BANK OF INDIA LTD Vs. AHMEDABAD MANUFACTURING AND CALICO PRINTING CO LTD

JUDGEMENT

(1.) THIS is a petition filed by the Bank of India Ltd. for the sanction of the court to a scheme of arrangement under section 391 of the Companies Act and for the necessary directions under section 394 of that Act.

(2.) THE facts of the case are that the business of the Bank of India Ltd. was nationalised by the Banking Companies (Acquisition and Transfer of Undertakings) Act, being Act V of 1970, with restrospective effect as from 19th July, 1969, after a prior Ordinance and a prior Act attempting to do so had been struck down by the Supreme Court. Under the said Act V of 1970, the assets and liabilities of the Bank of India Ltd. vested in the New Bank of India, and the only right which the old bank, viz. , the Bank of India Ltd. , acquired was the right to receive Rs. 14. 70 crores as compensation. The Bank of India Ltd. received that compensation in the form of 5 1/2% Banks (Acquisition and Transfer) Compensation Bonds, 1999, of the face value of Rs. 14,68,50,000 and a Government promissory note of the face value of Rs. 1,29,200 which, together with certain cash adjustment, made up the said sum of Rs. 14. 70 crores. The board of directors of the said bank thereafter considered the various open to it for utilisation of the company's funds, and, after negotiations with the respondent-company, arrived at a mutually agree scheme, the broad outlines of which were announced at the annual general meeting of the Bank of India Ltd. on the 29th of September, 1970. On the 29th of January, 1971, an agreement was entered into between the Bank of India Ltd. (hereinafter refereed to as "the transferor company") and the Ahmedabad Manufacturing and Calico Printing Company Ltd. (hereinafter referred to as "the transferee company") whereby, subject to the sanction of the court under sections 391 and 394 of the Companies Act and the other requisite formalities being complies with, the transferee company agreed to accept the vesting in it of the transferor company with effect from the 1st April, 1971, on the terms embodies in the said agreement. On the 1st of February, 1971, any my brother Nain passed an order for the holding of a meeting of the shareholders of the transferor company in accordance with the provisions of section 391 of the Companies Act. A meeting of the shareholders of the transferor company was accordingly held on the 18th of March, 1971, for the purpose of considering the proposed scheme, at which there was a discussion and voting thereon, and the result of the poll was announced on the 24th of voting thereon, and the result of the poll was announced on the 24th of March, 1971. The proposed scheme, with certain modifications, was passed by much more than statutory majority, 3,70,194 votes being cast in favour of the resolution, and 36 votes, being the votes of only 3 shareholders, were cast against the same. The report of the said meeting having been filed by the chairman of the transferor company on the 30th of March, 1971, the present petition for the sanction of the said scheme under section 391 and for the requisite directions under section 394 of the Companies Act was thereafter filed on the 12th of April, 1971. It may be mentioned that the transferee company has been made a party-respondent to the present and has appeared through counsel and supported the petition.

(3.) UNDER clause 8 of the said scheme, in respect of every four shares in the transferor company, the transferee company is to issue and allot to the members of the transferor company, (i) one "a" ordinary share of Rs. 25 credited as fully paid and an entitlement to two fractions of 1/10 each of such "a" ordinary share; (ii) one eight per cent. convertible bond of Rs. 100 credited as fully paid; and (iii) four eight per cent. redeemable bonds of Rs. 116 each credited as fully paid. It may, at this stage, be pointed out that, pursuant to the said scheme, the transferee company would be issuing the said additional shares and bonds and increasing its authorised capital by about Rs. 12 lakhs. Notice having been given to the Central Government has appeared at the hearing of this petition, through counsel, and has opposed the petition. The petition was also opposed by the new Bank of India for whom Mr. A. H. Desai appeared before me, as well as by an individual shareholder named Vijendra Devidas.