When no mistake is found in exchange ratio worked out by a recognized and reputed firm of Chartered Accountants and the same has been adopted by the shareholders/creditors with overwhelming majority, Court/Tribunal still

Law on valuation of shares is well settled. Regarding valuations by expert and recognized firm of Chartered Accountants, the Supreme Court in Miheer H. Mafatlal v. Mafatlal Industries Ltd. (1996) held that if Share Exchange Ratio is fixed by Chartered Accountant upon consideration of various factors and approved by majority of shareholders in meeting, the Court will not disturb ratio once the exchange ratio of the shares of the transferee company to be allotted to the holders of shares of the transferor company has been worked out by a recognized firm of Chartered Accountants who are expert 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 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 interests. Further, in Re Maknam Investments Ltd. (1995) (LJ) the Calcutta High Court observed: "Courts do not go into the matter of fixing of exchange ratios /in great details or to sit in appeal over the expert decision of concerned Chartered Accountants of repute. Courts only see whether there has been any manifest unreasonableness or manifest fraud involved in the matter." Therefore, I do not agree with the statement that the Court/Tribunal can still substitute the exchange ratio when no mistake is found and it has been adopted by the majority, unless there is manifest unreasonableness or fraud.