The Bubble Industries Ltd. (BIL) was incorporated on 20 th January 1993 carrying on all of businesses such as cotton

spinners and doublers, wool, silk flax, jute and hemp spinners and doublers, linen etc. The Authorized Share Capital of

company was Rs.100,00,000/- divided into 30,05,500 equity shares of each and 69,94,500 unclassified shares of Rs.

100/- each. The Subscribed Share Capital of the company as on 31st March 2003 was Rs. 26.30 crores divided into

26,90,000 equity shares of Rs. 100/- each. The company is a large multi- Division, multi-locational company carrying on

diversified activities.

The Real Industries Ltd. (RIL) was incorporated on 20th April 1995 under the Company Act 1994 and had been

carrying on the business of manufacture and sale of textile piece goods and chemicals. The Authorized Share Capital of

the company as on 31st March 1995 was Rs. 30 crores divided into 30,00,000 ordinary shares of Rs. 100/- each. The

Subscribed Share Capital of the company as on 31st March 1995 was Rs. 26,25,77,100/- divided into 26,25771 ordinary

shares of Rs. 100/- each. Subsequent to 31st March 1995 the RIL had allotted further 1,00,000 ordinary shares of

Rs.100/- each at a premium of Rs. 200/- per share on conversion of 1,00,000. Partly Convertible Debentures of the face

value of Rs. 2,000/- each issued to Financial Institutions with effect from 1st February 1996 by the company.

The RIL is proposed to be amalgamated with the BIL under the following circumstances and for the following

reasons. :

(1) The proposed amalgamation will pave the way for better, more efficient and economical control in the running of

operations.

(2) Economics in administrative and management costs will improve in combined profitability.

(3) The risk bearing capacity of the amalgamated company will be substantial.

(4) The Managers will not be inhibited by capacity constraints and will have the freedom of choosing from various

options.

(5) Both the companies have been subject to the pressures of raw material price fluctuations and of adverse

market conditions in their respective product mix.

The directors of the BIL and RIL approved the proposal for amalgamation and pursuant to the respective Resolutions

passed by them the detailed Scheme of Amalgamation was finalized. The directors of both the companies were of the

opinion that such amalgamation was in the interest of both the companies.

One of the directors of the RIL objected that resolution was passed without modification by the requisite majority as 5298

members holding 19,36,964 fully paid equity voted in favour of the Scheme and 143 members holding 86,061 fully

paid meeting by requisite majority approved the proposed Scheme of Amalgamation and report of the Chairman was

submitted to the High Court Division. Objections were raised by other prominent portion of shareholders that the

amalgamation is a sense of fraud which goes in excess of the powers of the directors. The directors of RIL got corporate

opportunities for personal profit from merging with a sick and non-profitable company BIL.

Question: 1. How can the objection of the minority board members having minority shares be protected? What are

the grounds of such protection and why?----------Marks 20.

2. Do you think if the minority shareholders rights are protected by the Civil Court there is possibility of winding

up of the RIL? Favor your argument with 5 logical points.--- -----------Marks 15.