' This petition under sections 284, 285, 286 and 287 and other enabling provisions of the Companies Ordinance, 1984 seeks giving effect to the proposed scheme transferring and vesting of petitioners Nos,1 and 2 in petitioner No,3 with all their undertakings, properties, Assets rights liabilities and obligations.
2. Petitioner No,1 Messrs Pak Water Bottlers (for short PWBPL) is a Private Limited Company incorporated to engage in purification, mineralization and sale of purified water and allied products. It has an authorized hare capital of Rs,30,000,000 divided into 3,000,000 ordinary shares of Rs,10 each. Out of the total issued and subscribed capital of the Company, 90% is held by petitioner No,3.
3. Petitioner No,2 Northern Bottlers (Pvt.) Limited (for snort NBPL) was incorporated on 27-2-1995 as a Private Limited Company to engage in business of purification, mineralization and sale of purified water etc. It has an authorized capital of Rs,50,000,000 divided into 5,000,000 ordinary shares of Rs,10 each. Out of its fully paid-up capital of Rs,50,000,000, 98% is held by petitioner No,3.
4. Petitioner No,3 Messrs Nestle Milkpak Limited (for short NML) is a listed company engaged in manufacturing, processing and sale of food products etc. It has an authorized capital of Rs,750,000,000 divided into 75,000,000 ordinary shares of Rs,10 each. Out of which Rs,45,263,925 is issued and subscribed. Messrs Nestle S.A. Switzerland holds 59.06% of the issued capital.
5. The benefits expected from the merger of petitioners inter alia are claimed to be an increase in profitability after removal of overlapping in management, marketing and distribution expenses; elimination of high-cost of complexity behind the existing operations/ set-up; streamlining of operations by optimizing their energies in the areas of sales, distribution and administration; reduction of administrative costs, effective control and administration on account of coming into being a single Board of Directors; the need to hold only one annual general meeting and issuance of only one set of annual/half yearly accounts, maintaining only one register of shareholders, only one set of books and records; only one administration office to manage the affairs of the merged/amalgamated company; exemption of capital gain on the sale of the shares of petitioner No,3 becoming available to the shareholders of petitioners Nos, 1 and 2 coupled with ready saleability of shares of petitioner No,3 as a listed company.
6. It is claimed that the petitioners have obtained written consent from 94% of the creditors of petitioner No,1, 98% of the creditors of petitioner No,2 and 96% of the creditors of petitioner No,3.
7. The petitioners accordingly make the following prayers:--
(a) To approve and sanction the Scheme as set forth in Annexure A; (b). To pass all requisite vesting orders for giving effect to the Scheme pursuant to section 287 of the Companies Ordinance, 1984 relating to the transferring to and vesting in' petitioner No,3 of all the undertakings of petitioners Nos,1 and 2 including all properties, assets, rights, liabilities and obligations of petitioners Nos,1 and 2;
(c) to order that all pending legal proceedings instituted by or against petitioner No,1 and/or petitioner No,2 be continued by or against petitioner No,3;
(d) to order the dissolution, without winding up of petitioners Nos, 1 and 2, so as to take effect from the Record Date (as defined in the Scheme);
(e) to order that the costs and all other incidental expenses to this petition be paid by petitioner No,3.
(f) to pass such further orders . And to issue all consequential and necessary directions as this Honourable Court may deem fit and proper in the circumstances.
8.. On the presentation of the petition general meetings of the three companies were convened under the supervision of a local commission appointed by this Court. The scheme proposed for merger and various arrangements in its execution were put before them. According to the report of the local Commissioner, these meetings by a majority of 90% and 98% finally, "resolved that the scheme of arrangement dated May 8, 2002 between Pak Water Bottlers (Pvt.) and its members, Northern Bottlers (Pvt.) Ltd. And its members and Nestle Milpak Ltd. And its members considered by these meetings is hereby approved, adopted and agreed". During the separate extraordinary general meetings of PWBPL and NBPL the representative of Messrs ALPS Jackson Veledian made oral as well as written objections to the merger.
9. After holding of the aforesaid three meetings as representative of Messrs American Bottled Water Systems he filed these objections in the Court opposing the scheme. It was stated that the petitioner holds in its name about 10% of the share capital in Pak Water Bottlers (Pvt.) Ltd. Petitioner No,1 and 2% of the share capital in Northern Bottlers (Pvt.) Ltd. (NBPL); that the two companies were successfully manufacturing and marketing bottled water under the popular brand name of AVA and had established a very strong presence in the retail market. It was alleged that Board of Directors of the aforesaid two companies (PWBL and NBPL) without knowledge of the objector, entered into an arrangement with the Board of Directors of Nestle-petitioner No,3 for their merger.
According to the objector some time back Nestle acquired controlling shares in both the companies, being 90% share capital of PWBL and 98% of share capital of NBPL. Therefore, whole of the management of both the companies was placed in the hands of the nominees of Nestle Milkpak Ltd. It was particularly pointed out that Managing Director of the three companies was a nominee of Nestle S.A. Incorporated in Switzerland. It was reiterated that the objector had very strong reservations to the proposed merger as it was calculated only to benefit Nestle through and through. The most important objection to the proposed merger being the proposed swap ratio i,e, one share of Nestle for 37 shares of PWBL and one share of Nestle for every 100 shares of NBPL. It was claimed that the proposed swap ratio had no nexus with the true worth of these two companies. To bring home the point it was claimed that in 1995 an International Company namely Messrs Artal had offered the objector to purchase their interest in the company for 300,000 USD while valuation new being offered on account of merger on behalf of Nestle stood only at 23,000 USD. It was also stated that as a matter of fact on May 3, 2001 Messrs Nestle the petitioner No,3 offered the objector to purchase their shares in the two companies at an amount which was several times more than the value which was being proposed as the swap ratio. In order to show that the proposed swa p ratio is totally unrealistic the objector also offered to purchase the entire shares of Nestle in both the companies as 10 times of the proposed value. Further that no information was provided by MessRs, A.F. Ferguson & Company who had proposed the swap ratio nor they had identified the basis on which the validity of their conclusions could be tested; that the proposed merger was likely to create unreasonable monopoly power and therefore, was against public interest and the interest of general consumers; that it was a calculated attempt by Messrs Nestle to destroy competition, create monopoly power to minimize competition and therefore, it was mala fide. Lastly it was stated that the objector and Messrs Nestle constituted a separate class being the only other shareholder but Messrs Nestle never took it into confidence while preparing the proposed scheme and that the nominee management of first two petitioners being directly under the control of petitioner No,3, the meeting of the members was a futile exercise and its real purpose was to lend a veneer of legality to the decision already taken by Messrs Nestle to do away with the corporate existence of first two petitioneRs,
10. The objector has repeatedly made a reference to two letters/reports of Messrs A.F. Ferguson and Company dated June 7, 2002. In the two letters/reports the impugned swap ratio was proposed in the following words:-- "In our opinion having regard to the audited accounts of the two companies up to December 31, 2001 management forecasts of their respective estimated future maintainable profits/losses and the share capital of the individual companies and other information and explanation given to us a fair rate of exchange of the ordinary shares is as follows:-- 1 share of NML = 100 shares of NBPL 1 share of NKL = 37 shares of PWBL."
11. The Securities and Exchange Commission has not made any material objection to the proposed scheme. It is however, stated that the object clauses of petitioners Nos,1 and 2 do not contemplate merger with another company while petitioner No,3 is not specifically authorized by the memorandum to carry on the business of drinking and mineral water etc.
12. Learned counsel for the objector relies upon a number of precedents of the superior Courts both from local and foreign jurisdictions. Also he has referred to some portions of important books and journals on the subject of valuation of shares in the perspective of mergers and various accounting standards. A reference in that regard is also made to The Analysis and Use of Financial Statements by Gerald I. White, C.F.A., Second Edition pages 933/34; How to Read Balance Sheets by Saeed Ahmed Qureshi, Financial Reporting Standard 7" of the Treatise on Fair Value in Acquisition Accounting, pages 67 to 79; Guide to Take Overs and Mergers by N.A. Sridharan and P.H. Arvindh Pandian Edition, 2002, pages 194 to 197; Amalgamations, Mergers, Take Overs and Acquisitions by L.M. Sharma published by Company Law Journal, New Delhi, pages 144 to 146; Weinberg and Blank on Take Overs and Mergers, Fifth Edition by Laurence Rabinowitz, page 2063 and Acquisitions, Mergers, Sales Buyouts and Take Overs; A Hand Book with Forms, Fourth Edition by Charlas A Scharf, pages 71 to 97. Also refers to a recent amendment made by the Securities and Exchange Commission to 4th Schedule to the Companies Ordinance, 1984 which pertains to transfer pricing of shares in the Corporate Sector. These references have been made to assail valuation assigned to the shares of the two petitioner-Companies and the swap ratio settled by Messrs A.F. Ferguson & Company; that valuation of the first two petitioners is not in accordance with the fair market value; that the decision of the Board of first two companies does not conform to the fair business decision rule; that it is not an arms length transaction which is sine qua non for determination of a fair value; that since practically it is a take over of the first two companies by petitioner No,3, the transaction should be seen as a contract of purchase and sale between the entities merging and the merged; that as a matter of fact the proposed scheme oppresses minority shareholders whose shares have been acquired on the authority of the decision made by the Boards having no clash of interest at all as these were essentially nominated and were representing the interest o Messrs Nestle Switzerland which owns the petitioner No,3. Reference is also made to a judgment of House of Lords re: O'Neil and another v. Phillips and others, decided on 20th May, 1999 wherein their Lordships considered an appeal by a member of a company holding minority share who considered that the company's affairs were being conducted in a manner unfair and prejudicial to his interest. A judgment of Court of Appeal in re: North Holdings Limited v. Sourtliern Tropics Limited Nicholas Andrew Clarke: Lesley Ann Gale Clarke and Kasmare Limited (1999) EWCA Civ. 1612, decided on 17th June, 1999 is also referred to stress valuation of shares in such situation by an independent auditor.
In that case their Lordships expressed the view that where the valuation of shares arose from the accounting treatment accorded to certain items then prima facie the auditor of the company could not be a suitable person to carry out the valuation. Another case from English jurisdiction in re: Re Hellenic & General Trust Ltd. (1975) 3 All ER 382 is referred to allege that the objector as a minority shareholder belonged to a different class to be treated and dealt with accordingly. The case of Messrs Revlon v. Mac Andrews & Forbes SC of Delaware 506 A. 2nd 173 (1965) is relied upon to maintain that in valuation of shares the market forces ought to have been allowed to prevail.
The last case cited from foreign jurisdiction re: Hanson Trust PLC etc. v. ML SCM Acquisitions Inc. 781 F. 2nd 264 is referred to support his claim that boards of both the petitioners Nos,1 and 2 failed to protect the interest of objector as a minority shareholder. Re: Gift Tax Commissioner, Bombay v.
Kusumben AIR 1980 SC 769 and re: W.T. Commissioner Assam v. Mahadeo Jalan AIR 1973 SC 1023 are relied upon to claim that both the petitioners being . Ongoing concerns method of valuation adopted in their respect could only be the earning method.
13. Other precedents from Indian jurisdiction cited at the bar include Tata Oil Mills Co. Ltd. & Hindustan Lever Ltd. (1994) 81 Comp. Cas. 754; Catex Petro Chemicals Ltd. (1993) 2 Comp. LJ 383 (Mad.); Miheer H. Mafat Lal v. Mafat Lal Ind. Ltd. (1996) 4 Comp. LJ 124 (SC); Kamala Sugar Mills Ltd. & Tirumurti Mills Ltd. (1996) 4 Comp. LJ (Mad.); Bank of Baroda Ltd. v. Mahindra Ugine Steel Co. Ltd.
(1976) 46 Comp. Cas. 227 (Guj.). The cases relied upon from local jurisdiction include Kohinoor Raiwind Mills Ltd. v. Kohinoor Gujar Khan Mills Ltd. 2002 CLD 1314; Koninoor Raiwind Mills Ltd. 2002 CLD 1747; Charles M. Oberly and others v. Alan P. Kirby and others 592 A. SD 445; Lipton Pakistan Ltd. And another 1989 CLC 818; Brooke Bond Pakistan Ltd. v. Aslam Bin Ibrahim and another 1997 CLC 1873; Companies Act 1913 and another PLD 1983 Karachi 45. The ratio settled in the aforesaid judgments is invoked to contend that the majority decision is meaningful only when their interest is not adverse to those whom it purported to represent; that Court may intervene when majority decision qua valuation of shares is not acceptable to minority; that the Court is under no compulsion to grant sanction to a scheme of merger as a matter of course; that mere observance of procedure prescribed in such cases does not mean that the Court will endorse the majority decision automatically, particularly in cases where majority was not true representative of the dissentient members; that the provisions of law revolve around the assumption that majority will not take a decision harmful to its own interest; that Court is not bound to follow decisions of interested directors and that where there are common boards both should refer the matter of merger to independent consultants to negotiate the transaction.
14. Learned counsel for the petitioner, on the other hand, places reliance upon re: Kohinoor Raiwind Mills Ltd. v. Kohinoor Gujjar Khan Mills 2002 CLD 1314; re: EITA India Ltd. And otheRs, 1997 Cal. 208; re: Miheer H. Mafatlal .v. Mafatlal Inustries Ltd. (1996) 87 Comp. Cas. 792; Asian Coffee Ltd. (2000) 3 Comp. LJ 92 (AP); re: Abdul Rahim v. UBL PLD 1997 Karachi 620; NBP v. KDA PLD 1999 Karachi 260; re: Brooke Bond Pakistan Ltd. v. Aslam Bin Ibrahim 1997 CLC 1873; re: Tata Oil Mills Co. Ltd. And Hindustan Lever Ltd. (1994) 3 Comp. LJ 46 (Born.); Aslam Bin Ibrahim v. MCA PLD 1998 Karachi 295; In re: Messrs Pakland Cement Ltd. 2002 CLD 1392; In re: Manekchowk (1970) 40 Comp. Cas. 819; Dewan Salman Fibre Ltd v. Dhan Fibres Ltd. PLD 2001 Lahore 230; Sussex Brick Company Ltd. (1960)
All ER 772 and In re: Companies Ordinance 1984 Balanced Fund Ltd. And another 2002 CLC 1361 to inter alia support his submissions that as a general rule in cases of mergers, break-up value, dividend earning capacity and market value are the three factors which are relevant for determining the fair value of shares and consequently the swap ratio; once the basic requirements of law both in procedure and substance are answered the Court will not scrutinize a scheme or refuse to sanction merely because drawing of a better scheme is possible; that the exchange ratio was fixed by a Chartered Accountant of report upon consideration of relevant factors and the same having been supported by majority shareholders in the meeting, the Court may not disturb the same on a vague ground of the minority that it was adverse to their interest; that sanction cannot be withheld unless it is shown that the scheme is unfair, unreasonable, or that it is against national interest; that objection or allegation of creation of a monopoly after merger is rather something which goes to the interest of the shareholder of the two companies, who will reap higher profits with even a better rate at the stock market; that the Court is to see as to whole if the scheme is fair but for that purpose it would not launch any investigation nor to consider each and every provisions of the scheme minutely; that it is always on the objector to establish that the scheme is mala fide or unfair; that a Court in mergers and amalgamations will not generally go into commercial merits of the decision reached by the majority; that a scheme is not to be scrutinized by the Court as an expert nor to sit in appeal with a view to find faults in it; that in absence of strong and cogent grounds showing that the scheme was conceived, designed or calculated to deceive, the Court will normally sanction the scheme rather than rejection it.
15. A judgment of this Court in re: Dewan Salman Fibres PLD 2001 Lahore 230 is relied upon to meet the objection of S.E.C.P. In that case Muhammad Asif Jan, J. As his Lordship then was, held that a company could amalgamate with another despite absence of any particular power in the objects clause of Memorandum of Association.
16. Heard the learned counsel for the parties. From the value positions taken it is clear that the objector minority shareholder in the first two companies is aggrieved only of the determination of swa p ratio. There is no other substantive objection to the scheme in hand.
17. Taking up first the claim of the objector to be treated and considered as a class' equal to the majority shareholder, the same cannot be granted just for the asking. It is correct that the objector is the only other shareholder in the first two companies while the petitioner No,3 holds the rest of the shares. That fact alone does not make it a different class to be treated at par with the majority shareholdeRs, The original concept of a Joint Stock Company may have undergone a number of changes during all these years and more rapidly with the recent development of the corporate sector. However, the basic status, character and significance of a share and .Its holder remains the same. It is that a holder of a share or shares, in the total equity of a company has his rights and privileges in the affairs of the company including sharing of profit and loss, proportionate to this paid-up share. Mere reason that the objector and petitioner No,3 are the only shareholders in the first two petitioners does not by itself make it one of the two partners in a firm. The legal position of a partnership in that aspect is clearly different from a corporate entity. The concept of division of a capital in shares is opposed to such a plea. The numerical strength of the two shareholders is too wide. To be ignored. The majority shareholder describes the objection to be an act of blackmailing and arm twisting while the objector looks at the scheme as an act of complete takeover and its elimination as a minority shareholder. Learned counsel for petitioner No,3 is correct in stating that if there was any intention to do away with the minority shareholder, both petitioners Nos,1 and 2 being in loss for quite some time and having a negative equity, the petitioner No,3 as majority shareholder could very well go for their winding .Up. Instead, it has opted to take along the objector and to merge them in one of the highest profit making companies in the country. His claim that shareholders of petitioner No,3 had rather their serious reservations about the merger on the ground that the two petitioners were going in losses is well reflected in the report of the Chairman.
The objector is also not correct in claiming that Messrs A. F. Ferguson Chartered Accountants failed to explain the basis of the determination of swap ratio as given by them. According to the report of the Chairman on the objection of Mr. Veledian, a representative of the minority share-holding company, the Chartered Accountants Messrs A.F. Ferguson explained the three methods for calculation of swa p ratio employed, namely, net assets value according to the audited accounts, capitalization of projected profits/ losses and quoted price of the merging company on the merger date (in case of petitioner No,3 being a listed company). At this, per report of the. Chairman, Mr. Veledian commented that he had no problem with the basis of the calculation but was not sure about the figures presented.
18. It will be seen that the swa p ratio was determined inter alia on the basis of the audited accounts of the first two companies and the objector did not come up with his own figures as against those which were picked up by the valuer from the audited accounts. Being a shareholder the objector had access to every record and books of accounts of the companies and therefore, in absence of any counter figure, as opposed to those reflected in the balance sheets of the two companies, a vague challenge to these figure.s and the swap ratio cannot be of any avail. According to the report of the Chairman the objector did not question the claim of Messrs A. F. Feroguson that as financial advisors they had determined the swap ratio for a number of amalgamations and mergers on the aforesaid basis which was never challenged before a competent forum. In the matter of Asian Coffee Ltd. (2000) 3 Comp. LJ 92 (AP) at page 106 the Honourable Judges of the Andhra Pradesh inter alia observed:-- "So many imponderable enter the exercise of valuation of shares. Once the exchange ratio of shares of the transferee company to be allotted to the shareholders of the transferor company has been worked out by a recognized 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 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."
19. Learned counsel for the objector has repeatedly made a reference to a judgment of the High Court of Sindh (Karachi) reported as re: Pfizer Laboratories Ltd. And another 2002 CLD 1209 to claim that the scheme in hand does not betray an arms length transaction as inter alia . The valuation of shares or swa p ratio was not determined by an independent valuer. The submissions made in this regard, however, cannot be accepted for two reasons. Firstly, at the time of meetings the representative of the objector did not challenge the competency of the Chartered Accountants Messrs A.F. Ferguson to make the valuation both with regard to their professional skill or the fact that they were Charted Accountants of the three petitioneRs, Secondly, no rule of law or propriety demands that valuation or determination of swap ratio cannot be made by the Chartered Accountant of the companies sought to be amalgamated. In absence of an allegation of mala fide, fraud or misrepresentation on the part of the valuer, an objection of the kind cannot be accepted on its face value. The objector, as noted earlier, has not been able to establish that valuation of shares was done only to protect the interest of majority shareholders'. In the said case relied upon by the objector Sindh Karachi High Court reached the conclusion on the ground that the valuation had been done keeping in view the interest of majority which was reflected from the statement of the auditor. No such factor is found established from the record in the present case.
The principle of arms length transaction relates more to an outright buyout rather than a petition for merger or amalgamation where obviously the controlling shareholders will have an edge allowed to them under the law. It is established from the case-law cited at the bar for both the parties that a scheme can be disapproved only if it appears unfair, unreasonable and oppressive on the face of it to a certain class of the shareholders which does not appear to be the case in the facts and circumstances of the merger/amalgamation scheme in hand.
20. Learned counsel for the objector on the basis of a news item published in Financial Times Wednesday, February 5, 2003 states that petitioner No,3 had recently purchased a concern in Europe engaged in bottling of mineral water at a price equivalent to 4.7 times of annual sales including equity and debt. Since the details of that takeover are not indicated in the news item its exact nature cannot be ruled upon. Also in my view the prayer for calculation of value of shares on earning method basis as made by the petitioner also vague and uncertain. The aforesaid three methods employed by the Chartered Accountant firm include the earning method basis by taking the companies as going concern. Therefore, it is not correct to state that these two elements were not taken into consideration. The other factors pointed out by the learned counsel from the various books on accounting and mergers and take overs in my view do not in any manner disapprove the three methods of valuation employed in the present case. These three methods, it needs to be repeated are broad outlines within which are included the factors like going concern, profit earning prospects both present as well as future, etc.
21. As pointed out earlier, the objectors are not specific in their objections either as to figures indicated in balance sheets of the first two petitioners which formed basis for determination of swa p ratio nor they have come out with a counter proposal or an exact swap ratio based upon their own figures. In absence of an exact counter-figure mere claim of having been offered a better price for their shares in past is not a good ground to refuse merger.
22. Learned counsel for the petitioner is also correct in pointing out that the objector in this case is looking at the transaction as an outright sale of its shares while the nature of a merger/amalgamation is altogether different. The counter offer for purchase of majority shares, as rightly pointed out by him, needs to be seen in that perspective. Such an offer is entertainable only when the seller is completely parting with the equity while in case of merger every single shareholder is to become a part of the new entity. Therefore, the objection that swap ratio had been determined only to favour the majority is not a correct statement of fact. Every shareholder in the merged company being entitled to the proposed advantages and disadvantages, the claim of adverse swa p ratio to the minority loses its force.
23. A lot of stress has been placed by the learned counsel for the objection on the "Business Judgment Rule" as explained in some of books as well as the case-law relied upon by him. This rule, in essence, means that management is not liable for mistakes which result in losses if made in good faith, exercise of Business Judgment and free of elements such as conflict of interest or violation of law. According to the aforesaid book by Charles A. Scharf, Edward E. Shea George C.
Back (supra) this rule usually protects judgments made by management in acquisition transactions. However, this rule is not applicable to the facts in hand inasmuch as it is not a management buy out because the management of the three companies is admittedly already with Messrs Nestle of Switzerland. Secondly, the first two companies are going in losses for the last quite some time and the claim of the objector that these are possessed with huge capital assets is not supported by any material on record.
24. The objection to the composition of Boards of the first two companies is also misconceived.
Obviously the owner of equity of 98% and 90% in the Companies has a privilege under law to dominate the Boards through its nominees. It will also be unnatural and rather logical to think that these nominees will act in a manner which is prejudicial to the interest of the principal company. In fact to expect otherwise would be against the usual course of things and human conduct. Further, that fact alone does not provide a ground for their, impeachment in the perspective of the merger in question. The purpose of the provisions of sections 284 to 287 of the Companies Ordinance will stand defeated if a merger is denied on the K sole ground that it is opposed or is otherwise not liked, as in the present case, by a sma ll number of shareholdeRs, Even if the alleged nexus between the holding and subsidiary companies is assumed yet that factor does not under any provision of law require that majority shareholders should concede the Will of minority shareholdeRs, As noted earlier, the only legal requirement being that the scheme is not oppressive, unreasonable and unjust. The objector is not specific as to the exact extent of adverse effect to its interest. The two companies continuously being in losses while the shares of the third company being transacted at the stock exchange at more than 20 times of its face value, the scheme based upon the swap ratio .Determined by a firm of reputed Chartered Accountants cannot be described to be unjust or unreasonable.
25. The relevant provisions of law of sections 284, 285 and 287 concede a democratic right of 3/4th majority of the members of a company to make a choice which the minority has been obliged to accept. The objector in this case has a negligible share in the total equity of two per cent. In one company while in the other it has an interest of 8% only. To disapprove the scheme, or the alternate suggested by the objector, a direction for re-consideration of swap ratio, is not likely to improve the status of the objector. Even otherwise to do so will amount to sitting in judgment as an Appellate Court to find out faults in the scheme as well as the swap ratio which is not possible in these proceedings on the principle laid down in re: Messrs Pakland Cement Ltd. 2002 CLD 1392 which inter alia states that a Court should see as a whole if the scheme was, fair. However, for that purpose an in-depth investigation and probe into every provision of the scheme of arrangement was disapproved. Also it was held that the onus was on the objectors to show that the scheme was mala fide or unfair. Further that unfairness should not be enough unless it was patent, obvious and convincing. It was also laid down that a Court should not go into the commercial merits or viability of the decision reached by the majority. To the same effect are the observations of the Gujarat High Court in re: Manekchowk (1970) 40 Comp. Cas. 819 in which it was inter alia stated that where majority was acting in a bona fide manner and the scheme was such as a fair minded person, reasonably acquainted with the facts of the case can regard it as beneficial for whom the majority seeks to represent then unless there was strong and cogent reasons to show that the scheme was misconceived, designed or calculated to cause injuries to others, the Court will sanction it rather than reject it; that the Court should prefer a living scheme to compulsory liquidation bringing about an end to a company.
26. The assertion by the objector that in case of approval of scheme the respondent No,3 will have monopoly in the manufacturing and marketing of mineral water, even if correct, cannot be a reason to deny the prayer in this petition. Since a different and distinct law namely, Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 is available in the field, any violation thereof is a matter of independent probe and investigation which cannot be undertaken in the present proceedings nor merger/amalgamation can be refused on that ground. I will also partly agree with the learned counsel for the petitioner that in practical terms that creation of alleged monopoly will rather be for the benefit of the shareholders of respondent No,3 after merger which will include the objector minority shareholders in the first two petitioneRs, That objection therefore, too is not worth serious consideration.
27. The objection of the Securities and Exchange Commission of Pakistan is adequately answered by the ratio settled in the aforesaid reported judgment/case of this Court in re: Dewan Salman Fibres Limited (supra). The ratio in re: Pfizer Laboratories Ltd. (supra) a case relied upon by the objector also supports the legal position that absence of a provision for amalagamation in the Memorandum of association of a company does not affect the statutory powers of a Court to allow the prayer for merger.
28. For what has been said above, I do not find the scheme to be unfair, unjust or oppressive to minority as alleged by the objector. The objections are accordingly rejected and the proposed scheme Annexure "A" which shall be read as part of this order is approved in terms of the prayer made from the date indicated therein.