Dion Global Solutions Limited vs .........................
2012 Latest Caselaw 7299 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                               Date of Judgment:20.12.2012

+      CO. PET. 431/2011
In the matter of
The Companies Act, 1956

And

Petition under Sections 100to 103
of the Companies Act, 1956 for
confirmation of Reduction of Share Capital

DION GLOBAL SOLUTIONS LIMITED
                          ......Petitioner/Petitioner Company

                            Through Mr. Sandeep Sethi, Senior
                            Advocate with Mr. NPS Chawla and Ms.
                            Simran Sethi, Advocates for the Petitioner
                            Company
                            Mr. K.S. Pradhan, Astt. Registrar of
                            Companies for the Regional Director
                            Mr. Ashish Makhija, Amicus-Curiae

INDERMEET KAUR, J. (Oral)

1. The present petition and the connected applications have been

filed under sections 100- 103 of the Companies Act, 1956 (for short

„Act‟) by the Petitioner Company seeking approval of this Court to the

proposed reduction of share capital and reserves as resolved by its Board

of Directors in the meeting held on 28.05.2012 and also by Membersof

the Company on 05.07.2012.

2. The registered office of the Petitioner Company is situated

within the National Capital Territory of Delhi and is within the

jurisdiction of this Court.

3. That the present petition was filed on 01.10.2011, in whichthis

Court vide its order dated 18.10.2011dispensed with the requirement of

section 101(2) of the Act. Thereafter, in view of the change in the

capital structure of the Petitioner Company vis-à-vis the capital structure

presented in the Company Petition No. 431 of 2011 and in order to

modify the earlier resolution passed by the Board of Directors and

Members, the Petitioner Company filed the Company Application No.

1498 of 2012 for obtaining confirmation of this Court to the resolution

passed by the Members of the Petitioner Company on 05.07.2012 for

reduction of share capital and reserves against the accumulated losses as

appearing in the books of accounts of the Petitioner Company as at

March 31, 2012.

4. The Petitioner Company, thereafter,has filed Company

Application No. 2277 of 2012 for correction in the form of minute filed

as Annexure - P to the Company Application No. 1498 of 2012.

5. Details with regard to the date of incorporation, registered office

and authorized, issued, subscribed and paid up share capital of the

Petitioner Company have been given in the Petition and the connected

application.

6. A copy of the Memorandum and Articles of Association of the

Petitioner Company as well as the audited Annual Accounts of the

Petitioner Company for the year ended March 31, 2012are enclosed with

the Petition and the connected application.

7. By the Company Application No. 1498 of 2012 in Company

Petition No. 431 of 2011, the Petitioner Company proposes to write off

the accumulated losses as appearing in the books of accounts of the

Petitioner Company as on March 31, 2012 against the balance in

Securities Premium Account, Amalgamation Reserve Account and part

of the paid up equity share capital, in the manner and to the extent

described in the said Company Application No. 1498 of 2012 and the

Form of Minutes placed along with Company Application No. 2277 of

2012.

8. Reasons for the reductionof share capital of the Petitioner

Company as stated in the Petition and the connected application are that

as a result of huge amount of brought forward losses, the capital of the

Petitioner Company is not adequately represented by the available assets

and improvements in the performance of the Petitioner Company cannot

be appropriately reflected unless past losses are written off.

Accordingly, the Board of Directors considered it desirable to undertake

right sizing of the Balance Sheet of the Petitioner Companyfor writing

off the accumulated losses as appearing in the books of accounts of the

Petitioner Company as at March 31, 2012 against the amount lying

under Amalgamation Reserve Account, Securities Premium Account

and paid-up equity share capital of the Petitioner Company.Consequent

to the approval of the present petition and the connected applications,

the amount of loss so adjusted shall be given effect to in the books of

accounts of the Petitioner Company as at March 31, 2012 so as to

present the true and correct view of the Balance Sheet of the Petitioner

Company.

9. Learned counsel for the Petitioner submits that Article 13 of the

Articles of Association of the Petitioner Company authorizes the

Petitioner to reduce its capital from time to time, by way of Special

Resolution, in any manner permitted by law.

10. A copy of the special resolution of the Petitioner Company in

accordance with section 189 of the Companies Act, 1956 passed by the

Members of the Petitioner Company dated 05.07.2012, has been placed

before this Court.

11. This Court vide its order 18.10.2011 had directed that the

citations be published in „Financial Express‟ (English Edition) and

„Jansatta‟ (Hindi Edition).Further, this Court after hearing the Company

Application No. 1498 of 2012 in Company Petition No. 431 of

2011,vide order dated 09.08.2012,had directed the Petitioner Company

to issue notice to the Registrar of Companies, NCT of Delhi & Haryana.

Notice was accepted by Mr. K.S. Pradhan, Deputy Registrar of

Companies on behalf of the Regional Director (Northern

Region).Affidavitsconfirming the publications and service of petition to

the office of Regional Director had been filed by the Petitioner

Company on 05.01.2012 and 30.10.2012.

12. In response to the notice issued to the office of Regional

Director (Northern Region), he has filed an affidavit/representation

dated 02.11.2012wherein he has made the following observation:

"5.1 It may kindly be noted that on the one hand the Company is issuing its share at a Premium of Rs. 24/- per share and at the same time the Company has filed the Petition for Reduction of Share Capital to write off its accumulated losses amounting to Rs. 79,18,09,881/-. In view of the above it is submitted that the Petitioner Company may be asked to justify the issue of shares on Premium."

13. The Petitioner Company by way ofits reply to the affidavit of

Regional Director as filed with Hon‟ble High Court on 06.11.2012

hasstated that the issue price (including share premium per share) of the

shares issued by the Petitioner Company was determined as per the

formulae given under Regulation 76 (i.e. "pricing of equity shares") of

the Securities and Exchange Board of India (Issue of Capital and

Disclosure Requirements) Regulations, 2009 (SEBI ICDR Regulations).

It is further stated in the reply of the Petitioner Company that the

issuance of shares by the Petitioner Company at a premium of Rs. 24/-

per equity share was made in compliance with the provisions of the

memorandum and articles of association and the SEBI ICDR

Regulations and the requirements of the BSE Limited (BSE) where the

shares of the Petitioner Company are listed. The Petitioner Company has

also submitted that the said issue of shares was duly approved by the

Board of Directors and Members of the Petitioner Company, BSE and

also the statutory auditors of the Petitioner Company. In view of the

reply of the Petitioner Company and the submissions made by the

Counsel of the Petitioner Company, Mr. K.S. Pradhan does not wish to

press this observation. Accordingly the same stands disposed of.

14. Further, no objections have been received to the proposed

reduction of paid up equity share capital and reserves from any other

party. Mr. N.P.S. Chawla, learned counsel for the Petitioner Company,

has filed an affidavit dated 06.11.2012 confirming that no objections

have been received pursuant to citations published in the newspapers.

15. In view of the facts and circumstances of the present case, the

resolution for reduction of share capital and reserves passed by the

special resolution dated 05.07.2012 along with the corrected form of

minute of the reduction in share capital proposed in para 6 of the

Company Application No. 2277 of 2012 in Company Petition No. 431

of 2011 are confirmed and approved.

16. The order passed today and the form of minute mentioned in

para 6 of the Company Application No. 2277 of 2012 in Company

Petition No. 431 of 2011, as approved by this Court shall be registered

in accordance with Section 103 of the Companies Act, 1956 by the

Registrar of Companies and shall be published in terms of sub-section 3

of section 103 in the „Financial Express‟ (English) and Jansatta (Hindi).

17. Learned Counsel for the Petitioner states that the Petitioner

Company would voluntarily deposit a sum of Rs. 50,000/- in the

Common Pool fund of the Official Liquidator within three weeks from

today. The statement is accepted.

18. The Petition and the connected application are allowed on the

above terms.

Order Dasti.

INDERMEET KAUR, J DECEMBER 20, 2012 nandan