The division bench consisting of justice N P Singh and justice S B Majmudar rejected all the arguments made on behalf of the Mafatlal family. Earlier, the Gujarat high court had dismissed his petition. The court was against interference in such company matters unless there is public interest or patent impropriety.
It was argued on behalf of Miheer that the amalgamation scheme would upset the family arrangement arrived at in 1979. According to that, he would get the flagship, Mafatlal Industries, while the smaller Mafatlal Fine would go to Arvind Mafatlal.
The ratio by which the shares of the amalgamated company were being allotted among the shareholders would frustrate the family arrangement, it was argued. The court was, therefore, asked to ensure fairness.
The court held that Miheer had not protested earlier because the scheme would have benefited him. It also rejected the argument that most of the Indian companies are family controlled. So the interests of the different family groups should be protected by the court.
It was further argued that the Companies Act refers to separate classes of shareholders with distinct rights. The Act is flexible enough to treat the family members as a separate class for shareholding purpose. The judgment did not consider this theory.
During the argument, the counsel also sought the appointment of an independent valuer to assess the value of the shares for the amalgamation, which is the main bone of contention. The court did not concede to it.
Mafatlal Industries had submitted that the courts should not interfere in the management decisions of a company.
The petitioner had not objected to the proposal at the general body meeting which approved it. He did not attend the meeting either. Two expert committees had examined the scheme. The petitioner had not objected to their reports nor produced any independent expert evidence. The court largely accepted these contentions.