Delhi High Court
Religare Capitals Markets ... vs ............. on 7 November, 2014
$~41
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CO.PET. 680/2014
IN THE MATTER OF
RELIGARE CAPITALS MARKETS LIMITED .....Petitioner
Through: Mr. Anirudh Das and Mr.
Arjun Pall Advocates for
the Petitioner.
CORAM:
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
ORDER
% 07.11.2014
SANJEEV SACHDEVA, J (ORAL)
1. This is petition filed under Section 100 to 105 of the
Companies Act, 1956 read with Rule 46 of the
Companies (Court) Rules, 1959 for proposing a
reduction of preference share capital of the Petitioner
Company. The Petitioner has prayed for dispensation of
the procedure prescribed under Section 101(2) of the
Companies Act, 1956.
2. The Counsel for the Petitioner Company has submitted
that the total accumulated losses of the Petitioner
Company as on 31.03.2014 is Rs. 1580,08,12,788/-
which comprise of losses on account of the business
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operations and diminution in value of investments held
by the Petitioner Company in Religare Capital Markets
International (Mauritius) Limited.
3. It is further submitted that since the net worth of the
Petitioner Company has eroded considerably, any
improvement of the Petitioner Company will not be
represented appropriately unless past losses are written
off. It has further been submitted that a reduction of the
paid up share capital against accumulated losses will
improve the financial position of the Petitioner
Company.
4. The Petitioner Company seeks reduction in its paid up
preference share capital by cancelling and
extinguishing 52,50,00,000 preference shares of
Rs.10/- each fully paid up aggregating to Rs.
525,00,00,000/-.
5. It is submitted that Article 24 of the Articles of
Association of the Petitioner Company authorizes
Petitioner Company to reduce its share capital in any
manner for the time being authorized by law.
6. The proposed reduction has been approved by the
Board of Directors of the Petitioner Company in its
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meeting held on 17th September 2014. Copy of
Resolution passed by the Board of Directors of the
Petitioner Company approving the reduction of the
preference share capital of the Petitioner Company has
been placed on record. The said resolution for the
reduction of share capital of Petitioner Company has
also been approved by the members of the Petitioner
Company as a Special Resolution in its Extra-Ordinary
General Meeting held on 22nd October 2014.
7. The Shareholders have also passed a Special
Resolution at the Extra-Ordinary General Meeting held
on 22.10.2014 approving the reduction of capital, as
under:
"RESOLVED THAT pursuant to the
provisions of Sections 100 to 104 and other
applicable provisions, if any, of the
Companies Act, 1956 and the Companies
Act 2013, Memorandum and Articles of
Association of the Company and subject to
approval of NSE and BSE and subject to the
confirmation of the Hon'ble High Court of
Judicature at New Delhi and such other
approvals, consent, permissions and
sanction as may be necessary to be obtained
from appropriate governmental authorities,
departments, offices, institutions, bodies,
agencies and third parties and such
conditions as may be prescribed while
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granting such approvals, consent,
permissions and sanctions, which may be
agreed by the Board of Directors, the
approvals of the members of the company
be and is hereby accorded to the proposal to
set off the operating clauses of the company
of Rs 2,150,812,788 and diminution in the
value of investments in Religare Capital
Markets International (Mauritius) Limited to
the tune of Rs. 3,099,187,212 aggregating to
Rs. 5,250,000,000 by reducing the issued,
subscribed and paid up share capital of the
company, which shall be affected by way of,
(a) A selective extinguishment and
cancellation of (i)25,000,000 (Two
crore fifty lakh) 0.001% non-
convertible cumulative redeemable
fully paid up preference shares of
Rs.10 (Rupees Ten) each held by
Religare Enterprises Limited ("REL"),
which were issued at premium of Rs.
90 per share, and having an aggregate
paid up value of Rs.250,000,000
(Rupees Twenty five crores); and (ii)
500,000,000 (Fifty crores) 0.001%
non-convertible cumulative fully paid
up preference shares of Rs.10 each
(Rupees Ten) held by REL, having an
aggregate paid up value of
Rs.5,000,000,000 (Rupees Five
hundred crores) ("Proposed Capital
Reduction").
(b) NIL consideration being payable by
the Company to REL in lieu of the
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selective reduction, extinguishment
and cancellation of the fully up
preference shares held by REL as
mentioned hereinabove.
....."
8. Learned Counsel for the Petitioner submits that the
reduction of preference share capital has been approved
by the Shareholders of the Petitioner Company.
Further, the Petitioner Company has submitted that the
said reduction does not involve either the diminution of
any liability in respect of un-paid capital or the
payment to any Shareholders of any paid-up capital and
that the net worth of the Petitioner Company based on
31st Mach 2014 would be positive upon completion of
reduction of preference share capital.
9. Further, it has been submitted that the proposed
reduction of paid up preference share capital does not
impair the liability of Secured and Unsecured
Creditors, their claims are not reduced or affected in
any manner. The Petitioner Company submits that they
have been meeting and will meet all its liabilities as
and when they arise, in the normal course of business.
10. Issue notice to the Regional Director (Northern
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Region), Ministry of Corporate Affairs returnable on
13th February, 2015. The Petitioner Company is
directed to publish citation in the newspapers
"Hindustan Times" (English Edition) and "Hindustan"
(Hindi Edition)
CO.APPL. 2540/2014
By this Application, the Petitioner Company seeks
dispensation from the requirement to follow the procedure as
set out in Section 101 (2) of the Companies Act, 1956.
Counsel for the Petitioner Company submits that the present
reduction in the paid up preference share capital of the
Petitioner Company does not involve either diminution of
liability in respect of unpaid share capital or payment to
shareholders of any paid up share capital.
Keeping in view the aforesaid averments, the procedure
laid down under Section 101(2) of the Companies Act, 1956
is dispensed with. Application stands allowed.
Renotify on 13 th February, 2015.
SANJEEV SACHDEVA, J
NOVEMBER 07, 2014/st
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