The Supreme Court has cleared the decks for amalgamation of the largest private iron ore exporter Sesa Goa with subsidiary Sesa Industries. A Bench headed by Justice D K Jain, while setting aside the Division Bench of the Bombay High Court’s judgment that ruled against merger, said ?the appeals are allowed and the impugned judgment is set aside. Consequently, the order passed by the company judge sanctioning the scheme of amalgamation is restored.?
However, the court clarified that the merger scheme will not come in way of any civil or criminal proceedings filed by minority shareholder Krishna H Bajaj, having 0.29% shares in SIL. Bajaj had objected to the scheme.
Sesa Industries had challenged the Bombay High Court?s judgment that quashed its single judges? order scantioning scheme of amalgamation between the companies. While SGL and SIL had moved the company court seeking approval for scantion of its scheme of amalgamation in 2006, Bajaj had objected to it by citing that the ministry of company affairs letter dated February 17, 2006, which noted in its inspection report that there was siphoning of funds from SIL to SGL. The report also stated that the minority shareholders of SIL had been cheated by depriving them of their reasonable returns in the form of dividend or gains out of fair price of its shares. While the single judge in December 2008 had rejected the shareholder?s objections and sanctioned the merger scheme, it also stated that the Central government had not taken any further actions since the inspections were carried out. However, the Division bench had revoked the scantion by stating that when serious irregularities have been found in the inspection report, the court cannot sanction the scheme.