Delhi High Court
Denso India Limited vs ... on 5 May, 2015
IN THE HIGH COURT OF DELHI
COMPANY PETITION NO. 673/2014
Reserved on 8th April, 2015
Date of pronouncement: 5th May, 2015
In the matter of
The Companies Act, 1956 & the Companies Act, 2013 (to the extent
applicable):
And
Petition under Sections 100 to 105 of the
Companies Act, 1956 and other
applicable provisions of the Companies
Act, 2013 read with Companies (Court)
Rules, 1959
And
Denso India Limited
.. Petitioner Company
Through Mr. Ajay Vohra, Sr. Advocate
with Mr. N. P. S. Chawla, Advocate for
the petitioner
Ms. Aparna Mudiam, Assistant Registrar
of Companies for the Regional Director
SUDERSHAN KUMAR MISRA, J.
1. This petition under Sections 100 to 105 of Companies Act, 1956
and other applicable provisions of the Companies Act, 2013 read with
Companies (Court) Rules, 1959 has been filed by Denso India 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 originally incorporated under the
Companies Act, 1956 on 22nd November, 1984 with the Registrar of
Companies, NCT of Delhi & Haryana at New Delhi under the name and
style of SRF Nippondenso Limited. The company changed its name to
Nippondenso India Limited and obtained the fresh certificate of
incorporation on 19th October, 1994. The company again changed its
name to Denso India Limited and obtained the fresh certificate of
incorporation on 1st October, 1996.
4. The authorized share capital of the petitioner company, as on 31st
March, 2014, was Rs.30,00,00,000/- divided into 3,00,00,000 equity
shares of Rs.10/- each. The issued share capital of the company was
Rs.28,06,20,000/- divided into 2,80,62,000 equity shares of Rs.10/- each
fully paid up. The subscribed and paid up share capital of the company
was Rs.27,87,96,440/- divided into 2,78,79,644 equity shares of Rs.10/-
each fully paid up.
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, and the provisional unaudited balance sheet and profit
and loss account, as on 30th June, 2014, of the petitioner company have
also been filed.
6. It has been submitted by the petitioner that the equity shares of the
petitioner company were listed and traded on the National Stock
Exchange (NSE), Bombay Stock Exchange (BSE), Delhi Stock Exchange
(DSE) and Madras Stock Exchange (MSE). It is further submitted that
one of the promoters of the petitioner company namely, Denso
Corporation, holding 47.93% of the paid up capital of the company, vide
its letter dated 26.04.2013 proposed to voluntarily delist the equity shares
of the petitioner company from the aforesaid stock exchanges by
acquiring upto 73,98,019 equity shares held by public shareholders in the
petitioner company. Thereafter, Denso Corporation vide a public
announcement dated 12.08.2013 made an offer to acquire the shares of
the petitioner company and the final price for accepting the equity shares
in the Delisting Offer was fixed at Rs.145/- per equity share. It is further
submitted that pursuant to the acquisition of the equity shares, Denso
Corporation along with other promoter and promoter group shareholders
of the petitioner company held 93.02% of the subscribed and paid up
equity share capital of the petitioner company, as on 03.10.2013. It is
further submitted that many of the shareholders for various reasons
including change of address, improper contact details, misplaced share
certificates and due to expiry of the offer date missed the exit opportunity
given by the holding company and have been deprived of an opportunity
to make liquid their investment, therefore, Denso Corporation gave a
Final Exit Opportunity to remaining non promoter public shareholders,
who had not tendered their shares in the Delisting Offer/whose tender of
offer shares had been rejected in the Delisting Offer, to participate in the
acquisition process for a period of one year from the date of delisting i.e.
05.11.2013 and is valid upto 04.11.2014.
7. It is further submitted by the petitioner that as on 08.08.2014, the
promoters of the petitioner company were holding 95.94% of the paid up
capital of the company and the remaining 4.06% of the paid up capital of
the company were held by non-promoters/public being approx. 8000 in
number, which clearly indicate that large number of non promoter
shareholders individually held insignificant shares. It is also submitted
that even after sending the reminder letters to these shareholders, the
said shareholders are not traceable due to various reasons and therefore
the possibility of such shareholders offering their shares under the Final
Exit Offer is highly improbable. It is further submitted that the Board of
Directors of the petitioner company have decided to reduce the share
capital of the company in accordance with the provisions of Sections 100
to 105 of the Companies Act, 1956 since in their view it is the only
practical and economically efficient option available to the petitioner
company in order to give exit opportunity to the shareholders since the
shares held by them are no longer marketable and are illiquid stocks.
8. It is pleaded that the petitioner company is authorized by virtue of
provisions of Article VII (h) of its Articles of Association to reduce its
share capital, as per the provisions of the Companies Act, 1956.
9. The Board of Directors of the petitioner company in their meeting
held on 25th August, 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 Annual General
Meeting of the equity shareholders of the petitioner company held on 23rd
September, 2014 confirming the proposed reduction of the share capital.
A copy of the minutes of the special resolution passed at the Extra
Ordinary General Meeting is placed on record. The petitioner company
does not have any secured creditor, as on 30th September, 2014.
Further, the petitioner company has 45 unsecured creditors, out of which
39 unsecured creditors holding 98.93% of the total unsecured debt have
given their consents/no objections in writing to the proposed reduction of
share capital.
11. Learned counsel for the petitioner company has submitted that the
proposed reduction in capital does not violate or override or circumvent
any provision of the Companies Act, 1956 and other applicable
provisions of the Companies Act, 2013. It is further submitted that no
investigation proceedings under Section 235 to 251 of the Companies
Act, 1956 are pending against the petitioner company.
12. In the aforesaid background, this petition is filed seeking approval
of the resolution passed at the Annual General Meeting held on 23rd
September, 2014. The Form of Minutes proposed to be registered under
Section 103(1)(b) of the Act and annexed with the petition is reproduced
as under:
"The subscribed and paid-up equity share capital of Denso
India Limited is henceforth INR 26,74,88,900/- divided into
2,67,48,890 equity shares of INR 10/- each fully paid up or
such higher amount, depending upon the number of equity
shares held by the promoter shareholders as on the record
date to be fixed by the board of directors of Denso India
Limited or as on 30th November, 2014, whichever is later,
reduced from INR 27,87,96,440/- divided into 2,78,79,644
equity shares of INR 10/- each fully paid up. At the date of
registration of this minute, the issued equity share capital
shall be deemed to be equal to the amount of subscribed
and paid-up equity share capital and the remaining equity
shares shall be unissued out of the authorized share capital
of the Company."
13. By order dated 5th 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 'Business
Standard' (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 20th
November, 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 6th January, 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. The petitioner company, in the
affidavit dated 5th January, 2015 of Sh. N.P.S. Chawla, Advocate of the
petitioner company has submitted that neither the petitioner company nor
its counsel have received any objection pursuant to citations published
on 20th November, 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
Annual General Meeting held on 23rd 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 'N', 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 'Business Standard' (English) and
'Jansatta' (Hindi) within 14 days of the registration aforesaid.
19. The representative of the Regional Director submitted that keeping
in view of the fact that the matter involved examination of extensive
records and prioritized hearings, at least, costs of Rs.2.0 lakhs should be
paid by the petitioners. Learned counsel for the petitioners submitted that
his client has no objection to pay these costs. Consequently, let costs of
Rs.2.0 lakhs be deposited by the petitioner with the Common Pool Fund
maintained by the Official Liquidator within two weeks from today.
20. The petition stands allowed in the above terms.
Dasti
SUDERSHAN KUMAR MISRA, J.
May 05, 2015
