JUDGMENT :

R. Balia, J.

This appeal is against the order dated 14 November, 1994, of the learned Company Judge in Company Petition No. 22 of 1994, by which the objections filed by the present appellant in respect of the scheme proposed by Mafatlal Industries Ltd. (hereinafter referred to as the MIL') under which scheme of amalgamating Mafatlal Fine Spinning and Manufacturing Company Ltd. (hereinafter referred to as 'M. Fine') with the petitioner MIL were approved and sanctioned.

2. The MIL moved the company court for sanction of the scheme under which the M. Fine, the transferor company, was to amalgamate with the petitioner MIL with effect from 1.4.1993. The application was moved on 16.12.1993 which was numbered as Company Application No. 872 of 1993. On 22.12.1993, the learned company judge issued directions for convening meeting in accordance with section 391(1) of the Companies Act, 1956 (hereinafter referred to as the Act') and appointed Shri A.N. Mafatlal to preside over the meetings to be convened in pursuance thereof. In pursuance of this direction, after notices were issued to individual shareholders as well as public, an extraordinary general meeting was held on 22.1.1994 in which the proposed scheme was approved by a majority representing more than three fourth in value of the members present and voting either in person or proxies. After such approval, Company Petition No. 22 of 1994 for sanction of the scheme was presented on 8.2.1994. In pursuance of the notice of the company petition, the present appellant who is a member of Mafatlal family filed his objections opposing the scheme before this court. The transferor company, M. Fine, having its registered office in the State of Maharashtra had also moved similar application before the Bombay High Court. The present objector who is also a shareholder in the said transferor company had neither participated in the meeting of shareholders held in pursuance of section 391(2) in the proceedings of application filed by the M. Fine, nor did he object to sanctioning of the scheme by the Bombay High Court. The scheme, ultimately, came to be sanctioned by the Bombay High Court on the petition filed by the M. Fine and had become final, no appeal having been filed against that order. The court also issued notice to Central Government under section 394A of the Act in response to which the learned counsel for the Central Government had informed the court that the Central Government had decided not to make any representation in favour or against the proposed scheme of amalgamation. A report of the appropriate authority was also submitted that the affairs of the company having been conducted in a manner not prejudicial to the interest of its members or public interest.

3. The objections which were raised before the learned company judge were summarised in the following manner in the order under appeal.

Objection No. (i)

The scheme is not for the avowed purpose or objects for which it is proposed.

Objection No. (ii)

Consequently, as the scheme is not for the purpose for which it is proclaimed to be, I submit it is for an ulterior motive which is explained hereinafter in detail.

Objection No.(iii)

That the scheme even otherwise is not in the interest of Mafatlal Industries Ltd.

Objection No. (iv)

Miheer H. Mafatlal, in his personal capacity, and as karta of his Hindu undivided family and as trustee of trusts and his family members are the shareholders of MIL holding 5 per cent of the total share capital of MIL. He, therefore, claims that he and his family members are of a distinct class of shareholders having interest in the petitioner company, MIL, of a distinct nature in view of the family arrangement, dated 1 March, 1979, and, therefore, they were required to be treated as a separate and distinct class of shareholders and their separate meeting was required to be called for in approving the proposed scheme as the scheme vitally affects the rights of this class of shareholders. In the absence