In Re: Sterlite Industries (India) Ltd.

K.B.K. Vasuki, J.—All the petitions are filed by the petitioner companies seeking approval of this court for the scheme of amalgamation and arrangement amongst the amalgamating companies 1 to 3, demerged company on one hand and amalgamated company and their respective shareholders and creditors. Sterlites Industries (India) Ltd. (''SIIL'' and ''1st amalgamating company'') is the petitioner in CP No. 164 of 2012. The 1st amalgamating company was originally incorporated on 8th September, 1975 under the provisions of the Companies Act, 1956 (''the Act'') with the Registrar of Companies (''RoC'') in West Bengal under the name and style of Rainbow Investment Ltd. Subsequently, the name of the company was changed to Sterlite Cables Ltd. with effect from 19th October, 1976 and its registered office was shifted from the State of West Bengal to the State of Maharashtra on 29th October, 1979. Thereafter, the name of the company was again changed to Sterlite Industries (India) Ltd. on 28th February, 1986 and its registered office was transferred from the State of Maharashtra to the State of Tamil Nadu, pursuant to the order of the Company Law Board (''CLB''), Western Regional Bench, Mumbai dated 19th February, 2007 and a certificate of registration dated 7th March, 2007 was issued by the RoC, Chennai, Tamil Nadu. The Registered office of the company is now situated at SIPCOT Industrial Complex, Madurai Bypass Road, T V Puram PO, Tuticorin-628 002, Tamil Nadu, which comes within the jurisdiction of this court. A copy of the memorandum and articles of association of 1st amalgamating company has been filed as Annexure A. The authorised share capital of 1st amalgamating company is Rs. 5,000,000,000 divided into 5,000,000,000 equity shares of Re. 1 each. The issued, subscribed and paid-up share capital of 1st amalgamating company is Rs. 3,361,207,534 comprising of 3,361,207,534 equity shares of Re. 1 each fully paid-up, in which, unpaid allotment money/calls in arrears to the tune of Rs. 11,790 is to be deducted. A copy of the audited balance sheet of 1st amalgamating company for the period ending with 31st March, 2012 has been produced as Annexure B.

The Madras Aluminium Co. Ltd. (''MALCO'' and ''the 2nd amalgamating company'') is the petitioner in CP No. 165 of 2012. The 2nd amalgamating company was incorporated on 31st August, 1960 under the provisions of the Act and its registered office is situated at Mettur Dam Rs. 636 402, Salem District, Tamil Nadu, which comes within the jurisdiction of this court. A copy of memorandum and "articles of association of 2nd amalgamating company has been filed as Annexure A. The authorised share capital of 2nd amalgamating company is Rs. 235,000,000 divided into 117,500,000 equity shares of Rs. 2 each, in which, 250,000 13.5 per cent redeemable cumulative preference shares of Rs. 100 each is to be added, The issued, subscribed and paid-up share capital of 2nd amalgamating company is Rs. 224,928,540 comprising of 112,464,270 shares of Rs. 2 each fully paid-up. A copy of the audited balance sheet of 2nd amalgamating company for the period ending with 31st March, 2012 has been produced as Annexure B.

Sterlite Energy Ltd. (''SEL'' and ''3rd amalgamating company'') is the petitioner in CP No. 166 of 2012. The 3rd amalgamating company was originally incorporated on 2nd February, 1995 as "Manjiri Finvest (P.) Ltd." under the provisions of the Act. Subsequently, the name of the company was changed to Sterlite Energy (P.) Ltd. with effect from 10th May, 2004 and again changed to Sterlite Energy Ltd. with effect from 21st July, 2006 and a fresh certificate of incorporation was obtained from the RoC, Chennai. Its registered office is situated at SIPCOT Industrial complex, Madurai Bypass Road, T V Puram PO, Tuticorin, Tamil Nadu-628 002, which comes within the jurisdiction of this court. A copy of the memorandum and articles of association of 3rd amalgamating company has been filed as Annexure A. Che authorised share capital of 3rd amalgamating company is Rs. 35,000,000,000 divided into 3,500,000,000 equity shares of Rs. 10 each, in which 1,000,000,000 redeemable cumulative convertible preference shares of Rs. 10 each is to be added. The issued, subscribed and paid-up share capital of 3rd amalgamating company is Rs. 11,873,147,150 comprising of 1.187,314,715 equity shares of Rs. 10 each fully paid-up. A copy of the audited balance sheet of 3rd amalgamating company for the period ending with 31st March, 2012 has been produced as Annexure B.

Vedanta Aluminium Ltd. (''VAL/demerged company'') is the petitioner in CP No. 167 of 2012. The demerged company was originally incorporated on 18th January, 2001 as "Sterlite Transmission Ltd." under the provisions of the Act. Subsequently, the name of the company was changed to Vedanta Alumina Ltd. with effect from 20th January, 2004 and again changed to Vedanta Aluminium Ltd. on 25th August, 2007 and a fresh certificate of incorporation was issued by the RoC, Chennai. Its registered office is situated at SIPCOT Industrial Complex, Madurai Bypass Road, T V Puram PO, Tuticorin, Tamil Nadu 628 002, Which comes within the jurisdiction of this court. A copy of the memorandum and articles of association of the demerged company has been produced as Annexure A. Its authorised share capital is Rs. 17,60,000,000 comprising of 8,80,000,000 equity shares of Rs. 2 each, in which, 12,50,000 preference shares of Rs. 1000 each is to be added. The issued, subscribed and paid-up share capital of demerged company is Rs. 1,709,312,500 comprising of 854,656,250 equity shares of Rs. 2 each fully paid-up in which, 10,00,000 preference shares of Rs. 1000 each fully paid-up is to be added. A copy of the audited balance sheet of the demerged company for the period ending with 31st March, 2012 has been produced as Annexure B.

Sesa Goa Ltd. (hereinafter called as SGL/amalgamated company) was incorporated on 25th June, 1965 as a private limited company under the provisions of the Companies Act, 1956 (''the Act''). Subsequently, it became a public limited company, pursuant to an initial public offer in the year 1981 and its Registered Office is situated at Sesa Ghor, 20, EDC Complex, Patto, Panaji, Goa-403 001, which is outside the jurisdiction of this court. A printed copy of the memorandum and articles of association of amalgamated company has been filed as Annexure C. The authorised share capital of amalgamated company is Rs. 1,000,000,000 divided into 1,000,000,000 equity shares of Re. 1 each. The issued, subscribed and paid-up share capital of Amalgamated company is Rs. 869,101,423 comprising of 869,101,423 shares of Re. 1 each fully paid-up. A copy of the audited balance sheet of the amalgamated company for the period ending with 31st March, 2012 has been produced as Annexure D.

The scheme of amalgamation and arrangement proposed has been produced as Annexure E in all the petitions. The Board of directors of the amalgamating companies 1 to 3, demerged company and amalgamated company in their respective meetings held on 25th February, 2012 have approved the scheme of amalgamation and arrangement and the resolutions approving the scheme of amalgamation and arrangement by the directors of all the petitioner-companies have been annexed as Annexure F1 and F2 in all the petitions.

After the scheme was approved by the Board of directors, the 1st amalgamating company approached this court with CA No. 393 of 2012 for convening the meeting of its equity shareholders for the purpose of considering the scheme of amalgamation and arrangement with or without modification. This court, by order dated 26th April, 2012, granted permission to convene the meeting of the equity shareholders. Accordingly, equity shareholders meeting was convened on 21st June, 2012 under the chairmanship of Mr. Ponnuswamy Ramnath, 861 equity shareholders representing 243,76,13,221 equity shares having face value of Re. 1 each fully paid-up were present and cast their vote, of which the votes of 129 equity shareholders representing 12,51,78,914 equity shares were found to be invalid. Therefore, there were 732 equity shareholders representing 231,24,34,307 equity shares of Re. 1 each whose votes were valid. Of these 657 equity shareholders holding 212,73,60,907 equity shares of Re. 1 each fully paid-up, constituting 89.75 per cent in number and representing 92 per cent in value, present for voting have voted in favour of the scheme, 75 equity shareholders holding 18,50,73,400 equity shares of Re. 1 each fully paid-up, constituting 10.25 per cent in number and representing 8 per cent in value, present for voting have voted against the scheme. Accordingly, the scheme was approved by the equity shareholders present and voting with requisite majority.

The 2nd amalgamating company has approached this court with CA No. 395 of 2012 for convening the meeting of its equity shareholders and the application was ordered on 26th April, 2012. Accordingly, equity shareholders meeting was convened on 23rd June, 2012 and 93 equity shareholders representing 10,66,95,139 equity shares having face value of Rs. 2 each fully paid-up cast their vote, no votes were found to be invalid. Of these 82 equity shareholders holding 10,66,16,651 equity shares of Rs. 2 each fully paid-up, constituting 88.17 per cent in number and representing 99.93 per cent in value, present for voting have voted in favour of the scheme. 11 equity shareholders holding 78,488 equity shares of Rs. 2 each fully paid-up, constituting 11.83 per cent in number and representing 0.07 per cent in value, present for voting have voted against the scheme. Accordingly, the scheme was approved by the equity shareholders with requisite majority.

After the scheme was approved by the Board of directors, the 3rd amalgamating company and demerged company have approached this court with CA Nos. 397 and 399 of 2012 for dispensing with convening the meeting of their equity shareholders. They have seven equity shareholders each and all of them expressed their consent to the proposed scheme and the consent affidavits have been produced as Annexure H1 to H7 in their respective typed set. In view of the same, this court dispensed with convening the meeting of equity shareholders of third amalgamating company and demerged company.

The demerged company has one preference shareholder, who gave consent to the scheme of arrangement and the copy of the affidavit stating no objection to the scheme has been produced as Annexure J in their typed set. In view of the same, this court by order 26th April, 2012 in CA No. 400 of 2012 dispensed with convening the meeting of the preference shareholder of the demerged company.

This court, by order dated 26th April, 2012, in CA Nos. 394, 396, 398 and 401 of 2012 dispensed with convening the meeting of the secured and unsecured creditors of the amalgamating companies 1 to 3 and demerged company by directing the petitioner to serve individual notice to all unsecured creditors having an outstanding balance of Rs. 1,00,000 and above also publish the same in one issue each of Business Standard in English and Makkal Kural in Tamil on the basis of the undertaking given on the side of the petitioner.

As the 1st amalgamating company and amalgamated company are listed companies, they obtained no objection from the Bombay Stock Exchange Ltd. and the National Stock Exchange of India Ltd. and the copy of the no objection letters are enclosed as Annexures K1 and K2, respectively in typed set filed in CP Nos. 164, 165 and 166 of 2012 and as Annexure 01 and 02, respectively in CP 167 of 2012. The amalgamated company has also received approval from the Competition Commission of India and the copy of approval has been produced as Annexure L in the typed set.

While the amalgamating companies 1 to 3 and demerged company are the India''s leading non-ferrous metals and mining companies and carrying on the business in power and sale of available power and in developing, constructing and operating power plants; and in producing metallurgical grade alumina and aluminium products, respectively, the amalgamated company is a producer and exporter of iron ore, pig iron and metallurgical coke. The scheme provides for amalgamation of Sterlite Industries (India) Ltd. (''SIIL''), Madras Aluminium Co. Ltd. (''MALCO'') and Sterlite Energy Ltd. (''SEE'') with the amalgamated company and vesting of the Power Business Undertaking of MALCO into Vedanta Aluminium Ltd. (''VAL'') and demerger of the Aluminium Business Undertaking of VAL into the amalgamating company. It is stated in all the petitions that the proposed scheme is expected to simplify the group structure and make it more transparent by eliminating cross holdings within the group and it would also provide consolidation and rationalisation of the activities of all the companies and cash flow visibility and improved alignment of debt and cash flows thereby resulting in enhanced focus on their business. The consolidation of business would also lead to enhancement of net worth of the combined business to capitalise on future growth potential, optimal utilisation of resources and better administration and cost reduction. It is further stated that the proposed scheme of amalgamation is in the interest and to the best advantage of the shareholders and creditors of all the companies.

The Regional Director, Ministry of Corporate Affairs, Chennai has filed separate reports in all the petitions and no adverse remarks is made out in the reports. The Regional Director has, except in CP No. 164/2012 stated that as per the report of the RoC, Coimbatore, the transferor companies are regular in filing their statutory returns and no complaints/inspection/investigation/prosecutions are pending against the companies and the amalgamation of the amalgamating companies will automatically lead to enhancement of authorised share capital of the amalgamated company and the same does not call for payment of any additional fees or stamp duty.

Insofar as CP No. 164/2012 is concerned, the Regional Director''s report referred to certain violations during the course of section 209A inspection and the complaint filed by the investors and about pending complaint by the investors and stated that the scheme may be sanctioned along with pending cases in the same forum/courts.

The official liquidator has also filed comprehensive report, in which, it is specifically stated that the amalgamating companies have not committed any act of misfeasance by any person, who took part in the promotion or formation of the companies as well as in the conduct of the activities of companies and also in the amalgamation with the transferee-company, or by any past or present directors, managers or officers of the companies attracting the provisions of section 542/543 of the Act and the activities of the company have not been Conducted in any manner prejudicial to the interest of their members and to the public. The official liquidator has in his report referred to about few disputed tax dues for building cess and payment of electricity distribution tax in Tamil Nadu, in respect of Sterlite Energy Ltd., the same is covered under the special clause mentioned in the proposed scheme to the effect that the liability of the amalgamating company can be transferred and vested with the amalgamated company and the proceedings if any to be continued against the amalgamated company. In short, the official liquidator has not raised any adverse remarks or expressed any objection for the sanction of the scheme.

During the pendency of the petitions for sanction of the proposed scheme of amalgamation and arrangement among the amalgamating and demerged and amalgamated companies, objections are received from number of objectors against granting approval of the scheme by this court. For better appreciation, the same can be dealt with individually.

Insofar as CP No. 164/2012 filed by SIIL is concerned, the sole objector is one Linden Capital IP (bond-holder). Though this objector submitted his detailed objection, the same was, in the course of hearing, withdrawn by the objector on the basis of the written memo, as such, there is no objector against the proposed scheme in CP No. 164/2012.

In CP No. 165/2012 which is filed by MALCO, there are four objectors, i.e., (i) Versha Techno Ind.-Equip (P.) Ltd., (ii) Ultra Drytec Engineering Ltd., (iii) Turbo-Machinery Engineering Industries Ltd. and (iv) Piyush Dilipbhai Shah. Out of four objectors, the third objector, viz., Turbo Machinery Engineering Industries Ltd. did not at all appear before this court and file their objection and contest the petition on merits. But other objectors 1, 2 and 4 entered appearance through their pleaders and submitted their objections. All the three objectors are unsecured creditors of MALCO and their claim for recovery of the amount arise out of contractual obligations.

The amount claimed by the first objector is Rs. 80,38,423 which includes actual outstanding of Rs. 43,68,708 and interest claim of Rs. 36,69,715 at the rate of 18 per cent per annum calculated from 1st January, 2008 to 31st August, 2012. Whereas, the amount claimed by the second objector is Rs. 10.12 crore. It. is noteworthy to mention that. it is the transferor-company who has first made the claim for recovery of Rs. 5.02 crore against the second objector and the claim made by the second objector is by way of counter-claim in the same. Both the claim and counter-claim made by both the objectors and the company are pending determination in the arbitration proceedings headed by the arbitral tribunal. Both the objectors would state that the proposed scheme may not be sanctioned without their claim being determined in the arbitration, proceedings and without their amount being settled.

Whereas it is stated by the learned senior counsel for the petitioner/amalgamating company No. 2 that the claim made by the first objector is in respect of disputed bills raised for supply of materials, to the amalgamating company and there is dispute over the same and the dispute remains to be settled in the arbitration proceedings and after merger the same shall be continued by and against the amalgamating company and in the event of the liability of the company being ascertained and the quantum of liability being quantified, the same shall be enforced against the amalgamated company. No other valid ground is made out on the part of the objectors that the proposed merger will in any manner prejudicial to their interest to recover the money, if any, due to them as such the objection deserves no merit. This court finds greater force in the argument so advanced on the side of the petitioner.

In my considered view, the right of the parties/objectors to recover the amount is yet to be determined. As a matter of fact, the first objector has neither initiated arbitration proceedings nor invoked any proceedings before the civil court. The arbitration proceedings initiated in the second case is only by the amalgamating company and not by the objector and the objector has made only counter-claim in the same. Both the claim and counter-claim made by the petitioner and the objector are the subject-matter of the arbitration proceeding and pending arbitration proceedings, no objection can be permitted to be raised against the relief sought for herein. Even otherwise, by reason of the proposed merger, the right to recover the amount if any can be duly enforced against the transferee-company as per the liability clause in the proposed scheme and the same is sufficient enough to safeguard the right of the objectors.

As far as the fourth objector is concerned, they have, in their capacity as one of the shareholders of the company, objected to the share exchange ratio between MALCO and the amalgamated company, It is not in dispute that the petitioner is holding 50,004 equity shares of MALCO and they attended the court convened meeting held on 23rd June, 2012.

According to the objector, they filed written objection about their views on the scheme and raised consent for the swap ratio between amalgamating and amalgamated companies and they requested to re-value MALCO assets and requested to incorporate their views in the petition, but the company petition was filed without incorporating their views and their request so made. The objection expressed herein is that considering shareholding pattern of MALCO to the extent of 3.56 per cent of total equity of 1st amalgamating company SIIL held by MALCO, the MALCO shareholders are entitled for 6.39 shares of SGL for 10 shares of MALCO, which is excluding its business operations, residual tangible and intangible assets of MALCO. Whereas, the shareholders of MALCO, under the proposed merger, are to receive 0.61 shares of the amalgamated company for 10 shares of MALCO for its business operations, residual tangible and intangible assets of MALCO other than investments in SIIL, which is not justified and earns much lesser return to its shareholders, as such, the swap ratio shall be revalued by the existing valuers or by new Valuer appointed by this court by taking into consideration the investment of SIIL in MALCO, business operations, residual tangible assets, i.e., free hold land at Mettur Dam, 100mw power plant, building and other fixed assets, cash and bank balance, investments other than SIIL, licences goodwill, etc., and over and above ZERO Debt and good infrastructure and non-tangible assets and market value of land of MALCO not only in the interest of or benefit of non-promoter shareholders of MALCO, but also of its promoters as their holding amounts to 94,80 per cent in MALCO. It is further stated that considering current market price of Rs. 180 of SGL, the valuation of 0.61 shares of SGL for 100 MALCO shares is only Rs. 110, i.e., Rs. 11 per MALCO share. The objector has also raised objection regarding sale of power plant to VAL at Rs. 150 crore, which is, according to the objector, under-valued. The fourth objector has also proposed either revaluation of swap ratio between, MALCO and SGL or the conversion of MALCO investment in SIIL as SGL or to modify the scheme of arrangement so as to distribute SGL shares to MALCO shareholders in proportion of 6.39 shares of SGL for 10 MALCO shares and subsequently to value all residual assets including power business, investments, cash and bank balance fairly and to be merged with SGL.

The reply filed by the petitioner-company MALCO is that the share exchange ratio has been determined by two independent and reputed firms of valuers, viz., Grant-Thornton India LLP and KPMG India (P.) Ltd. and the fairness opinion report on the valuation report has been given by Citi Group Global Markets India (P.) Ltd. and by DSP Merill Lynch (P.) Ltd., who are the experts in the field and no allegation of fraud or illegality is raised either against the valuer or against the manner of fixation of share exchange ratio and the same has been duly approved by the majority of the equity shareholders in the court convened meeting and the objector representing himself and others, who voted against the scheme, held only 50,004 equity shares representing 0.07 per cent in value of the equity shareholders. It is also brought to the notice of this court that the objectors has already voted in favour of the scheme which is including the swap ratio in the court convened meeting of SIIL. Thus, the objector is not consistent in his objection raised. It is further stated that approval of resolution regarding share exchange ratio in the court convened meeting by majority of the shareholders is taken through commercial wisdom of majority shareholders and the same cannot be disturbed or interfered with under the guise of raising objection against the proposed scheme. The petitioner has also in the reply pointed out that the power plant of the petitioner-company being old and aged, its value cannot be equated with new power plant and the objection regarding the value of power generating business without duly considering the contingent liability, is misplaced objection. It is also further contended that the share exchange ratio was determined on the basis of actual networth of the petitioner-company as on 31st December, 2011 and 31st March, 2012. The learned counsel for the petitioner has also, in the course of argument, cited the authority of the Hon''ble Supreme Court in Miheer H. Mafatlal Vs. Mafatlal Industries Ltd., for the legal proposition that valuation of shares is a technical and complex problem, which can be appropriately left to the consideration of experts in the field of accountancy. When the same is worked out by a recognised firm of chartered accountants, who are experts in the field of valuation when it is based on commonly accepted valuation principle including adoption of market price approach and in the absence of any error committed on their part in the manner of calculation or the valuation arrived at and in the absence of any allegation of mala fide against the valuer the court cannot substitute its own exchange share ratio especially when the same is accepted without any demur by the overwhelming majority of the shareholders of the two companies.

The learned senior counsel for the petitioner in support of his contention also cited the following decisions: (i) ICICI Ltd., In Re: ICICI Ltd., , (ii) unreported decision of Gujarat High Court in Company Application No. 93 of 2012 dated 7th March, 2012 (Digjam Ltd. v. Saurabh Soparkar, and (iii) Bengal Tea Industries Ltd. v. Union of India [1993] CWN 542 that valuation is ultimately a matter of expert opinion. There are more than one method of valuation and a valuation would vary if different methods are adopted. The shares are the properties of the shareholders and they are the ultimate and the best judge of the value they would put on their charges. There is no requirement in the Act that in such a case, the ratio of exchange. has to be determined on the valuation made by a chartered accountant or an auditor though the court feels that in the best interest of all concerned and to prevent controversy a proper basis of valuation should be recorded. In the absence of any challenge from the shareholders of the transferor-company who are primarily and exclusively interested in the question of ratio of exchange of shares, the court is not inclined to interfere in the matter.

This court finds much force in such factual and legal contention raised on the side of the petitioner, which is also fortified by Hon''ble Apex Court in Miheer H Mafatlal case (supra). It is observed therein as follows:

Once the exchange ratio of the shares of the transferee-company to be allotted to the shareholders of the transferor-company has been worked out by a recognised firm of chartered accountants who are experts in the field of valuation and if no mistake can be pointed out in the said valuation, it is not for the court to substitute its exchange ratio, especially when the same has been accepted without any demur by the overwhelming majority of the shareholders of the two companies or to say that the shareholders in their collective, wisdom should not have accepted the said exchange ratio on the ground that it will be detrimental to their interest.

As already referred to, the share exchange ratio is determined by experts against whom no allegation of fraud or mala fide intention are raised neither any error is pointed out regarding the manner of fixation of the same. It is also not pointed out by the learned counsel for the objector as to how and in what manner, the value arrived at is unfair and unjustified and the same is also not objected on the strength of any other equally authenticated valuation report by the expert when there are different mode of valuation and when the mode adopted by the experts is authenticated one no objection in this regard can be permitted. The same is also supported by fairness opinion from Citi Group Global Markets India (P.) Ltd. and DSP Merill Lynch (P.) Ltd. Further, it is also not made out before this court as to how the same is prejudicial to the interest of minority of shareholders or creditors. Even otherwise, as it is the decision of the majority of shareholders over commercial wisdom, this court cannot while dispose of the petition u/s 391 of the Act as observed by the Hon''ble Supreme Court sit over the value judgment of equity shareholders who are supposed to be men of the world and who know their benefit and interest underlying the proposed scheme and who with open eyes have okayed the ratio and the entire scheme and substitute its own value, as such, the share exchange ratio as agreed between the amalgamating and amalgamated companies and approved by the majority shareholders calls for no interference.

In CP No. 166 of 2012 filed by amalgamating company No. 3/Sterlite Energy Ltd., the number of objectors against the proposed merger are two of its unsecured creditors. Whereas the first objector SEPCO Electric Power Construction Corporation has subsequently withdrawn their objection. The second objector SEPCO ITI Electric Power Construction Corporation has come forward with various applications CA Nos. 716, 762 and 780 to 783 of 2012 in CP No. 166/2012. While CA No. 716/2012 is filed for taking on record the objections filed by the applicant/objector, CA No. 762/2012 is filed to take on record the affidavit along with the documents in CA No. 716/2012 in CP No. 166/2012. Likewise, the objectors 7 to 9 in CP No. 167 of 2012, viz., Electrification Charpente Levage SAS, Techno CAR SPA and Innova therm have also filed similar applications CA Nos. 755, 759 and 760 of 2012 in CP No. 167/2012 to take on record their objections. It is noteworthy to mention that though the Rules provides for limitation for filing the objection before two days prior to the date of hearing, the objections were admittedly filed belatedly. Notwithstanding such delay the objections are received subject to limitation and heard on merits. As the objections are now received and taken on record and the objections and counter to the objections are permitted to be raised and argued on merits, no further orders are necessary in these applications and these applications are, hence, closed.

The second objector/SEPCO III Electric Power Construction Corporation, while contesting this petition by filing separate objection, has also filed CP No. 285/2012 for winding up the petitioner-company. It is contended therein that the objector herein, who is the petitioner therein is one of the largest unsecured creditor of the company and the respondent, as per the agreement arrived at between the parties in the meeting held on 10th July, 2012 agreed to pay Rs. 475 crore on 4 instalments between 15th July, 2012 and 15th October, 2012 as per the payment schedule and the debtor company, having paid Rs. 100 crore to the petitioner therein, not only failed to make any further payment, but also evaded to make payment by raising all kinds of objections and their failure to make payment was also due to its financial position as evident from its annual report, as per which, the short-term borrowings of the respondent therein was increased from Rs. 4,814.35 crore to Rs. 6,905.77 and the respondent-company was in such insolvent circumstances and was unable to discharge its debt and was, hence, to be wound up. This objector, after advancing their arguments in these company petitions, has come forward with other two applications CA Nos. 34. and 35 of 2013 in CP No. 166/2012 to reopen the hearing of the company petition and stay all further proceedings in CP No. 166/2012 pending disposal of CP No. 285/2012 and CA No. 909/2012 in CP No. 285/2012.

The winding up petition CP No. 285/2012 was seriously contested by the petitioner-company herein as the respondent therein by contending that failure to make payment as per memorandum of understanding (''MoU'') dated 10th July, 2012 was only due to failure on the part of the objector to fulfill reciprocal obligations under the MoU as detailed in their counter therein. The company court after duly considering the claim made and the objections raised and the circumstances under which the amount remains unpaid, has arrived at the conclusion that failure to make payment was not due to the petitioner-company''s bankruptcy or inability to pay their debts and the defence raised by the respondent therein was in good faith and was one of substance and was not moonshine and was not fabricated for the purpose of depriving the lawful dues of the petitioner therein. It was specifically observed by the company court that the conduct of the parties before and after MoU dated 10th July, 2012 would make it clear that the dispute raised by the company was bona fide one and the dispute raised by the respondent was in existence 8 months prior to the Issuance of statutory notice and the same was kept alive on receipt of statutory notice and the same cannot be thereafter rejected as non-existent or imaginary dispute and 90 per cent of total value of all the contracts, which was huge amount, having already been paid, the company petition was liable to be dismissed and the company petition was dismissed vide order dated 7th March, 2013. Aggrieved against the same, the company petitioner/objector filed OSA No. 224/2013 and same is now pending determination before the Division Bench of this court.

As rightly argued by the learned senior counsel for the petitioner, the objection raised by this objector against the proposed merger on the ground that the petitioner-company herein owes huge amount due to the objector and pending discharge of their liability no sanction can be granted to the proposed merger is bound to fail, in view of the disposal of the winding up petition in CP No. 285/2012 against the objector herein as the petitioner therein.

The facts made available herein would reveal that the liability of this objector is not admitted one, but seriously disputed on the ground of nonperformance of reciprocal obligations on the part of the objector herein. That being so, this objector has not made out any valid ground to stay all further proceedings in CP No. 166/2012 pending disposal of the appeal in OSA No. 224/2013 against the dismissal of CP No. 285/2012. It is needless to say that in the event of their liability being ascertained and quantified, the objectors have also other remedy for enforcing the same. Here again, the liability if any, of the objector will, by reason of the liability clause in the proposed scheme, get transferred to the amalgamated company, as such, their right to recover amount if any, in my considered view, is in no way prejudiced by granting sanction to the proposed scheme. In view of such finding, CA No. 35 of 2013 in CP No. 166 of 2012 is liable to be dismissed.

Other objections raised by SEPCO III Electric Power Construction Corporation, who is the second objector in CP 166/2012 are as follows: (i) This court has no jurisdiction to dispense with convening the meeting of the creditors either secured or unsecured; (ii) even otherwise, conditional order of this court dated 26th April, 2012 made in CA No. 398 of 2012 for dispensing with convening the meeting of the secured and unsecured creditors of the company was not strictly complied with; (iii) no statement of the material particulars relating to the proposed scheme and the companies, which are the constituents of the proposed scheme, are made available to the unsecured creditors u/s 393(1) of the Act along with notice; (iv) the petitioner companies have not filed the list of creditors and affidavit of service of notice of the unsecured creditors of the company; and (v) failure to appear and raise objection by other creditors cannot amount to their implied consent to the proposed scheme and the decision must be taken at the meeting convened for the said purpose.

In CP No. 167/2012 filed by VAL, there are 9 objectors, out of which, the objectors 5 to 9/(a) China Non-Ferrous Metal Industry''s Foreign Engineering & Construction Co. Ltd., (b) Shenzen Sandong Nuclear Power corporation Co. Ltd., (c) Electrification Charpente Levage SAS, (d) Techno CAR SPA, and (e) Innova therm have raised similar objections, in addition to other, objections. Hence, this court, while dealing with other objections raised by the second objector in CP No. 166/2012, is inclined to commonly dispose of the identical objections raised by the objectors 5 to 9 in CP No. 167/2012.

The learned counsel for the objectors has at the outset, questioned the jurisdiction of this court in dispensing with the meeting of the creditors. It is contended that the meeting of the class is dispensed with on the undertaking to serve individual notices to the creditors of the petitioner-companies, thereby communicating them the scheme of arrangement to enable them to file their objection. It is the specific case of the objectors that no notice was served on the objector, in spite of specific undertaking given before this court, while obtaining order for dispensing with the meeting. It is also stated therein that failure to issue notice to the creditors as directed by this court would render the presentation of the company petition to be contrary to and not in accordance with rule 79 of the Company Court Rules, 1959. It is also stated therein that statement of the material particulars of the scheme of amalgamation and arrangement u/s 393(1) of the Act has not been sent to any of the unsecured creditors of the petitioner-company. While putting forth such argument, it is strenuously argued on the side of the objector that the observation of the decision taken in the commercial wisdom cannot be interfered with is applicable only in respect of those decisions, which are taken in the convened meeting and not otherwise..

Regarding the jurisdiction of this court to dispense with the convening of the meeting of the creditors, it is sought to be argued by relying upon the judgment of the Division Bench ( Ramco Super Leathers Ltd. and Others Vs. The Dhanalakshmi Bank Ltd. and Others, ], wherein it is held at para 24 as follows:

It is true that the section 391 of the Companies Act, 1956 does not mandate holding of the meeting of the creditors in a scheme of arrangement between the company and its members and equally a meeting of the members in a scheme of arrangement and its creditors. Though not specific provision has been made for ascertaining the wishes of the creditors, in a scheme of arrangement between the company and its members, the court is entrusted with the duty to ascertain whether the scheme would affect the interest of creditors, to such an extent the holding of the meeting is essential and if the court in appraisement of the facts and circumstances is of the view that the interest of creditors would be adversely affected, if the scheme is approved, then it has to refuse to sanction the scheme, since what is involved is a public interest....

As far as dispensation of convening the meeting is concerned, it is true that the Hon''ble Supreme Court in Miheer H Mafatlal case (supra), and our Division Bench in Ramco Super Leathers Ltd.''s (supra) have observed that the court is entrusted with the duty to ascertain whether the scheme would affect the interest of the creditors. But in the same judgment, it was observed that section 391 does not mandate holding of the meeting of the creditors in the scheme of arrangement between the company and its members. The Hon''ble Supreme Court has in Mafatlal Industries Ltd.''s case (supra), also observed that where a compromise or arrangement is proposed between the company and its members or any class of them, a meeting of such members or class of them has to be convened and this clearly presupposes that if the scheme of arrangement or compromise is offered to the members as a class and no separate scheme is offered to any sub-class of members which has a separate interest and a separate scheme to consider, no question of holding a separate meeting of such a sub-class would at all survive. When commercial interest of the minority shareholder so far as the scheme is concerned is in common with other equity shareholders, he would have a common cause with them either to accept or to reject the scheme from commercial point of view.

It is held by Bombay High Court in ICICI Ltd. case (supra) that where the arrangement is purely between the company and its members, not adversely affecting the creditors or any class of them, the court is not bound to convene a meeting of the creditors. However, where the arrangement between the company and its members is likely to adversely affect the creditors, it would be proper for the court to exercise its judicial decision to convene the meeting of the creditors, unless majority of the creditors representing three-fourth in value of the credit have otherwise given consent for the same. In view of the authorities cited above the view expressed by the learned Judge of the Karnataka High Court in Ansys Software Pvt. Ltd., is not applicable to the facts of this case.

It is also brought to the notice of this court by the learned senior counsel for the petitioners about the practice of dispensing with the meetings being followed by various courts including High Courts of Bombay, Gujarat, Karnataka, Delhi and Madras also. It has been the practice of this court to dispense with the meetings of the creditors, whenever, this court was of the view that the proposed scheme does not adversely affect any creditors or class of them. The attention of this court is also drawn to the decision of the Jamal Uddin Ahmad Vs. Abu Saleh Najmuddin and Another, , wherein, it is held that the practice of the court is the law of the court. Every court is the guardian of its own records and the master of its own practice and where a practice has existed, it is convenient, except in cases of extreme urgency and necessity to adhere to it, because it is the practice, even though no reason can be assigned for it; for an inveterate practice is law generally and stands upon principles that are founded in justice and convenience.

As far as objection regarding want of notice is concerned, the facts and material available before this court would reveal that the conditional order was duly complied with by sending notice to all the creditors, thereby intimating them regarding the presentation and admission of the petition. The notice further called upon the creditors to file their objections by duly entering appearance two days before the date fixed for hearing, etc. The copy of the notice addressed to all the four companies are enclosed in the typed set filed by the petitioner. As far as the objector in CP No. 166 of 2012 is concerned, the petitioner has produced unserved registered notice returned on 13th August, 2012 with an endorsement ''refused''. The notice aspect for the objector No. 5 in CP No. No. 167 of 2012 is concerned the same was issued on 10th August, 2012 through RPAD as evident from the postal receipt produced herein. As far as other objectors are concerned similar records for having sent the notice is duly produced. The petitioner has also produced the particulars regarding total number of secured and unsecured creditors as on the date of filing of the petition and total number of unsecured creditors to whom the notice has been sent in compliance with the order of this court and the postal receipts for having sent the notice. In view of the same, no further orders are necessary in CA Nos. 780 to 783 of 2012, where the relief sought for is for one such report.

''Thereafter, what is sought to be argued herein is that the notice was directed to be sent before the presentation of the petition and not after presentation of the petition and hence the same was not in substantial compliance with the direction of this court. In my considered view, the objection raised is baseless and without any substance for the following reasons. The learned senior counsel for the petitioner, while answering the question in this regard, drew the attention of this court to rule 32 of Companies Court Rules, which provides for mode of service and the same is extracted as follows:

Mode of service and service when deemed to be effected.-(1) Save as otherwise provided by these rules or by an order of Court, all notices, summonses and other documents required to be served on any person, may be served either personally by delivering a copy thereof to such person or upon his advocate where he appears by advocate or, except where personal service is required by prepaid registered, post for acknowledgement duo addressed to the last known address of such person. In the case of service by registered post where no acknowledgement signed by the addressee or his duly authorised agent is received, orders of court shall be obtained as to the sufficiency of service or as to the further steps to be taken for service as the court may direct:

Provided that where a notice, summons or other document has to be served on any class of persons such as shareholders, debenture-holders, creditors and the like, the same may be sent by prepaid registered post or by. ordinary post under certificate of posting, as may be provided by these rules or by an order of court, and unless otherwise ordered by the court, the service shall be deemed to be effected at the time when the said notice, summons or other document, ought to be delivered in the ordinary course of post by the post office, and notwithstanding the same is returned undelivered by the post office....

The mode of service adopted herein if viewed in the right of relevant rules is in my considered view in accordance with the manner prescribed under the Rules. When the notice was sent in the manner prescribed under rule 32, the same is deemed to be effected notwithstanding return of the same undelivered. When there are sufficient particulars and materials produced herein to show the same was duly sent in the manner prescribed under the Rules, substantial compliance of the direction of this court can be inferred notwithstanding the failure to produce the postal acknowledgement. Even otherwise, the purpose of issuing direction to put notice on creditors before presentation of the petition is only to enable the creditors to have their say and to file their objection. In that event, it makes no much difference that the notices are sent immediately before or after presentation of the petition and the notices sent immediately after admission of the same, i.e., first date of hearing cannot be said to be totally derogatory either to the direction issued by this court or any other provisions of law under the Companies Act and Rules.

Even otherwise it is but relevant to look into rule 31 of the Companies Court Rules, which read as follows:

Procedure on default of compliance as regards advertisement and service of notice: In default of compliance with the requirements of the rules or the directions of the Judge or Registrar, as regards the advertisement and service of the petition, the petition shall, on the date fixed for hearing, be posted for orders of the Judge and the Judge may either dismiss the petition or give such further directions as he thinks fit.

It is further sought to be argued by the objectors by relying upon the judgment in In Re: Subhiksha Trading Services Limited and Blue Green Constructions and Investments Limited, that the consent given in the course of meeting cannot be operated as estoppel against informing the court that the scheme fails to satisfy the twin tests of (i) interests of members, and (ii) public interest and the failure of the shareholders to attend the meeting would not amount, to an implied consent to the scheme by that member. This court do not dispute the reasoning behind the argument so advanced. However, in this case none of the other member or creditors except the objectors herein, who do not belong to majority who approved the scheme, has appeared before this court, and raised any objection as such the presumption of consent can be easily drawn in all the cases. Further, the contesting objectors though were said to be absent in the meeting, are now given equal opportunity while considering the petition for sanction of the scheme and their objections are heard in detail and answered well herein. There are no other ground made out to show that the transaction is in any manner prejudicial to the creditors and that the act of majority shareholders in approving the same is lacking in bona fide or the same is vitiated in any other manner.

The sum and substance of the objections raised by all the objectors in all the company petitions are in respect of:

(i) claim for recovery of disputed amount

(ii) dispensation of meeting of the creditors in respect of two of the amalgamating, companies

(iii) want of notice in compliance with the directions of this court

(iv) non-disclosure of material particulars

(v) share exchange ratio

All the objections have been duly answered and the objections are negatived as devoid of any substance.

In my considered view, the rights of the secured and unsecured creditors are duly secured and safeguarded by way of specific liability clause in the scheme. The financial status of amalgamating and amalgamated companies before and after amalgamation as disclosed in the affidavits filed herein, is such that amalgamated company have greater financial strength to meet out the liabilities of any third party whether secured or unsecured creditors and to protect the rights of the shareholders in the matter of share exchange ratio also. Further, there is no investigation/proceedings pending in respect of two of the amalgamating companies and the proceedings pending in respect of other amalgamating company will in no way affect the rights of the creditors for grant of approval of the proposed merger, by reason of specific clause in the scheme of amalgamation and arrangement to continue the proceedings against the amalgamated company.

Next objection sought to be raised is that the material facts regarding latest financial position of the company, including existing liability of the company and the charges created over securities, etc., are not furnished to enable the objectors to come to proper conclusion whether to vote for or against the scheme. The main grievance raised by the objectors appears to be the failure to show the present financial position of SGL and pendency of winding up proceedings against VAL. Presently, winding up proceedings is dismissed and the appeal is pending. Regarding the financial position of SGI, the same is through affidavits filed herein, satisfactorily established to be stronger enough to meet out the liabilities, after merger.

What are the other materials which are omitted to be disclosed, are not specifically mentioned herein.

But it is, in the course of argument pointed out that the report by Senior Fraud Investigation Office (''SFIO''), who invested the amalgamated company under the provisions of section 235 of the Act regarding the mismanagement and affairs of the company affecting public policy and public interest is omitted to be disclosed to enable the creditors to take appropriate decision to vote for and against the scheme. It is contended that pending investigation if any, into any act of fraud upon the amalgamated company will have serious impact upon the financial status of the company, which in turn is likely to affect the exchange ratio, etc., and creditors claim. The same is rightly answered by saying that the grant of approval if any of the proposed scheme will in no way affect the pending investigation. It is also brought to the notice of this court that the Sesa Goa has filed its reply to the SFIO report and proceedings are still pending before the concerned Ministry. It is needless to say that the amalgamated company shall be even after merger liable to face the outcome of the proceedings or action taken in this regard. It is also staled that the particulars about the same is made available in explanatory statement and is, hence, duly disclosed. Further, any arrangement or amalgamation of the company and its members shall not in any manner affect the pending proceedings and the amalgamated company in all practical purpose is liable to answer the same. Pendency of any proceedings or investigation shall not be a bar to grant approval of the scheme otherwise satisfies other legal requirements, as such, it is too premature stage to say that SFIO report or the proceedings, if any, based on the same is an impediment to grant sanction.

In my considered view, whatever be the objections regarding want of notice, non-disclosure of material facts, nil consent for the proposed scheme, etc., the same stand rectified as the objectors now availed the right of opportunity of being heard and heard at length and the objections are also duly received, appreciated and considered, as such, objectors can have no serious objection in this regard and the main relief sought for in the present company petitions cannot be thrown away on this ground.

In CP No. 167/2012 filed by VAL is concerned, there are, as already stated, 9 objectors, who are all unsecured creditors and they are as follows:

(i) Bombay Minerals Ltd.

(it) Ashapura Minechem Ltd.

(iii) Voltas Material Handling (P.) Ltd.

(iv) Orissa Stevedores Ltd.

(v) China Non-Ferrous Metal Industry''s Foreign Engineering & Construction Co. Ltd.

(vi) Shenzen Sandong Nuclear Power Corporation Co. Ltd.

(vii) Electrification Charpente Levage SAS

(viii) Techno CAR SPA, and

(ix) Innova therm

The objectors (i) and (ii), viz., Bombay Minerals Ltd. and Ashapura Minechem Ltd. have made a claim for Rs. 1,10,01,013 and Rs. 5,51,40,380, respectively arising out of purchase order in respect of supply of Gibbsite Grade Bauxite Ore on ex-mine basis and the service orders contain arbitration clause and notice was issued demanding payment. Whereas, the claims were seriously disputed by VAL by denying their liability in view of the dispute and difference arose between the parties. The objectors invoked arbitration agreement and the arbitral tribunal is now constituted and the claims are pending determination before the arbitral tribunal.

As rightly pointed out by the learned senior counsel for the petitioner, pursuant to the proposed merger, all the liabilities of the aluminium business of demerged company, shall get transferred to the transferee-company and the arbitration proceedings shall continue against the amalgamated company and in the event of any award being passed, the same shall be enforced against the amalgamated company, which is a profit making company, whose networth post-restructuring is Rs. 36,549 crore and no prejudice will be caused in respect of the claims, if any payable to the objectors and no other ground is made out by the objectors in this regard.

The third objector, viz., Voltas Material Handling (P.) Ltd. is concerned, their claim is arising out of the contractual obligations. It is in the course of argument, submitted that the dispute between the parties is under adjustment of reconciliation and no proceeding is till date initiated. The only apprehension raised by the objector is that whether their liability to the tune of Rs. 54,81,597 will be honoured and protected by the amalgamated company after post-merger. As rightly argued by the learned senior counsel for the petitioner, the apprehension raised by this objector is baseless and unfounded, in view of the specific liability clause in the proposed amalgamation and arrangement, under which the outstanding liability if any will get transferred to the amalgamated company, which is financially stronger than the demerged company.

The fourth objector is Orissa Stevedores Ltd. (''OSL''). Here again, dispute arose regarding actual amounts due to the objector company. It is submitted that the account regarding this disputed debt is under reconciliation. The main objection raised herein is that it is not shown whether the positive networth of SGL is sufficient enough to meet out the liabilities of the creditor of various companies including VAL. In my considered view, it is satisfactorily made out through the affidavits that networth of amalgamated company, after taking out of all the companies will be sufficient enough to safeguard the interest of all the creditors. All the companies involved in the proposed amalgamation and arrangement, in their respective company petitions, have also given undertaking that dues and liabilities towards any of the creditors will in no way affect the scheme and the same will be transferred to the amalgamated company, which is financially more stronger than the amalgamating and demerged company.

The fifth objector is China Non-Ferrous Metal Industry''s Foreign Engineering & Construction Co. Ltd. Here again, dispute and difference arose due to contractual obligations. This objector raised the claim for USD 89,12,250 approximately Rs. 49 crore which according to the objector, is due under three contracts for supply and services to their aluminium smelter at Jharsuguda and alumina refinery at Lanjigarh. The objections raised herein regarding failure to issue notice to the unsecured creditors and other objections are duly discussed in the foregoing paras and it is decided against the objectors.

The next issue raised herein on the basis of the recent order issued by the Governments of Goa and Karnataka followed by the direction issued by the Hon''ble Supreme Court about mining operations which has according to the objector greatly affected the mining operation of the company and the entire business of the transferee-company is shut down, as such there are remote chances for revival of business of the transferee-company. It is also further argued that the scheme appears to be dishonest and fraudulent to deprive the creditors like of the objector of their fair chance of getting the dues repaid.

The next objector is Shenzen Sandong Nuclear Power Corporation Co. Ltd. (''SSNP''). Here again, the amount claimed was for Rs. 1,424,449,444, Euro 25,133,831 and USD 2,380,000 and the objections are raised against dispensation of convening the meeting of the creditors and non-compliance of the direction of this court in issuing notice to the unsecured creditors having outstanding of Rs. 1 lakh and more and failure to furnish material particulars along with the statement, etc., which are already answered against the objector. Here again, the claims which are already dealt with are arising out of contractual obligations and the total value of contract awarded to the objector is Rs. 1208 crore, out of which, the objector has raised running invoices aggregating to Rs. 1009 crore and payment was made for Rs. 836 crore by VAL to the objector. As far as the claim made by the objector is concerned, the objector has already approached the Bombay High Court by way of Arbitration Petition No. 448 of 2012 u/s 9 of the Arbitration and Conciliation Act for an order of prohibitory injunction against the respondent therein from invoking advance bank guarantee and for restraining the respondent from dispossessing and/or creating any third party rights in the equipments lying at project site and also directing VAL to deposit Rs. 173.87 crore for onshore part and Euro 68,133,400 and USD 2,380,000 for off-shore part in terms of EPC contracts. The arbitration petition was dismissed by the learned Single Judge on 25th April, 2012.

Aggrieved against the same, the objector/creditor preferred Appeal No. 341/2012 before the Division Bench of Bombay High Court on ordinary original civil jurisdiction. The appellate court passed an interim order on 16th July, 2012 thereby permitting the appellant to remove the plant, machinery and other articles pending dispute before the Arbitral Tribunal. The appellate court has also permitted the respondent VAL to encash the bank guarantee and directed the amount to be deposited into court. However, the respondent opted not to encash guarantee as such, the appellate court rejected the relief seeking injunction as the bank guarantee has how been lapsed. As far as third relief to direct the respondent to deposit the amount is concerned, the same was after detailed discussion, ordered and VAL was directed to furnish security to the appellant for Rs. 187 crore. The appellate court was also pleased to pass an order of injunction restraining the respondent VAL from transferring the assets till security is furnished. The appellate court issued such a direction by duly taking into consideration the proposed merger and pendency of amalgamation petition by the amalgamating companies and demerged company and similar petition before the Bombay High Court by the proposed amalgamated company. As against that order, VAL preferred further appeal before the Hon''ble Supreme Court. The Hon''ble Supreme Court by order dated 10th June, 2013 confirmed the order dated 12th December, 2012 passed by the Division Bench of Bombay High Court. The learned senior counsel for the appellant would undertake to comply with the conditional order for furnishing bank guarantee subject to their right of appropriate remedy if any under law. As a matter of fact, the amalgamated company has also filed an affidavit of undertaking to discharge all liabilities of aluminium business undertaking of demerged company and liabilities of the unsecured creditors of residual VAL as defined in the scheme and as determined in accordance with law and contractual and legal remedies by residual VAL as defined in the scheme to the extent that Residual VAL is unable to discharge the same. In view of the undertaking given above, this court is of the-view that the proposed, scheme of amalgamation will in no way affect the right of the unsecured creditors of aluminium business undertaking of demerged company and unsecured creditors of Residual VAL to enforce their claim if any against amalgamating or amalgamated company as the case may be. "

The other general objection raised is regarding closure order of Tuticorin Copper Smelter Unit of Sterlite Industries (India) Ltd. (''SIIL'') 1st amalgamating company. The petitioner, on memo dated 29th April, 2013 submitted that on account of certain complaints regarding gas leakage Tamil Nadu Pollution Control Board by order dated 29th March, 2012 ordered closure of the Tuticorin Unit and SIIL has filed appeal before the National Green Tribunal, Southern Zone, Chennai and the National Green Tribunal has appointed an Expert Committee to look into the issues, which has filed its report on 29th April, 2013 and the matter has been transferred to the Principal Bench in New Delhi. The Principal Bench of National Green Tribunal, after hearing both sides, passed an order permitting the industry to start production. Against which, the respondent therein approached the Hon''ble Supreme Court and the Hon''ble Supreme Court passed an order in the same line of National Green Tribunal thereby permitting the petitioner-company to run its factory. The Hon''ble Supreme Court has also by order dated 4th February, 2012, allowed the appeal filed against closure of Tuticorin unit of SIIL and set aside the order of the Madras High Court dated 28th September, 2010, however, subject to payment of compensation which has also been complied with and the same has been now functioning. Even otherwise, it is brought to the notice of this court that the profits from the Tuticorin Unit is less than 10 per cent of the total consolidated profit of SIIL for the year ended on 31st March, 2013, as such, the dispute regarding continuance running or not of SIIL will in no way stand in the way of considering the approval herein.

The objectors have also sought to oppose the proposed scheme on the ground that the proposed scheme, viewing the same as a whole, does not satisfy the principles governing the amalgamation/compromises and merger of the transferor-or transferee-companies. The learned counsel for the objector has, by relying upon the judgments of Karnataka High Court in Shankaranarayana Hotels Pvt. Ltd. and another Vs. Official Liquidator, Government of Karnataka, , Madras High Court in Alabama, New Ordeans Texas & Pacific junction Railway Co., In re. [1891] 1 Ch. 213 (Mad.) and Delhi High Court in Mazda Theatres Pvt. Ltd. and Another Vs. New Bank of India Ltd. and Others, ; argued that the court has to see the scheme as a whole having regard to the general conditions and background and the object of the scheme is reasonable and fair and is to be considered in the light of prudent business man test. It is held by Karnataka High Court in Shankaranarayana Hotels (P.) Ltd. case (supra), when a scheme of compromise and/or arrangement is submitted to the court for its sanction, the court would ordinarily pose to itself, three questions, viz., (i) whether the statutory provisions have been complied with or not; (ii) whether the class or classes have been fairly represented; and (iii) whether the arrangement is such as a man of business would reasonably approve. It is argued by relying upon the judgment of Delhi High Court in Mazda Theatres (P.) Ltd. (supra) that if the transaction is illegal, ultra vires, unjust or oppressive, the courts are inclined to hold that an irregularity is fatal to the validity of the transaction.

As rightly argued by the learned senior counsel for the petitioners, by citing the authority of Hon''ble Supreme Court in Miheer H Mafatlal case (supra), the court has widest power u/s 391 to approve the scheme of arrangement among the amalgamating, demerged company on one hand and the amalgamated company on other hand. It is the commercial wisdom of the parties to the scheme who have taken an informed decision about the usefulness and propriety of the scheme by supporting it by the requisite majority votes which has to be kept in view by the court. The court certainly would not act as a court of appeal and sit in judgment over the informed view of the concerned parties to the compromise as the same would be in the realm of corporate and commercial wisdom of the concerned parties. The court has neither the expertise nor the jurisdiction to delve deep into the commercial wisdom exercised by the creditors and members of the company who have ratified the scheme by the requisite majority. Consequently, the company court''s jurisdiction to that extent is peripheral and supervisory and not appellate.

Here is the case, wherein, the facts and materials would reveal that all the statutory and legal formalities are duly complied with and the same is approved by the requisite majority. It is not shown that the scheme of amalgamation is unconscionable in nature by overlooking the interest of the shareholders or creditors either secured or unsecured.

as rightly argued by the learned counsel for the petitioner, the proceedings under sections 391 to 394 of the Act cannot be used by the creditors to seek recovery of the disputed amounts or coerce the company to make payments and the creditors have other available remedies to pursue and the sanction of the scheme will not frustrate the rights of creditors to pursue their remedy as available under law particularly when there is no specific objection that the remedies available to them under contract law are being adversely affected by the scheme.

It is well laid down principle of law in the authorities cited below that the petition for a sanction of a scheme u/s 391 of the Act is not a tool in the hands of the creditor to recover the debt or to coerce the company to pay, especially when the debt is not admitted and the objecting creditor must show to the court that the scheme is mala fide or fraudulent and is likely to adversely affect him or the creditors or any class of creditors to whom he belongs. Unless the scheme is shown to be contrary to any law or shocks the conscience of the court or is patently unfair to the members or creditors or any class of them or is against public interest or against the public policy, the court should not come in the way of business by rejecting a bona fide scheme u/s 391 of the Act-Mayfair Ltd., In Re: Mayfair Ltd., ; Zee Interactive Multimedia Ltd., In Re: Zee Interactive Multimedia Ltd.; In Re: Siti Cable Network Ltd., ; Sumilon Plastic (P.) Ltd., In Re: Sumilon Plastic P. Ltd., ., In Re: EMCO Ltd., .

In this context, the learned senior counsel for the petitioner has relied upon the broad principles laid down by the Hon''ble Supreme Court regarding scope of enquiry under the relevant provisions of the Act and the role of the court while making such enquiry. It is observed in para 29 of the judgment in Miheer II Mafatlal case (supra), as follows:

29.... 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:

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 to meetings as contemplated by section 391(1)(n) have been held.

That the scheme put up for sanction of the court is backed up by the requisite majority vote as required by section 391, sub-section (2).

That the meetings concerned 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.

That all necessary material indicated by section 393(1)(a) is placed before the voters at the meetings concerned as contemplated by section 391, sub-section (1).

That all the requisite material contemplated by the proviso of sub-section (2) of section 391 of the Act is placed before the court by the applicant concerned seeking sanction for such a scheme and the court gets satisfied about the same.

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.

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.

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.

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 would 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.

The hon''ble Supreme Court in the decision in Hindustan Lever Employees'' Union Vs. Hindustan Lever Limited and others, observed that it is not part of the judicial process to examine entrepreneurial activities to ferret out flaws. The court is least equipped for such oversights. Nor indeed, is it a function of the Judges in our constitutional scheme. We do not think that the internal management, business activity or institutional operation of public bodies can be subjected to inspection by the court. To do so, is incompetent and improper and, therefore, out of bounds. A scheme of amalgamation cannot be faulted on apprehension and speculation as to what might possible happen in future. Improved technology and scientific methods result in better employment prospects. Section 394 casts an obligation on the court to be satisfied that the scheme of amalgamation or merger was not contrary to public interest. The basic principle of such satisfaction is none other than the broad'' and general principles inherent in any compromise or settlement entered into between the parties that it should not be unfair or contrary to public policy or unconscionable. In amalgamation of companies, the courts have evolved, the principle of "prudent business management test" or that the scheme should not be a device to evade law. The power of the court is to be satisfied only whether the provisions of the Act have been complied with or that the class or classes were fully represented and the arrangement was such as a man of business would reasonably approve between two private companies may be correct and may normally be adhered to.

The hon''ble Apex Court in Hindustan Lever and Another Vs. State of Maharashtra and Another, laid down the following two broad principles underlying the scheme of amalgamation:

(i) That the order passed by the court amalgamating the company is based on a compromise or arrangement arrived at between the parties; and

(ii) that the jurisdiction of the company court while sanctioning the scheme is supervisory only, i.e., to observe that the procedure set out in the Act is met and complied with and that the proposed scheme of compromise of arrangement is not violative of any provision of law, unconscionable or contrary to public police. The court is not to exercise the appellate jurisdiction and examine the commercial wisdom of the compromise or arrangement arrived at between the parties. The role of the court is that of an umpire in a game, to see that the teams play their role as per rules and do not overstep the limits. Subject to that how best the game is to be played is loft to the players and not to the umpire and these principles are well neigh applicable to the present case also.

In the present case, both the amalgamating and amalgamated companies, in compliance with the directions of this court, filed various affidavits, viz., networth affidavits dated 20th September, 2012, 30th September, 2012 and 2nd October, 2012 and the list of unsecured creditors having outstanding of Rs. 1 lakh and more as on June 2012 of the amalgamating companies. The networth affidavit dated 20th September, 2012 of amalgamating and amalgamated companies would disclose pre-and post-restructuring assets of the same. As per the same., the pre-restructuring assets of amalgamated company is as follows:

Total assets-Rs. 14,203 crore

Total liabilities-Rs. 2,617 crore

Networth-Rs. 11,586 crore

Whereas, post-restructuring assets of the amalgamated company is as follows:

Total assets-Rs. 66,756 crore

Total liabilities-Rs. 30,207 crore

Networth-Rs. 36,549 crore

As per networth affidavit dated 30th September, 2012 the pre-restructuring assets of amalgamated company is as follows:

Total assets-Rs. 17,990.71 crore

Total liabilities-Rs. 4,802.02 crore

Networth-Rs. 13,188.69 crore

and post-restructuring is as follows:

Total assets-Rs. 75,653.69 crore

Total liabilities-Rs. 38,391.68 crore

Networth-Rs. 37,262.01 crore

Thus, the calculated networth of the amalgamated company, post-restructuring, based on unaudited provisional financial statement as on 30th September, 2012 is Rs. 37,262.01 crore. Further, the calculated networth of VAL post-demerger of aluminium business and after giving effect to transfer of power business of MALCO based on unaudited provisional financial statement as on 30th September, 2012 is as follows:

Total assets-Rs. 9,476.09 crore

Total liabilities-Rs. 6,575.54 crore

Networth-Rs. 2,900.55 crore

Though it is vehemently argued that the affidavit filed is not based on audited financial statement and the affidavit is not filed by authorised signatory, this court is not inclined to attach any serious importance to the same. The particulars called for by this court is to verify as to whether the scheme is likely to adversely affect either shareholders or creditor or any class of them and whether the financial status of the amalgamated company is such that it shall be sufficient enough to honour the commitments accepted by the same under the proposed scheme. It is note worthy to mention at this juncture that the Bombay High Court has allowed CP No. 11/2012 along with connected company applications filed by the amalgamated company/Sesa Goa India under sections 391 to 394 of the Act for similar approval and the company court of Bombay High Court at Goa, after detailed discussion, was pleased to negative similar objections raised therein and sanctioned the scheme mainly on the ground that the post-merger assets of the amalgamated company is going to be increased. The Bombay High Court has observed that even if one of the companies is the loss making company, it should not deter from sanctioning the scheme.

It is at this juncture seriously argued by the learned counsel for the objectors that the proposed merger is likely to result in loading the amalgamated company with the liabilities of transferor-companies, such as VAT, and Sterlite Energy Ltd. and the same is likely to affect the shareholders and creditors of other two amalgamating companies and amalgamated company and in the event of the scheme being sanctioned, the amalgamated company would be saddled with enormous amount of debt concerning loss making transferor companies and there cannot be any amalgamation of profit making with that of loss making company. In my considered view, such contention is legally or factually untenable. When the financial status of amalgamated company as evident from the records made available herein appears to be more stronger, so as to meet out the liabilities of the transferor-and transferee-company if any, the same shall not stand as a major block in sanctioning the scheme. As a matter of fact, the objectors herein are neither the members/shareholders nor creditor either secured or unsecured of the amalgamated company so as to raise any apprehension or objection about the financial stability of the amalgamated company. In this context, the observation of the Hindustan Lever Ltd. case (supra) is to be recollected that "the scheme of amalgamation cannot be faulted on apprehension and speculation as to what might possibly happen in future". Further, there is absolutely no provision of law under the Act, which bars the amalgamation of profit making company with that of loss making company and it all depends on the decision to be taken by the majority of shareholders and once the decision is taken, the commercial wisdom of the same cannot be interfered with by this court.

As observed by High Court of Bombay at Goa in CP No. 11 of 2012, when entrepreneurs take commercial decisions, it is not open for the court to judge their commercial wisdom. Whenever entrepreneurs take a commercial decision, there is always an element of risk involved and businessmen take such calculated risk after taking into consideration various facts and circumstances and pros and cons of all situations. The court is not expected to dissect and conduct a post-mortem of such decisions, which are based on business experience and commercial wisdom. The court is expected to be an impartial umpire and is not expected to enter the arena and examine the scheme under a microscope. Whenever decisions are taken, there is bound to be some kind of variation in the situation in respect of functioning of both companies. As the decision is based on business entrepreneurs, the court is not expected to reject over the same. It is further observed by Bombay High Court that the need for amalgamation and consolidation of competing companies in one Agglomeration sometimes becomes necessary, not for the purpose of creating monopoly, but for the purpose of survival in the global market. This appreciable logic is reasonably applied to the relief sought for in the present petitions.

While the amalgamating companies rely on the financial status of amalgamated company through networth affidavits, and pre-and post-restructuring assets of the amalgamated company, the objectors rely on the recent development regarding mining operations particularly in Karnataka, which issue is now seized of by the hon''ble Supreme Court.

It is argued by the learned senior counsel for the objectors that in view of the order dated 26th August, 2011 passed by the hon''ble Supreme Court, there was ban on operation of mining leases, granted to SGL in the state of Karnataka and the Directorate of Mine, Government of Goa issued order dated 10th September, 2012 for temporary suspension of mining operation for all mining leases in the State of Goa and the same was followed by another order dated 14th September, 2012 by the Ministry of Environment and Forests, thereby the environment clearances accorded for 139 cases in the State of Goa was kept in abeyance with immediate effect and SGL is one of those 139 cases covered under the ban order. Further, Ministry of Environment and Forests issued show cause notice dated 11th September, 2012 to all 139 mines as to why environment clearance granted to the unit should not be revoked and direction for closure of the mines should not be issued under Environment (Protection) Act, 1986. It is stated that originally there was prohibitory order both for carrying on mining operation in respect of iron ore and for transporting ore materials already excavated and sale of the same. But, the objection regarding closure of mining operation need not be the subject-matter of any anxiety as it is now modified by the hon''ble Apex Court by order dated 18th April, 2013, thereby categories A and B mines were permitted to be re-opened subject to compliance of certain conditions laid down in CEC Report and SGL falls under category B mine and has been awaiting statutory clearances from the concerned authorities so as to resume the mining operation shortly. Even otherwise, the proceedings initiated before the Supreme Court was temporary in nature and the same has not been extended to greater extent thereby mining operations were now permitted to be continued. It is nobody''s case that SGL failed to comply with the conditions issued by the Supreme Court and is disentitled to avail the benefit granted under the same. Further, an affidavit was also filed on behalf of the amalgamated company to the effect that Sesa Goa Ltd. (''SGL'') has been, as per the particulars, available herein engaged not only in the business of production and sale of iron ore in the State of Goa and Karnataka, but also in the business of production and sale of pig iron and metallurgical coke. SGL also owns 51 per cent equity stake in Western Cluster Ltd., Liberia, a company with potential iron ore resources in excess of over a billion tones in West Africa. Further, SGL currently holds 20 per cent equity stake in Carin India Ltd., a company engaged in oil and gas exploration, as such, the objection regarding temporary closure of its mining operation is no longer an impediment to grant approval of the scheme.

The scheme of amalgamation between Ekaterina Ltd. with Sesa Goa Ltd. was also sanctioned by the hon''ble Supreme Court of Mauritius (Bankruptcy Division) made in Co. 233(m)/2012 on 24th August, 2012.

''This court, for all the discussions held above, is of the considered view that the proposed scheme has no objectionable feature, which is detrimental either to the employees, members or creditors of all the companies. The scheme is not violative of any statutory provisions. The scheme is also fair, just, sound and is not against any public policy or public interest. All the statutory provisions are complied with. The liabilities of all unsecured creditors get transferred to the amalgamated company, which is financially stronger. The amalgamated company also files affidavit of undertaking to discharge the liability and separate affidavit is given to furnish security for the liability of VAL to SSNP as per the order of the hon''ble Supreme Court and all the undertakings are accepted, as such, this court is inclined to sanction the scheme of amalgamation and arrangement annexed to be binding on all the shareholders and creditors of all the companies which are constituents of the scheme. In the result, all the petitions are ordered thereby approving the scheme of amalgamation and arrangement amongst (2) Sterlite Industries (India) Ltd.; (2) The Madras Aluminium Co. Ltd.; and (3) Sterlite Energy Ltd. amalgamating companies 1 to 3, respectively; (4) Vedanta Aluminium Ltd. demerged company; and (5) Sesa Goa Ltd./amalgamated company and their respective shareholders and creditors with effect from 1st April, 2011. The amalgamating companies 1 to 3 shall stand dissolved without being wound up. The necessary formalities if any are to be complied with within 30 days from the date of receipt of the copy of this order. The scheme shall take effect subject to the compliance of the order made in SLP (Civil) No. 49/2013 dated 22nd June, 2013 confirming the order dated 12th December, 2012 made in OSA No. 341/2012 in Arbitration Petition No. 448/2012 by the Division Bench of Bombay High Court on the original side and such compliance is also subject to the outcome of appropriate legal remedy if any available to the petitioner under law against the order passed in SLP. The fee for the counsel for the Ministry of Corporate Affairs is fixed at Rs. 10,000 in each petition. Consequently, connected applications are closed.