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Judgment
Deepak Gupta, J.—Briefly stated the facts of the case are that the petitioners M/s. Nu-Line Industries P. Ltd. (hereinafter referred to as "the transferor company No. 1), M/s. Swati Storwel P. Ltd. (hereinafter referred to as "the transferor company No. 2) and M/s. Sturdy Industries Ltd. (hereinafter referred to as "the transferee company") are all companies duly incorporated under the Companies Act, 1956 (hereinafter referred to as "the Act"). The three companies have their headquarters in the State of Himachal Pradesh. The three companies filed petitions under Sections 391 and 394 of the Act for sanction of a scheme of "amalgamation which provided for amalgamation of the two transferor companies with the transferee company. Directions were sought for by the petitioners in Company Petitions Nos. 7, 8 and 9 of 2008 for exempting certain meetings and holding of certain meetings of the shareholders and creditors of the companies. Detailed orders were passed in all these petitions on June 4, 2008, wherein after going through the entire company petitions this Court, on the basis of the documents placed on record came to the prima facie conclusion that the merger of the companies would result in better synergy since all the companies are engaged in the same business. Therefore, separate directions were issued in all the petitions.
In the case of M/s. Nu-Line Industries transferor No. 1 the meeting of the unsecured creditors was dispensed with since all the unsecured creditors had consented to the scheme. Therefore, it was directed that meeting to ascertain the views of the equity shareholders and the secured creditors be held.
In respect of transferor company No. 2 the meeting of the unsecured creditors was dispensed with since there was only one secured creditor whose claim was also not very significant. It was directed that the meeting of the equity shareholders and the secured creditors be held.
As far as the transferee company was concerned the meeting of the preference shareholders was dispensed with but meetings of the equity shareholders, secured creditors and unsecured creditors were directed to be held. Directions were given appointing the chairman and alternative chairman for these meetings which were fixed on July 19 and 20, 2008.
After the aforesaid, directions were issued, Shri S.S. Gupta and his wife Smt. Sharda Gupta filed company applications for being impleaded as parties in the company petitions and prayed that the meetings fixed be stayed or be postponed. These applications came up before me on July 18, 2009, on which date the following order was passed on the application(s) filed by them:
By means of this application, the applicant has prayed that the meeting of the shareholders, secured and unsecured creditors of the company called for be stayed or postponed. This Court had passed detailed orders as far back on June 4, 2008 and the meeting is fixed for July 19 and 20, 2008. Therefore, at this stage, it would not be appropriate to either stay the meetings or postpone the same. Notices have already been issued to all the shareholders/secured and unsecured creditors and other persons who may be interested to attend the meetings. The citations have already been published and heavy expenses incurred in this behalf.
Therefore, without commenting on the merits of the application, at this stage the prayer for postponement/cancellation and adjournment of the meeting is rejected. However, in view of the serious allegations made in the application, it is made clear that the proposed scheme shall not be approved/sanctioned u/s 394 of the Companies Act, 1956, till this application is disposed of.
Consequently, the meetings were conducted by the chairman/alternate chairman appointed by this Court. As per the reports of the chairman of the said meetings the shareholders and the creditors of all the three companies in the meetings so held approved the scheme of amalgamation with such modification as this Court may deem fit and proper.
Thereafter, the companies have filed Company Petitions Nos. 12, 13 and 14 of 2008 for confirmation of the scheme of amalgamation and passing an order sanctioning the scheme of amalgamation. These petitions have been opposed by Shri S.S. Gupta and Ms. Sharda Gupta by filing objections to the company petitions on various grounds. Shri S.S. Gupta one of the objectors is the brother of Shri M.L. Gupta and Shri Ramesh Gupta. According to the objectors these three brothers along with their families had promoted the three petitioner-companies and six other companies which are all family companies. It is alleged that in Nu-Line Industries Ltd., transferor company No. 1 Shri S.S. Gupta and Shri M.L. Gupta were the two directors. According to the objectors on February 10, 2007, Shri Amit Gupta son of Shri M.L. Gupta was shown to have been inducted as additional director without any board meeting having been conducted. It was stated that Shri S.S. Gupta was not present in any such meetings. It was alleged that Shri S.S. Gupta had been removed from the directorship of the company without holding any proper meeting and without issuing notice to him in accordance with law. Another ground raised is that the shareholding pattern of the companies was changed only with a view to show majority in favour of Shri M.L. Gupta, etc.
In respect of M/s. Swati Storwel P. Ltd., transferor company No. 2 it was stated that Smt. Sharda Gupta was one of the directors and she had been illegally removed by the company. It was also alleged that the shareholding of the company had been changed with a view to garner a majority by the other group.
According to the objectors against the illegal removal of the applicants from the board of directorship of the two companies and further illegal action of the petitioners, the objectors preferred Company Petitions Nos. 164 to 172 of 2007 before the Company Law Board, New Delhi (hereinafter referred to as "the Company Law Board"). These petitions were still pending for hearing. In respect of both the petitions, according to the objectors, the petitioners have withheld material information from this Court and from the shareholders and the creditors inasmuch as they have not made any reference to the disputes inter se the parties and the proceedings before the Company Law Board.
Reply was filed by the petitioners denying these allegations and it was averred that nothing material was withheld from the court and the court was apprised of all the necessary facts. According to the original petitioners the proceedings under Sections 397 and 398 of the Companies Act are totally different proceedings which have no relevance to the amalgamation scheme. It was contended that Shri Amit Gupta was rightly appointed as director of M/s. Nu-Line Industries and similarly it is submitted that the objectors were removed from the directorship of the two companies after following the due procedure.
Rejoinder was filed in which the pleas made in the objections were reiterated. The authority of Mr. Amit Gupta to file company petition on behalf of M/s. Nu-Line Industries was specifically disputed. The removal of Shri S.S. Gupta from M/s. Nu-Line Industries and Ms. Sharda Gupta from M/s. Swati Storwel is alleged to be illegal. It is further alleged that some of the affidavits filed in support of the original petitions are in fact blank but have been shown to have been attested by the notary public and therefore it is contended that, the meetings have not been conducted in accordance with law.
The matter was heard in detail on June 25, 2009 and judgment was reserved but while dictating the judgment it transpired that after the judgment was reserved the original petitioners had filed certain documents on July 1, 2009. Therefore, the arguments were re-heard.
I have heard Ms. Jyotsna Rewal Dua, learned Counsel for the objectors and Mr. P. Nagesh, learned Counsel for the petitioners at length. I have also perused the entire record of the case.
The first and foremost question which arises for consideration is whether Shri Amit Gupta was properly appointed as director of M/s. Nu-Line Industries or not. Shri Amit Gupta is alleged to have been appointed as additional director of transferor company No. 1 in a meeting of the board of directors held on February 10, 2007. It is not disputed that at that time there were only two directors of the company, namely, Shri M.L. Gupta and objector No. 1 Shri S.S. Gupta. According to Shri S.S. Gupta, he was not present when the meeting was allegedly held and therefore Shri Amit Gupta was not validly appointed as the additional director. Shri S.S. Gupta in fact filed an FIR with the police on June 28, 2007, alleging that he had wrongly been shown to be present on the said date. It is further alleged that even if the appointment of Shri Amit Gupta as additional director was valid this came to an end on the date when the next annual general meeting (AGM) was held, i.e., on September 29, 2007. In terms of Section 260 of the Companies Act the term of an additional director is only valid till the next annual general meeting. The petitioners however rely upon Form No. 32 sent to the Registrar of Companies regarding the appointment of Shri Amit Gupta as director in the company. This form purports to bear the digital signatures of Shri S.S. Gupta. The objector avers that his digital signatures have been misused by Shri Amit Gupta or Shri M.L. Gupta. All these issues are pending before the Company Law Board. I am clearly of the view that this Court while deciding a petition for amalgamation cannot sit as a court of appeal to decide whether the amalgamation is proper or not. However, it definitely can go into the question whether the petition has been validly presented before it. One of the conditions of the valid presentation is that the person who has filed the perition is legally authorised by the company to present the petition. Therefore, the challenge to the appointment of Shri Amit Gupta has to be looked into.
Though this issue cannot be decided finally at this stage still I must be prima facie satisfied that Shri Amit Gupta was a director of the company. Admittedly, Amit Gupta was director of transferor No. 1 company till 2005. Thereafter, Shri M.L. Gupta and Shri S.S. Gupta, objector No. 1 were the only two directors of M/s. Nu-Line Industries. The petitioners aver that on February 10, 2007, in a meeting of the company held at its registered office, Shri Amit Gupta was appointed as additional director. The objector S.S. Gupta denied this fact.
Even when arguments were heard on the previous date it was pointed out that there is nothing on record to show that Shri S.S. Gupta was present on the meeting held on February 10, 2007. The petitioners had annexed a copy of the minutes of the meeting of the board of directors held on February 10, 2007, showing that Amit Gupta was appointed as an additional director. The opening part of the minutes reads as follows:
Minutes of the meeting of the board of directors of the company held on 10th day of February, 2007, at 11. 00 hours at the registered office of the company present
Mr. M.L. Gupta - Director
Mr. S.S. Gupta - Director
After the arguments were heard the petitioners placed on record another document purporting to be a copy of the proceeding book of the company the opening part of which reads as follows:
Minutes of the meeting of the board of directors of the company held on 10th day of February 2007 at 1215 hours at the registered office of the company present
As per attendance register.
The moot question is whether Shri S.S. Gupta was present or not. Despite having filed documents even after arguments were heard, the petitioners for reasons best known to them have not filed a copy of the attendance register which would have borne the signatures of Shri S.S. Gupta if he was present. Since they have not filed any document to show the presence of Shri S.S. Gupta on the said date, adverse inference can be drawn against them.
18 According to the petitioners, in the annual general meeting held on September 29, 2007, Shri Amit Gupta was appointed as the director of the company. Minutes of the annual general meeting have been filed after the arguments were heard on the previous date. The opening portion of that meeting reads as follows:
Minutes of the annual general meeting of the company held on 29th of September, 2007, at 14.15 hours at the registered office of the company present
Mr. Mohan Lai Gupta-Shareholder
Mr. Ramesh Gupta-Shareholder
Mrs. Usha Gupta-Shareholder
Mr. Amit Gupta-Shareholder
Mr. Rajpal-Shareholder.
19 The election of Shri Amit Gupta was carried out vide resolution No. 8 which reads as follows:
Special business-Ordinary resolution:
Proposed by: Mr. Ramesh Gupta
Seconded by: Mr. Rajpal.
The following resolution having been proposed and seconded by the aforementioned two shareholders was taken up for consideration.
RESOLVED THAT pursuant to provision of Section 260 of the Companies Act, 1956 and other applicable provision if any, and pursuant of the articles of association of the company, Mr. Amit Gupta, who is appointed as additional director of the company and liable to retire on this annual general meeting, is hereby appointed as director of the company.
The above ordinary resolution was thereafter put to vote and on a show of hands was declared carried unanimously.
A perusal of this resolution shows that in contradiction to the earlier resolution dated February 10, 2007, wherein the presence is not shown, in the present case the presence of all the shareholders is specifically shown in the minutes. In this case, Shri Rajpal is shown to be present as one of the shareholders. It would also be pertinent to mention that the resolution whereby Shri Amit Gupta was purported to be appointed as the director has been allegedly seconded by Shri Rajpal. This is contrary to the other material on record.
The objectors have made reference to a large number of documents to show that the shareholding pattern of the company was changed by the majority to garner majority of votes in the meetings. It is pointed out that even as per the reply filed by M/s. Nu-Line Industries on November 5, 2007, before the Company Law Board there were only 13 shareholders up to March 31, 2005, out of whom C.D. Jain, Nathi Kanwani, Deepak Jain and C. M. Gupta have expired. Thereafter, up to March 31, 2006, 55,000 shares are shown to have been purchased by Shri M.L. Gupta, Shri Ramesh Gupta and Arravali Industries. According to the objectors, C.D. Jain, Nathi Kanwani, Deepak Jain and C.M. Gupta had died. S/Shri B.L. Surana, S.L. Nuberia, B.C. Jain and S.S. Gupta would have opposed the merger and therefore the majority would not have been in favour of the merger. In Company Petition No. 8 of 2008 filed before this Court the number of shareholders were inflated to 24. The objectors also rely upon another affidavit filed by the chartered accountant of the company before the Company Law Board on November 4, 2008, which reflects the shareholding as before. It is alleged that there is nothing on record to show that these shares were ever transferred.
On the other hand the petitioners submit that a resolution was passed on February 18, 2008, approving the transfer of shares. Shri Ramesh Gupta is purported to have transferred portion of his shares to as many as 15 other persons including Mr. Rajpal. By the same resolution transfer of the shares by S/Shri B.L. Surana, S.L. Nuberia, B.C. Jain and Nathi Kanwani in favour of Shri C.D. Jain have also been approved. It has been pointed out that Nathi Kanwani and C.D. Jain had died much earlier and therefore it is obvious that this approval is a forged document.
Admittedly, as per the stand of the petitioners, Mr. Rajpal only has 10 shares in the company which were transferred to him by Ramesh Gupta and approval for such transfer was given on February 18, 2008. It was argued by Mr. P. Nagesh on behalf of the petitioners that these transfers were made prior to February 18, 2008 and were only approved on the said date and it cannot be said that the transfers of the shares were invalid. However, if reference is made to the reply filed by the original petitioners on the affidavit of Shri Ramesh Gupta to Company Application No. 25 of 2008 in Company Petition No. 7 of 2008 it has been specifically stated as follows:
Mr. Ramesh Gupta has transferred his shareholding to the others on December 18, 2007. Accordingly the number of the shareholders of M/s. Nu-Line Industries P. Ltd., has increased from 13 to 24.
Shri Ramesh Gupta has made a specific averment on affidavit that the shareholding was transferred on December 18, 2007. Therefore, prior to December 18, 2007, Shri Rajpal had no shares in the company since admittedly he only has 10 shares which he purchased from Ramesh Gupta. If he was not a shareholder prior to December 18, 2007, how could he be present in the meeting, wherein Shri Amit Gupta was appointed as the director, which was held much earlier on September 29, 2007. If he became a shareholder only on December 18, 2007, he had no right to attend the meeting on September 29, 2007. This casts grave doubt on the veracity of the resolution dated September 29, 2007.
It has also been alleged that the removal of Shri S.S. Gupta and Smt. Sharda Gupta as directors from the two transferor companies was illegal and the procedure prescribed by law was not followed and no valid notices were issued to them before their removal. It has also been alleged that shareholding patterns of both the companies were changed only with a view to get the majority in their favour.
Ms. Jyotsna Rewal Dua has also alleged that even the affidavits produced before this Court in support of the company petitions are false and some of them are blank.
Ms. Jyotsna Rewal Dua filed written submissions pointing out with precision the persons whose signatures in the affidavits filed in the court did not tally with the signatures on the ballot papers. An opportunity was given to the petitioners to file counter reply. They have replied to the same and have admitted that in certain cases the signatures on the ballot papers is different from the signatures given in the affidavits. In some of the cases the explanation given is that whereas in the affidavit the person has signed in one language he has signed the ballot paper in some other language. The other explanation given is that in some of the cases the shareholders did not put their signatures on the ballot paper but have only initialed the same. This explanation cannot be accepted in all the cases. In some case even according to the petitioners the signatures do not tally at all.
It is also pointed out that whereas the affidavits are purported to have been signed at one place the stamp papers have been signed at some other place. This fact has not been specifically denied but it has been stated that this was done due to convenience. A large number of cases have been brought to the notice of this Court where the stamp papers are purchased in Himachal but the deponents are residents of some other place but all the affidavits have been shown to have been attested by the notary public at Hyderabad. Even the manner of attestation of the affidavits leaves much to be desired. In some of the cases the dates of verification of the affidavits are totally blank. In some of the cases the date of verification does not tally with the date of attestation of the affidavits. The explanation given is that the stamp papers were purchased in Himachal Pradesh. The affidavits were got prepared and sent for signatures of the deponents who got them notarised and returned the same to the company. However, this cannot be accepted because in certain cases the stamp papers are purchased in Andhra Pradesh and the affidavits are reported to be attested at Chandigarh, Pune or some other place. This belies the stand of the company that the affidavits were got prepared in Himachal Pradesh and sent to the deponents. It is also surprising that most of the affidavits of more than 75 per cent, of the shareholders have been attested by one notary that is Naresh K. Menan at Chandigarh. It is difficult to believe that all these persons who are residents of different places were all present it Chandigarh on one date.
It may be true that these affidavits were not accepted by this Court and meeting of the creditors and shareholders of M/s. Swati Storwel was called but this shows that the petitioners did not treat the proceedings with solemnity which is expected from litigants who approach the court. The petitioners have treated this Court in a very casual fashion. The affidavits filed in support of the petitions for dispensation of the meetings were filed very casually. Most of them do not bear any date or verification. They seem to have been got attested in a mechanical fashion.
When a company approaches the court for approval of the scheme of amalgamation it must come to the court with clean hands. It must apprise the court of all facts which are in any way connected even if remotely with the amalgamation. In the present case the petitioners made no reference to the proceedings pending before the Company Law Board as the disputes with the objectors.
Shri P. Nagesh appearing for the petitioners has placed reliance on the judgment of the apex court in Miheer H. Mafatlal Vs. Mafatlal Industries Ltd., wherein the apex court held as follows (page 818 of 87 Comp Cas):
In view of the aforesaid settled legal position, therefore, the scope and ambit of the jurisdiction of the company court has clearly got earmarked. The following broad contours of such jurisdiction have emerged:
(1) The sanctioning court has to see to it that all the requisite statutory procedure for supporting such a scheme has been complied with and that the requisite meetings as contemplated by Section 391(1)(a) have been held.
(2) That the scheme put up for sanction of the court is backed up by the requisite majority vote as required by Section 391(2).
(3) That the concerned meetings of the creditors or members or any class of them had the relevant material to enable the voters to arrive at an informed decision for approving the scheme in question. That the majority decision of the concerned class of voters is just and fair to the class as a whole so as to legitimately bind even the dissenting members of that class.
(4) That all necessary material indicated by Section 393(1)(a) is placed before the voters at the concerned meetings as contemplated by Section 391(1).
(5) That all the requisite material contemplated by the proviso to Sub-section (2) of Section 391 of the Act is placed before the court by the concerned applicant seeking sanction for such a scheme and the court gets satisfied about the same.
(6) That the proposed scheme of compromise and arrangement is not found to be violative of any provision of law and is not contrary to public policy. For ascertaining the real purpose underlying the scheme with a view to be satisfied on this aspect, the court, if necessary, can pierce the veil of apparent corporate purpose underlying the scheme and can judiciously x-ray the same.
(7) That the company court has also to satisfy itself that members or class of members or creditors or class of creditors, as the case may be, were acting bona fide and in good faith and were not coercing the minority in order to promote any interest adverse to that of the latter comprising the same class whom they purported to represent.
(8) That the scheme as a whole is also found to be just, fair and reasonable from the point of view of prudent men of business taking a commercial decision beneficial to the class represented by them for whom the scheme is meant.
(9) Once the aforesaid broad parameters about the requirements of a scheme for getting sanction of the court are found to have been met, the court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the court there could be a better scheme for the company and its members or creditors for whom the scheme is framed. The court cannot refuse to sanction such a scheme on that ground as it would otherwise amount to the court exercising appellate jurisdiction over the scheme rather than its supervisory jurisdiction.
The aforesaid parameters of the scope and ambit of the jurisdiction of the company court which is called upon to sanction a scheme of compromise and arrangement are not exhaustive but only broadly illustrative of the contours of the court''s jurisdiction.
Reliance is also placed on the judgment of the Bombay High Court in Niulab Equipment Co. P. Ltd., In re [2009] 152 Comp Cas 375 : [2009] 3 Comp. LJ 87, wherein the court held as follows (page 384):
The mere fact of a violation of the provisions of Sections 235 to 251 by itself does not invalidate or warrant the court refusing to sanction a scheme of arrangement under Sections 391 to 394, including a scheme of amalgamation. It is not every violation of these Sections that disentitles a scheme being proposed or sanctioned. It is only those violations which adversely reflect upon or affect the scheme that would persuade the court not to sanction the scheme. That Section 391(2) only requires the disclosure of all material facts to the court, establishes this. If it were otherwise, Section 391, and in particular, Sub-section (2) thereof, would have been worded differently. The purport of Section 391(2) is that all the material facts relating to the company including the pendency of any investigation proceedings in relation to the company under Sections 235 to 251 and the like, ought to be disclosed to the court in order to enable the court to decide whether or not the scheme ought to be sanctioned in view of such facts. The manner of exercise of discretion would then depend upon the facts of each case.
Similarly reliance is placed on the judgment of the Delhi High Court in Modiluft Ltd., In re [2004] 119 Comp Cas 142, wherein the court held as follows (page 150):
Secondly, the mere filing of suits on the original side by one of the rivals to the propounder of the scheme cannot be construed to be a bar to entertaining a scheme in the absence of any interim order. If Mr. Sawhney''s plea as to the existence of dispute as to the management pending in this Court as bar for propounding a scheme by the existing management is accepted, then all that an objector/opponent has to do is to file a suit and dub the management as disputed, to thwart a scheme. If such a plea is accepted even a suit without merit filed to ostensibly dispute the management''s credentials, can have the effect of stalling a revival scheme for several years. Such a plea of Shri Sawhney about the pendency of a suit about the control of the company being a bar against the consideration of this scheme u/s 391 cannot, therefore, be accepted, inter alia, in the absence of an interim order given in the civil suit. I am also not bound to consider the other pleas of the objectors at this stage as the creditors of this company are yet to give their verdict on the feasibility and desirability of the scheme.
There can be no quarrel with the proposition of law that it is the shareholders and creditors of the company who have the right to decide whether they want the scheme of amalgamation/arrangement to be carried out or not. This Court cannot sit in appeal over their decision but this Court must ensure that the scheme has emanated from a legally authorised person and that all the necessary information has been given to the shareholders and creditors. In the present case, admittedly the two groups are battling it out before the Company Law Board. Serious allegations have been levelled by the objectors that Shri S.S. Gupta was not present when Shri Amit Gupta was appointed director of the company. In the first document filed in the court presence of Shri S.S. Gupta is reflected in the minutes itself. When after arguments were first heard another set of documents was filed by the petitioners in which the presence of Shri S.S. Gupta is not recorded but it is recorded "present as per the attendance register". However, no copy of the attendance register has been placed on record. Therefore, the petitioners have prima facie failed to prove the presence of Shri S.S. Gupta at the said meeting. Even assuming that Shri Amit Gupta had been appointed as additional director, he could only continue as such till the next annual general meeting. He is alleged to have been appointed as director in the next annual general meeting on September 29, 2007, when his name was seconded by Shri Rajpal who is shown to be present as one of the shareholders. As already discussed above, Shri Rajpal was not a shareholder on September 29, 2007 and as per the affidavit of Shri Ramesh Gupta he had sold the shares to Rajpal only on December 18, 2007. This casts a doubt on the authority of Shri Amit Gupta to file the petition for amalgamation itself. Admittedly, there should have been at least two directors in the company. If Amit Gupta was not a validly elected director then there was no proper directorship of the company. I do not want to delve further into the matter since this matter is pending before the Company Law Board.
Similarly, the removal of Shri S.S. Gupta and Smt. Sharda Gupta has been challenged on the ground that their removal was not in accordance with law. No doubt these matters are pending before the Company Law Board. It is the Company Law Board which has the jurisdiction to decide these matters. However, these matters go to the root of the case because these are closely held family companies where change in directorship can change the entire scenario. The shareholding pattern has also admittedly changed drastically. There can be no fetters to the transfer of shares but here we are considering the case where after disputes have arisen the shares are allegedly sold by one of the warring groups that is Ramesh Gupta to a large number of persons.
As already held above there seems to be something amiss even in the transfer of shares since the document evidencing the appointment of Amit Gupta as director shows the presence of Rajpal a shareholder on September 29, 2007, whereas the shares were sold to him, even as per the petitioners, on December 18, 2007, that is almost three months later.
The petitioners for reasons best known to them did not even make a whisper in their original pleadings that Shri S.S. Gupta and Mrs. Sharda Gupta had filed proceedings against them before the Company Law Board. It was only after S.S. Gupta appeared that this fact came to the notice of this Court. It is alleged that these proceedings have no connection with the present cases. I am unable to accept this submission. One of the main issues before the Company Law Board is whether Shri S.S. Gupta was validly removed; the other main issue before the Company Law Board is whether Amit Gupta was validly appointed as director or not. These issues also go to the root of the matter since the very presentation of the present petitions by the transferor companies and transferee company would be illegal in case the objections of the objectors are allowed by the Company Law Board. It is more than apparent that with a view to thwart any orders that may be passed by the Company Law Board and to render infructuous the orders, if any, passed in favour of the objectors the present petitions for amalgamation have been filed. The creditors and the shareholders had a right to know about these disputes which went to the root of the matter.
The petitioners are also guilty of filing the proceedings in a very casual manner. As pointed out above most of the affidavits filed along with the original petitions were verified and attested in a mechanical manner. There is discrepancy between the affidavits and the ballot papers and therefore the possibility of impersonation during the meetings cannot be ruled out.
There are a number of shortcomings in the case of the petitioners. Individually each one of them may not have been sufficient to reject the petitions but when we take all of them into consideration it is obvious that there are reasonable grounds to doubt the appointment of Shri Amit Gupta as additional director and later as director of M/s. Nu-Line Industries. This will affect the validity of the petitions and the scheme. The removal of the objectors from the companies is still under challenge before the Company Law Board. The documents filed by the petitioners are contrary to each other. The petitioners withheld material facts from the court and later have filed documents which makes it apparent that they are trying to mislead the court. They have treated the proceedings in a very casual fashion. When all these factors are viewed cumulatively it is apparent that the petitioners are not entitled to any relief.
In view of the above discussion, I am of the considered opinion that keeping in view all the facts stated above, the scheme of amalgamation as presented by the petitioners cannot be approved/accepted till the matter is disposed of by the Company Law Board. All the company petitions are accordingly dismissed with costs assessed at Rs. 50,000. The costs to be deposited with the H.P. Legal Services Authority within four weeks from today. Exemplary costs have been imposed because it stands established that at every stage of the proceedings the petitioners have tried to either withhold information from this Court or to mislead the court.
All pending applications are disposed of in light of the disposal of the main company petitions.