Shree Nirman Limited vs ...
2014 Latest Caselaw 1620 Del

                      IN THE HIGH COURT OF DELHI
                    COMPANY PETITION NO. 664/2014

                                           Reserved on 24th March, 2015
                                Date of pronouncement: 26th March, 2015
In the matter of
The Companies Act, 1956 & the Companies Act, 2013 (to the extent
applicable):

And

Petition under Sections 101 to 103 of the
Companies Act, 1956

And

Shree Nirman Limited
                                                     .. Petitioner Company

                                 Through Ms. Shilpi Jain and Mr. Sharad
                                 Vaid, Advocates for the petitioner
                                 Mr. Atma Sah, Assistant Registrar of
                                 Companies for the Regional Director

SUDERSHAN KUMAR MISRA, J.

1. This petition under Sections 101 to 103 of Companies Act, 1956

has been filed by Shree Nirman Limited (hereinafter referred to as the

'petitioner company') for confirming the reduction of its issued, subscribed

and paid-up share capital.

2. The registered office of the petitioner company is situated at New

Delhi, within the jurisdiction of this court.

3. The petitioner company was incorporated under the Companies

Act, 1956 on 12th April, 1984 with the Registrar of Companies, West

Bengal. Thereafter, the company shifted its registered office from the

State of West Bengal to NCT of Delhi and obtained a certificate in this

regard from the Registrar of Companies, NCT of Delhi & Haryana at New

Delhi on 31st July, 2008.

4. The authorized share capital of the petitioner company is

Rs.70,50,00,000/- divided into 1,05,00,000 equity shares of Rs.10/- each

aggregating to Rs.10,50,00,000/-; 10,00,000 1% non-cumulative

redeemable preference shares of Rs.65/- each aggregating to

Rs.6,50,00,000/-; 5,30,00,000 1% non-cumulative redeemable

preference shares of Rs.10/- each aggregating to Rs.53,00,00,000/-; and

50,000 10% non-cumulative preference shares of Rs.100 each

aggregating to Rs.50,00,000/-. The present issued, subscribed and paid-

up share capital of the company is Rs.63,15,42,500/- divided into

1,01,86,166 equity shares of Rs.10/- each fully paid up aggregating to

Rs.10,18,61,660/-; and 5,29,68,084 1% non-cumulative redeemable

preference shares of Rs.10/- each fully paid up aggregating to

Rs.52,96,80,840/-.

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

petitioner company has been filed on record. The audited balance sheet,

as on 31st March, 2014, of the petitioner company, along with the report

of the auditors, has also been filed.

6. It has been submitted by the petitioner that on 30th March, 2013,

the petitioner company had issued 1% non-cumulative redeemable

preference shares of Rs.10/- each fully paid up (hereinafter referred to as

1% NCRPS), aggregating to Rs.5,29,68,084/-, as bonus shares to its

equity shareholders in the ratio of 26 1% NCRPS for every 05 equity

shares held by them. This resulted in increasing the total issued and

paid-up share capital of the company by Rs.52,96,80,840/- to

Rs.70,15,42,500/-. It is further submitted that this increase in the amount

of paid up share capital resulted in increase in certain costs besides

imposing certain additional statutory and other obligations on the

company that do not apply to companies having lower paid up capital and

that the aforesaid increase in the paid up capital of the company has in

no way provided any advantage or benefit to the company. It is further

submitted that it is anticipated by the petitioner company that the

company may be benefitted by having a lower paid up share capital and

higher amount of reserves and surplus and that could be better and more

beneficial for the company. This is also expected to possibly add to

shareholders value and better perception in the mind of investor

community. Therefore, the company had decided to again roll back the

above increase in the total paid-up share capital of the company by

writing down and reducing the par value and paid up value of all the

issued and paid-up equity shares as well as all the preference shares of

the company. The company, therefore, proposed that the rate of dividend

payable on 1% NCRPS be increased from the present 1% to 10% and all

1% NCRPS be made redeemable at a premium of Rs.9/- per share

instead of at par as at present, while keeping the other terms and

conditions unchanged as at present and consequently, simultaneously

transferring and crediting Rs.47,67,12,756/- representing the amount of

reduction in the issued, subscribed and paid-up value of 1% NCRPS to

the "Capital Reserve for Redemption" and balance Rs.9,16,75,494/-

representing the amount of reduction in the issued, subscribed and paid-

up value of the equity shares, to the "Capital Reserve" in the books of

accounts of the company.

8. It is pleaded that the petitioner company is authorized by virtue of

Article 44B of its Articles of Association to reduce its share capital, any

capital redemption reserve account or share premium account, as per the

provisions of the Companies Act, 1956.

9. The Board of Directors of the petitioner company in their meeting

held on 1st September, 2014 have unanimously approved the proposed

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

petitioner company. A copy of the resolution passed at the meeting of the

Board of Directors of the petitioner company is placed on record.

10. A special resolution has been passed at the Extra Ordinary

General Meeting of the shareholders of the petitioner company held on

29th September, 2014 confirming the proposed reduction of the share

capital. Further, the preference shareholders of the petitioner company in

their Class Meeting held on 29th September, 2014 have also approved

the proposed reduction. Copies of the minutes of the special resolutions

passed at the Extra Ordinary General Meeting and the Class Meeting are

placed on record. The petitioner company does not have any secured or

unsecured creditor, as on 9th October, 2014. A copy of the certificate of

the Chartered Accountant dated 10th October, 2014 certifying the same

has been placed on record.

11. Learned counsel for the petitioner company has submitted that the

proposed reduction does not involve either diminution of any liability in

respect of unpaid share capital or payment to shareholders of any paid

up share capital. It is further submitted that the proposed capital

reduction will not result in any reduction in the net worth of the company,

nor the assets base of the company and it is expected to have an overall

favourable impact on the company and would be beneficial for the

company, its shareholders, other stakeholders and all concerned.

12. In the aforesaid background, this petition is filed seeking approval

of the resolution passed at the Extra Ordinary General Meeting held on

29th September, 2014. The Form of Minutes proposed to be registered

under Section 103(1)(b) of the Act and annexed with the petition as

Annexure - K is reproduced as under:

"With effect from close of business hours on 30 September 2014, the issued, subscribed and paid up share capital of Shree Nirman Limited shall stand reorganized and reduced from the present Rs.63,15,42,500/-, comprising of 1,01,86,166 equity shares of Rs.10/- each, fully paid-up, and 5,29,68,084 1% non-cumulative redeemable preference shares of Rs.10/- each, fully paid up, to Rs.6,31,54,250/-, consisting of 1,01,86,166 equity shares of Rs.1/- each, fully paid-up, and 5,29,68,084 10% non-cumulative redeemable preference shares of Rs.1/- each, fully paid up, and consequently, (a) the rate of dividend payable on the said preference shares shall stand increased from the present 1% to 10% and (b) the said preference shares shall be redeemable at a premium of Rs.9/- per share instead of being redeemable "at par" as at present, and consequently,

(c) simultaneously Rs.47,67,12,756/- representing the amount of reduction in the issued, subscribed and paid-up amount of the preference share capital shall be transferred and credited to the "Capial Reserve for Redemption" and Rs.9,16,75,494/- representing the amount of reduction in the issued, subscribed and paid-up amount of the equity share capital, shall be transferred and credited to the "Capital Reserve" in the books of accounts of the company, thus resulting in corresponding credit/increase in the "Capital Reserve for Redemption" and in the "Capital Reserve" of the company by the aforesaid amounts respectively.

Consequently, with effect from close of business hours on 30 September 2014, Clause V of the Memorandum of Association of the Company shall stand substituted by the following clause:

"The authorized share capital of the company is Rs.70,50,00,000/-, consisting of 10,50,00,000 equity shares of Rs.1/- each, 53,00,00,000 10% non-cumulative redeemable preference shares of Rs.1/- each, 10,00,000 1% non-cumulative redeemable preference shares of Rs.65/- each and 50,000 10% non-cumulative redeemable preference shares of Rs.100/- each."

13. By order dated 10th November, 2014, notice of this petition was

directed to be issued to the Regional Director, Northern Region and

citations were directed to be published in the newspapers 'Financial

Express' (English) and 'Jansatta' (Hindi) in terms of the Companies

(Court) Rules, 1959. The petitioner has filed an affidavit showing

compliance regarding service on the Regional Director, Northern Region

as also publication of citations in the aforesaid newspapers on 31st

December, 2014. Copies of the newspaper clippings containing the

publications have been filed along with the affidavit.

14. In response to the notice issued, Mr. A. K. Chaturvedi, Regional

Director, Northern Region, has filed his report dated 22nd January, 2015

and additional report dated 24th February, 2015 raising no objection to

the proposed reduction of share capital of the petitioner company.

15. Despite publication of notice, no objection has been received from

any creditor or any member of the public. Learned counsel for the

petitioner have also confirmed that neither the petitioner company nor

their counsel have received any objection pursuant to citations published

on 31st December, 2014. Thus, there appears to be no legal impediment

in allowing the present petition.

16. In view of the averments made in the petition and there being no

objection from any creditor or any member of the public, the petition is

hereby allowed. The resolution passed by the petitioner company in its

Extra Ordinary General Meeting held on 29th September, 2014 for

reduction of its share capital is approved. The 'Form of Minutes' proposed

to be registered under Section 103(1)(b) and annexed to the petition as

Annexure 'K', is also approved.

17. A certified copy of this order be delivered to the Registrar of

Companies within thirty days from today. The Registrar of Companies, on

receipt of the certified copy of this order and minutes approved by this

Court, is directed to register the same and effect the necessary alteration

with regard to the company.

18. The notice of registration of this order and the resolution of the

company shall be published in the 'Financial Express' (English) and

'Jansatta' (Hindi) within 14 days of the registration aforesaid.

19. The petition stands allowed in the above terms.

Dasti

SUDERSHAN KUMAR MISRA, J.

March 26, 2015