Delhi High Court
Shree Nirman Limited vs ............. on 10 November, 2014
$~2
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CO.PET. 664/2014
IN THE MATTER OF
SHREE NIRMAN LIMITED .....Petitioner
Through: Ms. Shilpi Jain, Mr. Sharad
Vaid and Ms. Madhur
Punjwani, Advocates for
the Petitioner.
CORAM:
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
ORDER
% 10.11.2014
SANJEEV SACHDEVA, J (ORAL)
1. This is petition filed under Section 100 to 103 of the
Companies Act, 1956 for confirming reduction of
Issued, Subscribed and Paid-up 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. It has been submitted that the reason for the reduction
of share capital of the Petitioner Company is on 30 th
March 2013, the Petitioner Company had issued 1%
Noncumulative Redeemable Preference Shares of Rs
10 (Rupees Ten) each fully paid up (hereinafter also
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referred to as "1% "NCRPS"), aggregating 5,29,68,084
1% NCRPS, as bonus shares to its Equity Shareholders
in the ratio of 26 1% NCRPS for every 5 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 with effect from 30
March 2013. 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. It has been
observed by the Petitioner Company that the aforesaid
increase in paid up capital has in no way provided any
advantage or benefit to the company. It is therefore
anticipated by the Petitioner Company that the
Company may benefit 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.
3. The Petitioner Company has proposed a reduction of (i)
5,29,68,084 1% Non-cumulative Redeemable
Preference Shares of Rs 10 each by Rs. 9 per share and
(ii) 1,01,86,166 Equity Shares of Rs. 10 each by Rs 9
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per share, thus resulting in reduction of total issued,
subscribed and paid-up share capital from Rs.
63,15,42,500 to Rs. 6,13,54,250
4. It is submitted that Article 44B 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.
5. The proposed reduction has been approved by the
Board of Directors of the Petitioner Company in its
meeting held on 1st September 2014. Copy of
Resolution passed by the Board of Directors of the
Petitioner Company approving the reduction of the
share capital of the Petitioner Company has been
placed on record.
6. The Equity Shareholders have also passed a Special
Resolution at the Extra-Ordinary General Meeting held
on 29th September 2014 approving the reduction of
share capital, as under:
"RESOLVED THAT pursuant to Sections
100 to 104 read with all other applicable
provisions of the Companies Act 1956 and
relevant provisions of the Companies Act,
201 and Article 448 and other applicable
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provisions of the Articles of Association of
the Company and subject to the approval of
preference shareholders in their class
meeting and confirmation of the Hon'ble
High Court of Delhi/National Company Law
Tribunal, the existing Share Capital of the
Company be reorganized .and reduced by
writing down and reducing the par value
and paid up value of all the existing Issued,
Subscribed and Paid-up Equity Shares of Rs
10/each, fully paid up and also of all the
existing Issued, Subscribed and Paid-up
Preference Shares of Rs 10/- each, fully
paid up, by Rs 9/- per share in each case,
and thereby reducing and making the par
value and paid up value of all such Equity
Shares, as also of all such Preference
Shares, to Re. 1/- each, fully paid up, while
keeping the number of such shares in each
case the same as at present and
consequently, the rate of dividend payable
on the said Preference Shares be increased
from the present 1% to 10% and all such
Preference Shares be made redeemable at a
premium of Rs 9/- each, while keeping the
other terms and conditions unchanged as at
present, thus reorganizing and reducing the
total Issued, Subscribed and Paid up Share
Capital of the Company from 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, comprising of
1,01,86,166 Equity Shares of Re. 1/- each,
fully paid-up, and 5,29,68,084 10% Non-
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cumulative Redeemable Preference Shares
of Re 1/ each, fully paid . and consequently,
simultaneously transferring and crediting
Rs 47,67,12,756/-, representing the amount
of reduction in the Issued, Subscribed an
Paid-up value .of the Preference Share
capital, to the "Capital Reserve for
Redemption" and Rs 9,16,75,494/-
representing the amount of reduction in the
Issued, Subscribed and paidup value of the
Equity Share capital to the "Capital
Reserve' in the books of accounts of the
Company.
RESOLVED FURTHER THAT upon the
confirmation/approval of the Hon'ble High
Court of Delhi/National Company Law
Tribunal this resolution shall become
effective i.e., it shall take effect from the
close of business hours on 30th September
2014.
RESOLVED FURTHER THAT subject to
confirmation of the High Court of
Delhi/National Company Law Tribunal, as
maybe applicable, the Company shall not be
required to add the words "and reduced" to
its name as the last words.
RESOLVED FURTHER THAT for the
purpose of giving effect to the above
Resolutions, the Board of Directors or any
Committee appointed by the Board of
Directors or any other person authorized by
the Board of Directors, be and is hereby
authorized to do and perform all such acts,
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deeds, matters and things as it may in its
absolute discretion deem necessary or
desirable, including making requisite
application(s) / petition(s) and making and/
or agreeing to such alterations
modifications/ additions/ deletions in the
petition and any other relevant document in
connection with the aforesaid reduction of
share capital on behalf of the Company, as
may be considered necessary and/or be
directed by the Hon'ble High
Court/National Company Law Tribunal
and/or required by the Government or any
concerned authority and/or to withdraw the
same, and to settle any question, difficulty
or doubt that may arise in regard to the
subject matter of the above Resolutions as it
may in its absolute discretion deem fit and
proper."
7. Learned Counsel for the Petitioner Company has
submitted that besides the aforesaid Extra Ordinary
General Meeting of the Equity Shareholders of the
Petitioner Company held on 29 September 2014,
pursuant to provisions of Section 106 of the Companies
Act, 1956, a "class meeting" of the Preference
Shareholders of the Company holding the 1% NCRPS
of Rs 10 each was also held on 29 th September 2014 in
terms of a notice dated 1 st September 2014 issued to all
such Preference Shareholders. At the said meeting, all
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the Preference Shareholders holding 1% NCRPS of Rs
10/- each present in person or through proxy at the
meeting, approved the special resolution for Capital
Reduction and consequent increase of the rate of
dividend payable on such Preference Shares from 1%
to 10% and also revising the terms of redemption of the
said Preference Shares to make them redeemable at a
premium of Rs 9/-.per share instead of "at par", as at
present, while other terms and conditions remaining the
same as existing prior to such reduction.
8. Further, it has been submitted that the Petitioner
Company has no Secured Creditors and Unsecured
Creditors as on 09.10.2014. A copy of the Certificate of
the Chartered Accountant dated 10th October 2014
certifying the same has been enclosed with the Petition
as Annexure J.
9. Learned Counsel for the Petitioner Company further
submits that the proposed capital reduction of the
Petitioner Company does not involve diminution of
liability in respect of unpaid share capital nor does it
involve any payment to any shareholder of paid-up
share capital; further the proposed reduction will not
result in any reduction in the net worth of the
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Company, nor the asset base of the Company thus, the
interest of the creditors of the Company (if any) shall
not be affected in any way by the aforesaid reduction of
share capital. The said undertaking is accepted.
10. Keeping in view the aforesaid averments, the procedure
laid down under Section 101(2) of the Companies Act,
1956 is dispensed with.
11. Issue notice to the Regional Director (Northern
Region), Ministry of Corporate Affairs. Let a copy of
the Petition be also served on the Registrar of
Companies within one week from today.
12. Further, it is directed that publication be carried out in
Financial Express (English) and Jansatta (Hindi).
Renotify on 29th January, 2015.
SANJEEV SACHDEVA, J
NOVEMBER 10, 2014
st
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