bank of India Ltd. clearly gives a power to the company to amalgamate. It is true that in the said two clauses the word 'amalgamate' has not been used and whether the company can be taken over, to take over other company is not specifically mentioned. But if the said four clauses are read as a whole, in substance it gives a power to the company to amalgamate with another company. I cannot accept the contention of Mr. Bachawat that those four clauses only give power to the company to take over another company and not to be taken over by another company, or it can only amalgamate with another company having similar object, that is, banking business. Further, in my view, the net result of the decisions in Tata Industrial Bank's case AIR 1928 PC 180, Nagaisuree Tea Co.'s case [1966] 2 Comp LJ 208, Associated Hotels of India Ltd., In re [1968] 2 Comp LJ 292 (Cal) and Hari Krishna Lohia v. Hoolungooree Tea Co, Ltd. : AIR1969Cal312 clearly lays down that even if there is no express power in the memorandum of a company to amalgamate with another company, by virtue of a statutory power under Section 391 of the Companies Act, 1956, a court can always sanction a scheme of amalgamation if the statutory requirements are complied with. In view of the specific provisions in the statute being Companies Act, 1956, passages in Buckley on the Companies Acts, 13th edition, page 404, Palmer's Company Law, 21st edition, page 698, and Halsbury's Laws of England, 3rd edition, volume 6, page 614, and Pennington's Company Law 2nd edition, page 438, have no application to India and the decision in Crown Bank, In re [1890] 44 Ch D 634 (Ch D) and Carton Tea [1966] 2 Com LJ 278 (Cal) seems to me to be contrary to the decision of the Division Bench of this court in Hari Krishna Lohia v. Hoolungooree Tea Co. Ltd. : AIR1969Cal312 . In any event, the said Division Bench decision is binding on me and I respectfully agree with the same.

48. It was contended that the observation in the said Division Bench was obiter, but, in 'my view, assuming it is so, even then it has a binding force, if not, certainly a guiding principle for other courts to follow. Therefore, I hold that both the petitioner-companies have power to amalgamate and if the statutory requirements are fulfilled, the court will have no difficulty in sanctioning the scheme of amalgamation in this application.

49. On the question whether the procedure followed in this case is unwarranted as the object could have been achieved by the United Bank of India Ltd. changing its name and altering its memorandum and articles and commencing new business, I also find no substance in the said contention that where there are several legitimate alternatives, means and procedure for attaining the same object there is no bar in choosing any one of them, according to the views of the directors and shareholders of a particular company. The method of floating a new company with the power to carry on a desired business and then amalgamating the existing company with the new company is a well-known procedure of the take-over or an amalgamation. The passage of Wiendur on Takeovers and Moon on Business Mergers and Take-over Bids referred to by Mr. Nag and Mr. S. C. Sen clearly set out the said method by which the object of amalgamation is attained. In my view, there is nothing wrong in the petitioner incorporating the petitioner No. 2 solely for the purpose of taking over the petitioner-bank.

50. Therefore, I cannot accept the contention that the petitioner-bank should have followed the other method of changing its name and objects clause in the memorandum for the purpose of attaining the same objects as it is sought to be attained by the present scheme of amalgamation with the newly formed company being the petitioner No. 2.

51. Then, on the question of sufficiency or adequacy of explanatory statement under Section 393 of the Companies Act, 1956, I am of the view that there is nothing wrong in the said explanatory statement. As such notice is settled by the officer of the court under the rules, I accept the contention of Mr. Nag that the explanatory statements in the notice are not at all defective. No objection was taken in the meeting, nor is there any material suppression of any relevant facts in the said notice. Further, the shareholders had knowledge of the relevant facts in view of the meeting previously adjourned due to pandemonium and it cannot be said that anything material was not known to them. In any event, in my view, the notice and the explanatory statements were not defective and in substantial compliance with the statutory provisions and the rules made thereunder. There is material distinction between explanatory statement under Sections 173 and 393 of the Companies Act, 1956. In this particular case the notice has been settled by the Registrar under the relevant company rules and it is in substantial compliance with the provisions of the Act. Therefore, I hold that there is no substance in the said contention of the opposing shareholders that the explanatory statements were misleading or insufficient. In any event, none of the shareholders, in fact, has been misled and raised any objection regarding the said notice at the meeting which has been duly held and convened pursuant to the order of the court made under Section 391(1) of the Companies Act, 1956.

52. Next the question was raised regarding the non-service of notice on the Bangladesh shareholders. In my view, there is no substance in it and, in any event, notice to the Custodian of the Enemy Property under the Enemy Property Act--section 2(c), Section 7(3), Section 8(1)--are sufficient notice and in due compliance with the provisions of the Act. In my view, the decisions cited by the opposing group of shareholders have no application to the facts of this case. Further, even assuming that the Bangladesh shareholders have not been served with the notice it constitutes only a negligible portion of the shareholders.

53. On the next question regarding the conduct of the meeting resulting in no fair representation of class and as such no statutory majority, in my view, the analysis of the members present and actually voted even excluding the interested voters gives a clear majority and the statutory require-ments are duly complied with. I accept the contention of Mr, Nag and his analysis of the votes cast in the said meeting and hold that the scheme was sanctioned by reasonable and statutory majority. I need not discuss in detail the law on the subject as that is well settled, the whole question in fact in each case. Mr. Nag has referred to the relevant principles in his usual thoroughness and erudition. Further, in my view, most of the opposing shareholders are mere speculators who have purchased the shares of the petitioner-bank either from the market or from weak-holders at a lower price and are trying to get the scheme approved by the shareholders set aside so as to realise the higher compensation money, if possible.

54. Regarding the question of the scheme being unfair on merits, hypothetical, conditional, etc., I do not find any substance in the same save and except such contentions as have been raised relying on various decisions which are entirely on different background and different facts having no relevancy whatsoever in the facts and circumstances of the case. All of the said decisions relate to taking over or amalgamation of a company with an existing company, whereas, here, a new company has been incorporated for the purpose of the said amalgamation. As such, the principles relied on by the opposing group of shareholders cannot have any application whatsoever in the facts of the case, as, admittedly, the new company has not commenced its business but has only been incorporated for the purpose of taking over the petitioner-bank. Further, the court cannot speculate at this stage as to the possibility, potentiality of the amalgamated-company in future and its working. It is true that the court is not a mere rubber-stamp but, in sound exercise of its discretionary power to sanction a scheme, must consider the scheme as a whole having regard to the general conditions, background, and object of the scheme and the present day conditions, and atmosphere in the State where the companies are going to function. Court cannot take a pedantic and strict view of each and every clause in the scheme and speculate as to its future, feasibility and possibility at this stage. It is for the collective wisdom of the shareholders who are primarily businessmen and investors guided by the directors of a company to determine the course of business they choose. The principles are so well-known and even repeated by all the counsels appearing for both the parties that I need not discuss the same threadbare and it will be sufficient for me to hold that I accept the arguments and contentions of Mr. S. C. Sen, Mr. R. C. Nag and Mr. S. B. Mukherjee on this question which I have set out before. It is premature for the court to judge now whether the business envisaged by the scheme of amalgamation to be carried on in future would become profitable and a success. The court is only to see whether it is feasible having potentiality in the facts and circumstances of this case. In my view, prima facie, I am satisfied that in the present set up and conditions, particularly as it appears from the Report of the Banking Commission, the relevant articles of which I have quoted before, that there is nothing wrong or objectionable in the scheme of amalgamation being put through. In fact, the State of West Bengal appearing before me through Mr. D. P. Gupta is supporting the said scheme so also the Life Insurance Corporation of India and other statutory bodies. I have no hesitation in holding that the business of the amalgamated company is highly potential and conducive to the economy and development of the State of West Bengal in the present set up, when funds are urgently needed for the growth and development of existing and new enterprises. Further, the shareholders of the petitioner-bank never complained of the management of their company by its directors so far and suddenly they cannot have any reasonable and bona fide grievances against the said management and the scheme. It is true that names of eminent, well-known industrialists and respectable persons of integrity and honesty have been referred as prospective directors of the amalgamated company and they have not yet signified their consent of acceptance of such office but that in my view is not required at this stage, being premature. But the suggestion and intention as shown by the petitioners to appoint respectable, reliable and honest persons of high reputation as directors is enough for me at this stage to take into consideration the bona fide intention and object of the petitioner-companies.

55. Regarding the exchange ratio being unfair I hold that there is no substance in it as, firstly, the shareholders have approved by overwhelming majority the said exchange ratio and I accept the contention of Mr. S. B. Mukherjee and Mr. Nag who analysed the exchange ratio elaborately in their arguments as being fair and reasonable in the facts and circumstances of this case. It is well settled that the onus of showing the unreasonableness and unfairness of the exchange ratio and the scheme of amalgamation is entirely on the dissentient shareholders who, in my view, in this case, have utterly failed, except raising some technical, frivolous speculative and untenable contentions.

56. On the question whether the balance-sheet of the petitioner-bank shows its latest financial position, in my view, there is substantial compliance with the provisions of the statute and the same is sufficiently disclosed in this case. Regarding the question of obtaining the sanction of the Reserve Bank for carrying on the merchant-cum-banking business, Mr. Mukherjee rightly contended which I accept that no such sanction is required. I also find that the contention of the opposing shareholders that the petitioner No. 2 has not obtained its certificate of commencement of business is not correct as the same has been obtained on the 28th of August, 1970, and the original certificate was produced before me in court and as such the same is conclusive under Section 149(3) of the Companies Act, 1956.

57. Regarding the contention on behalf of the opposing shareholders that purchase of shares of the face value of Rs. 25 lakhs by the petitioner No. 2 from the petitioner No. 1 is in violation of the provisions of Section 372 of the Companies Act, 1956, has no substance. As the said provision has no application in this case the purchase of the said shares is not within the mischief of the section and, in any event, it comes within the exception under Section 372(13) and (14) of the Companies Act, 1956,

58. Regarding the service of the notice on shareholders Mr, Mukherjee rightly contended with reference to Section 53 of the Companies Act, 1956, wherein the modes of service of documents on the members of the company are provided. In cases where a member has no registered address in India such notice may be served, if any address within India was supplied by him. Sub-section (3) of Section 53 also provides that a document advertised in the newspaper in the neighbourhood of the registered office shall be deemed to be duly served on the date on which the advertisement appeared on every shareholder of the company who has no registered address in India and has not supplied any address in India. On that ground also the service of the notice on the Bangladesh shareholders should be deemed to be in due compliance with the Act as there is no dispute that the advertisement has been duly issued by the chairman of the said meeting.

59. After careful consideration of the entire matter and after considering decisions and authorities cited both on behalf of the petitioners and their supporters and also on behalf of the opposing shareholders, I agree with the contentions of Mr. S. B. Mukherjee, Mr. R. C. Nag and also Mr. Samarendra Chandra Sen, who reinforced the arguments of Mr. S. B. Mukherjee which I have noted before. In my view, the present application must be judged in the light of prevailing circumstances in our country particularly in the State of West Bengal where the business of the amalgamated company is sought to be carried on after sanction is accorded to the said scheme of amalgamation, the subject-matter of this application. As I have already held the scheme of amalgamation has been approved by the requisite majority of the shareholders present and voted at the statutory meeting convened and held under the order of this court dated the 7th January, 1972, as would appear from the reports of the chairman annexed to the petition. Examining the scheme of amalgamation I am satisfied that the statutory majority are acting bona fide and the scheme of amalgamation is such that an intelligent and honest shareholder of the petitioners might reasonably approve. I have no doubt in my mind that the scheme of amalgamation is fair and reasonable and made in good faith and it will be conducive to the interest of the shareholders of the petitioners. On the other hand, I am also satisfied that some of the opposing shareholders are mere speculators who have purchased the shares of the petitioner-bank at a lower price and trying to take advantage of the higher compensation money paid if possible. They have no interest whatsoever in the benefit or advantage to be derived by the shareholders by the said scheme of amalgamation under the present condition and atmosphere of the State. The said opposition do not seem to me to be bona fide and for the interest of the shareholders or the petitioners as a whole. However, the said resolution has been passed by the statutory majority and the scheme of amalgamation appears to me to be reasonable, feasible and conducive to the interest of the shareholders present and voting in the meeting and there is substantial compliance with the statutory requirements of serving notice on the shareholders and setting out the statements as required under Section 393 of the Companies Act, 1956, in the said notice which has been settled by the Registrar of this court under the Companies (Court) Rules.

60. I may note here that the decisions cited on behalf of the opposing group of shareholders are not applicable to the facts of the present case which seems to me a case, in substance, of reconstruction of a company following the procedure of scheme of amalgamation by incorporating a new company specifically for the said purpose. This is a well-recognised method of reorganisation and reconstruction of a company and I do not find there is anything wrong in the said scheme of shareholders approving the said scheme and the directors are actuated by any sinister motive as sought to be imputed by the opposing group of shareholders. On the other hand, some of the objecting group of shareholders are mere speculators and based their objections on mere speculation and conjecture as to what would happen in future and so on. This is not a case of two existing companies amalgamating and as such the principle applicable to such cases has no bearing in the instant case. And after careful consideration of the scheme I cannot find anything wrong with the same ; on the other hand, it may prove very beneficial to the shareholders having regard to the present business climate in our country and particularly in the State of West Bengal. As all the requirements have been duly complied with I accept the contention of Mr. Samarendra Chandra Sen, Mr. S. B. Mukherjee and Mr. R. C. Nag in support of the sanction of the scheme of amalgamation approved by the requisite majority of the shareholders in the duly held statutory meetings pursuant to an order of this court, and I reject the contention raised by Mr. R. C. Deb, Mr. B. S. Bachawat and Mr. Prabir Sen on behalf of the opposing group of shareholders as they have no application to the facts of this case.

61. Therefore, I am making the following order :

There will be an order in terms of prayer (a) subject to further modification that all the dissenting shareholders of the petitioner No. 1 should be paid for their shares by the petitioner No. 2 at the prevailing rate, that is, the last quoted price in the Calcutta Stock Exhange Daily Quotation Report if they tender their shares together with relative share scrips and transfer deeds duly executed within 31st of August, 1973.

62. There will be orders in terms of prayer (b), (c), (d), (e) and (f) subject to this that the transferee-company do, within 30 days of the receipt of the sanction and approval for issue of shares and allotment of shares by the Central Bank of India, Controller of Capital Issues and Reserve Bank of India and entering into contract of employment with the employees of the said transferee-company, cause a certified copy of this order to be delivered to the Registrar of Companies, West Bengal, for registering the same on such copy being so delivered, the transferor-company be dissolved with effect from the date of the said delivery to the said Registrar of Companies, West Bengal, and the said Registrar of Companies, West Bengal, do place all documents relating to the said transferor-company and registered with him on the file to be kept by him in relation to the said transferee-company and the files relating to the said transferee and transferor companies be consolidated accordingly.

63. Parties to bear and pay their own costs.


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