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Hindustan Lever Employees’ Union vs Hindustan Lever Limited And Ors on 24 October, 1994

Hindustan Lever Employees’ Union vs Hindustan Lever Limited And Ors on 24 October, 1994
Bench: A Ahmadi, R Sahai, S C Sen

CASE NO.:

Special Leave Petition (civil) 11006 of 1994

PETITIONER:

HINDUSTAN LEVER EMPLOYEES’ UNION

RESPONDENT:

HINDUSTAN LEVER LIMITED AND ORS.

DATE OF JUDGMENT: 24/10/1994

BENCH:

A.M. AHMADI, CJ & R.M. SAHAI & S C. SEN

JUDGMENT:

JUDGMENT

The Judgment of the Court was delivered by

R.M. SAHAI, J, Merger under the Companies Act, 1956 (in brief’the Act,) of the two big companies-one, Hindustan Lever Limited (HLL), a subsidiary of tlni Lever (UL), London based mulii national company, and other Tata Oil Mills Company Ltd. (In brief ‘TOMCQ’) the first Indian company found in 1917 and public since 1957 which has been found by the High Court to be still ‘not financially insolvent or sick company was unsuccessfully challenged in the High Court by few rather nominal shareholders of TOMCO, Federation of Employees Union of both the TOMCO and HLL, Consumer Action Group and Consumer Education arid Research Centre. The attack varied from statutory violation, procedural irregularities of provision of the Act to ignoring effect of the provisions of Monopolies & Restrictive Trade Practices Act, 1969 under yaluatibn of Shares, its preferential allotment on less than the market price to the muM national, failure to protect the interest of employees of both the companies and above all being violative of public interest. The High Court was riot satisfied that either the merger was against public interest or that the valuation of the shares was prejudicial to the interest of the shareholders of TOMCO or that the interest of the employees was not adequately protected. It was held that there was no violation of Section 391(l)(a) of the Act and the claim that the disclosures in the explanatory stateinent were not as required was without basis as it was not established that the statement did not disclose correct financial position of TOMCO. Nor there was anything to show that the material was not disclosed. The Court held that the petitioner failed to establish any fraud or prejudice. On valuation of share for exchange ratio the Court found that a well reputed valuer of a renowned firm of chartered accountants and a director of TOMCO determined the rate by combining three well known methods, namely, the net worth method, the market value method and the earning method. The figure so arrived could not

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