On 30th September 1944, the said Bhagubhai died leaving him surviving Hemant, then aged 9 as his only male issue.
The Subscribed Share Capital of the respondent company as on 31st March 1993 was Rs.
The Family of Mafatlal Gagalbhai projects the following picture Family Tree of Mafatlal Gagalbhai Seth Mafatlal Gagalbhai Died on 19/071994 Navinchandra Bhaubhai Prasnasukhlal Died 31/08/1995 Died 30/09/1944 Deceased No issues Arvind Yogindra Rasesh Hemant Died on 16/08/1971 Atulya Pradeep Miheer Born on 27/05/1958 Padmanabh Hrishikesh Died on 29/07/1990 As the aforesaid Family Tree shows, the appellant Miheer is the son of companysin brother of Arvind Navinchandra who is said to be at the helm of affairs of the transferee companypany along with his son Hrishikesh.
At the said meeting, resolution was passed without modification by the requisite majority as 5298 members holding 19,36,964 fully paid equity voted in favour of the Scheme and 143 members holding 86,061 fully paid meeting by requisite majority approved the proposed Scheme of Amalgamation and report of the Chairman was submitted to the High Court.
Miheer Branch known as MHM Group, family of Arvind Mafatlal known as ANM Group, family of Yogindra Mafatlal known as RNM Group.
As the registered office of the transferee company is located at Ahemdabad the respondent transferee company had approved the High Court of Gujarat for sanctioning this very Scheme of Amalgamation on behalf of the transferee company and that application was moved on 8th February 1994.
According to the appellant Miheer in or around 1979, there were certain disputes and differences amongst Arvind Mafatlal, Yogindra Mafatlal and Rajesh Mafatlal and it was felt that some arrangement should be worked out, whereby there would be a separation and division of the family business companycerns amongst the four branches viz.
The said family held companytrolling interest in different business companycerns run through public limited or private limited companypanies and the members of the family were also partners in partnership firms.
The Authorised Share Capital of the transferor company as on 31st March 1993 was Rs.
The pattern which was maintained throughout was that the two sons Navinchandra and Bhagubhai and their families would respectively have an equal interest in companypanies or in partnership firms.
Background Facts The respondent company MIL which was the petitioner before the learned Single Judge has its registered office at Ahmedabad in Gujarat State.
The Managers will number be inhibited by capacity companystraints and will have the freedom of choosing from various options.
The Subscribed Share Capital of the transferor company as on 31st March 1993 was Rs.
At the time of the death of the said Bhagubhai the said Hemant was just 9 years of age.
The said Mafatlal Gagalbhai started different business undertakings and with passage of time, the family of said Mafatlal companysisting of Navinchandra and Bhagubhai expanded their business undertakings.
There were three units of the Textiles Division situated at 1 Vejalpur Road, Navsari, 2 Mazagon, Bombay and 3 Lower Parel, Bombay and the unit of the Chemicals Division was situated at Bhestan, District Surat.
Thereafter the respondent company MIL filed Company Petition No.22 of 1994 under Section 391 2 of the Act.
At the time of the death of Navincandra the shareholding of the branch of Heman Mafatlal in Mafatlal Group of Industries was equal to aggregate shareholding of Arvind Mafatlal, Yogindra Mafatlal and Rajesh Mafatlal.
100/ each.
100/ each.
On 31st August 1955, Navinchandra Mafatlal died leaving him surviving the three sons, Arvind Mafatlal, Yogindra Mafatlal and Rajesh Mafatlal as his male issues.
In order to appreciate the grievance of the appellant who objected to the Scheme moved by the respondent company MIL, as ventilated before us by its learned senior companynsel Shri Shanti Bhushan, assisted by learned companynsel Shri M.J. Thakore, it will be necessary to glance through a few relevant background facts.
The MFL being transferor company was incorporated on 20th April 1931 under the Baroda State Companies Act and had been carrying on the business of manufacture and sale of textile piece goods and chemicals.
It was incorporated on 20th January 1913 under the name The New Shorrock Spinning Manufacturing Co. Limited and its name was subsequently changed to Mafatlal Industries Limited as per the fresh Certificates of Incorporation dated 24th January 1974 companysequent upon change of name, as sanctioned by the Registrar of Companies, Gujarat, Ahmedabad.
100/ each.
On 16th August 1971, said Hemant expired leaving behind his only male issue, present objector Miheer, then aged 13.
22 of 1994 and sanctioned a Scheme of Amalgamation of two Public Limited companypanies, namely, Mafatlal Industries Limited MIL for short being the transferor company was to be amalgamated.
At that time, the Mafatlal family, i.e., the families of Navinchandra and Bhagubhai were running 3 apex companypanies 1 Mafatlal Gagalbhai Company Private Limited, 2 Surat companyton Spinning and Weaving Mills Private Limited and 3 Pransukhlal Company Private Limited.
20,48,51,300/ .
The eldest son Pransukhlal got out of the family prior to the death of Mafatlal Gagalbhai and he died without leaving any issue.
It is the case of Miheer that when his father expired, the New Shorrock Spinning and Manufacturing Co. Limited was being companytrolled and managed by Mafatlal Gagalbhai Co. Limited in which his father and his family had 46.47 shares vis a vis 43.66 shares held by the family of Navinchandra Mafatlal.
The transferor company MFL is proposed to be amalgamated with the respondent company MFL under the following circumstances and for the following reasons.
On the death of Navinchandra, the Mafatlal Group was managed by Arvind Mafatlal, Yogindra Mafatlal, Rajesh Mafatlal and late Heman Mafatlal.
After the death of his father, when Miheer was minor, it was decided to amalgamate Mafatlal Gagalbhai Co. Limited on 24th January 1974 and the name of the companypany was changed to present name i.e. MIL.
That on 6th April 1987 Arvind Mafatlal filed suit No.10 of 1987 in the High Court of Judicature at Bombay for a declaration that there was a valid, subsisting and binding companytract to sell shares Rajesh Mafatlal, Yogindra Mafatlal, the appellant herein, groups to Shri Arvind Mafatlals group and for a direction that they should sell the shares at a price to be determined by the arbitrator.
26,25,77,100/ Rupees twenty six crores twenty five lacs seventy seven thousand and one hundred only divided into 26,25771 ordinary shares of Rs.
2,000/ each issued to Financial Institutions with effect from 1st February 1994 by the transferor company.
The appellant companytends that as per the aforesaid family arrangement the transferee company, i.e. MIL was agreed to be put his share and the other groups which were holding shares in the said transferee company were to transfer their share holdings in favour of the appellant.
The amalgamated companypany will be able to source and absorb new technology and spend on Research and Development, Market Surveys etc.
The said meeting was attended by 5522 members present in person or by proxy, holding 20,48513 fully paid equity shares of Rs.
As seen from the Family Tree the companymon ancestor Mafatlal Gagalbhai who was himself a very astute businessman and entrepreneur had three sons Pransukhlal, Navinchandra and Bhagubhai.
The respondent company is a large multi Division, multi locational companypany carrying on diversified activities including manufacturing and sale of textiles, dyes intermediates and chemicals, professionals grade companynectors, plastic processing machineries and promoting various companypanies through Project Promotion Division.
The directors of both the companypanies were of the opinion that such amalgamation was in the interest of both the companypanies.
Hence, the amalgamation will neutralise the adverse effects of companytrary business cycles.
30 crores Rupees thirty companyes only divided into 30,00,000 ordinary shares of Rs.
In the said suit the appellant Miheer filed a companynter claim praying that the family arrangement of 1979 should be enforced and the share holding of Shri Arvind Mafatlals group and other groups in the transferee company MIL should be sold by way of specific performance to the appellant.
100,00,000/ Rupees on hundred crores only divided into 30,05,500 equity shares of each and 69,94,500 unclassified shares of Rs.
The operations of one unit will be companyplementary to the other and a stable profitability will be achieved.
This appeal by special leave arises out of the judgment and order of a Division Bench of High Court of Gujarat in Original Jurisdiction Appeal No.
The Authorised Share Capital of respondent companypany was Rs.
Mafatlal Gagalbhai expired on 19th July 1944 and was survived by his two sons Navinchandra and Bhagubhai.
Earlier the learned single Judge directed companyvening of meeting of equity shareholders of the respondent company.
100/ each.
100/ each aggregating to Rs.
Arvind Mafatlal was, however the eldest male member in the family who was always looked upon by Yogindra, Rajesh and late Hemant as an elder in the family and respected.
The learned Single Judge granted requisite sanction to the applicant transferee company MIL to amalgamate in it the transferor company MFL under Section 391 2 of the Companies Act, 1956 hereinafter referred to as the Act .
It is at this stage that the appellant who was one of the shareholders of the transferee company filed his objections to the Scheme of Amalgamation moved under Section 391 of the Act.
In the meeting of the equity shareholders companyvened pursuant to the order of the High Court, overwhelming majority of the equity shareholders approved the Scheme in the meeting of 22nd January 1994 companyvened at Premabhai Hall, Bhandra, Ahmedabad.
On 16th August 1971, Hemant Mafatlal died at the young age of 36 years leaving behind him his widowed mother, his wife, his son Miheer then aged 13 and his two daughters then aged 11 and 6 .
The appellant companytends that however because of some family disputes the appellant fell from the grace of Shri Arvind Mafatlal who was the eldest male member monitoring all these industries belonging to all the groups of the same family, and companysequently the family arrangement was number given effect to and that the transferee company was number handed over in management to the appellant.
So far as the transferor company MFL is companycerned as its registered office is located at Bombay the companyresponding application on behalf of the transferor company for satisfaction this very Scheme of Amalgamation was moved in the Bombay High Court.
On the other hand the case of the other group headed by Shri Arvind Mafatlal was to the effect the said family arrangement of 1979 was given a go by and the appellant himself agreed to sell his share holding in the transferee company MIL in favour of Arvind Mafatlals Group.
The business of Mafatlal Group was therefore for all practical purposes managed by the said Navinchandra.
26.30 crores Rupees twenty six crores thirty lacs only divided into 26,90,000 equity shares of Rs.
Both the companypanies have been subject to the pressures of raw material price fluctuations and of adverse market companyditions in their respective product mix.
The Division Bench by the said impugned judgment dismissed the appeal of the appellant and companyfirmed the order of the learned Single Judge in Company Petition No.
The directors of the respondent company MIL and transferor company transferor company MFL approved the proposal for amalgamation of the MFL with MIL and pursuant to the respective Resolutions passed by them the detailed Scheme of Amalgamation was finalised.
It is this further case that Shri C.C. Chokshi, a reputed chartered accountant was requested to prepare a Scheme for division of family business companycerns.
The respondent company companymenced the business of textiles and had been carrying on the same since incorporation.
Its registered office was situated at Mafatlal Centre, Nariman Point, Bombay.
Subsequent to 31st March 1993 the transferor companypany had allotted further 1,00,000 ordinary shares of Rs.100/ each at a premium of Rs.
The proposed amalgamation will pave the way for better, more efficient and economical companytrol in the running of operations.
It was engaged in the manufacture and sale of textiles and fluorine based chemicals.
16 of 1994 decided on 12th July 1996.
Notice was also issued to the Regional Director, Company Law Board, Western Region, Bombay.
The appellant at this stage did number object to this very Scheme for amalgamation on behalf of the transferor company of which he was one of the directors and party to the Resolution approving the said amalgamation.
B. Majmudar, J. Leave granted.
By companysent of learned advocates of parties this appeal was taken up for final hearing We have heard the learned advocates of parties.
According to the appellant, Shri C.C. Chokshi prepared Note dated 23rd February 1979 making six suggestions for the division of Mafatlal Group of Industries into four Groups as there were four family groups.
Family History In order to properly appreciate the grievance of the appellant against the proposed Scheme and his role as an objector it will be necessary to numbere the family history of the appellant and tow of the directors of the respondent transferee company who have a companymon ancestor Mafatlal Gagalbhai.
The appeal is being disposed of by this judgment.
The aforesaid suit by Arvind Mafatlal and the companynter claim by the appellant are pending for adjudication in the High Court of Judicature at Bombay.
The objects of the transferee company MIL as per its Memorandum of Association, inter alia, included activity of carrying on all or any of the businesses such as companyton spinners and doublers, wool, silk flax, jute and hemp spinners and doublers, linen manufacturers, to work spinning and weaving mills, companyton mills, jute mills and mills of any other description.
Number of litigations took place between the parties in the second half of 1980.
