Delhi High Court
Cfr Asset Reconstruction India ... vs ... on 29 August, 2016
IN THE HIGH COURT OF DELHI
COMPANY PETITION NO. 151/2016
Reserved on 14th July, 2016
Date of pronouncement: 29th August, 2016
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
And
CFR Asset Reconstruction India Limited
.. Petitioner Company
Through Mr. Ashish Garg and
Mr.Abhishek Saran, Advocates 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 has been
filed by CFR Asset Reconstruction 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 24th August, 2001 with the Registrar of
Companies, NCT of Delhi & Haryana at New Delhi under the name and
style of Capital Factors & Recoveries Private Limited. The company
changed its name to Capital Factors & Recoveries Limited and obtained
the fresh certificate of incorporation on 21st March, 2003. The company
again changed its name to Capital Factors & Asset Reconstruction (India)
Limited and obtained the fresh certificate of incorporation on 3rd August,
2006. The Company finally changed its name to CFR Asset
Reconstruction India Limited and obtained the fresh certificate of
incorporation on 8th January, 2014.
4. The authorized share capital of the petitioner company, as on 31st
March, 2015, was Rs.10,00,00,000/- divided into 80,00,000 equity shares
of Rs.10/- each aggregating to Rs8,00,00,000/- and 20,00,000 12%
convertible preference shares of Rs.10/- each aggregating to
Rs.2,00,00,000/-. The issued share capital of the company was
Rs.8,00,00,000/- divided into 80,00,000 equity shares of Rs.10/- each.
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, 2015, of the petitioner company, along with the report
of the auditors, has also been filed.
6. It has been submitted by the petitioner that due to change of
shareholding of the petitioner companies, the carry forward losses were
not allowed to be adjusted against the future profits, accordingly, the
provision was made for Deferred Tax Asset which was not allowed,
hence, it was written off to the extent of Rs.122.59 lacs. It is further
submitted that the equity shareholders holding equity shares of Rs.10/-
each will continue to hold the same number of shares, however, the paid
up value of each of such shares become Rs.7/- per share. It is further
submitted that the company envisages restructuring the capital position
by means of accounting adjustment in the books of accounts of the
company by reducing the paid up value of the shares for writing off the
accumulated losses. It is also submitted that the reduction of share
capital would place the company in a position to pay dividend in future or
raise further capital in future.
7. It is pleaded that the petitioner company is authorized by virtue of
provisions of Article 61 of its Articles of Association to reduce its share
capital, as per the provisions of the Companies Act, 1956.
8. The Board of Directors of the petitioner company in their meeting
held on 30th July, 2015 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.
9. A special resolution has been passed at the Annual General
Meeting of the equity shareholders of the petitioner company held on 30th
September, 2015 confirming the proposed reduction of the share capital.
A copy of the minutes of the special resolution passed at the Annual
General Meeting is placed on record. The petitioner company has also
filed an affidavit dated 18th March, 2016 of Mr. Avadh K. Sharma, Director
of the petitioner company stating that the petitioner company is not a
listed company, whose shares are listed on a stock exchange for public
trading. There is no secured or unsecured creditor of the petitioner
company, as on 31st March, 2015.
10. In the aforesaid background, this petition is filed seeking approval
of the resolution passed at the Annual General Meeting held on 30th
September, 2015. 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:
"Pursuant to Section 66 of the Companies Act, 2013 and
such other applicable provisions of the Act read with Section
100 of the Companies Act, 1956.........., the company's
issued and subscribed equity share capital of
Rs.8,00,00,000/- (consisting of 80,00,000 equity shares of
Rs.10/- each fully paid up) be reduced to Rs.5,60,00,000/-
(consisting of 80,00,000 issued, subscribed and paid up
equity shares of Rs.7/- each paid up), the amount being
reduced the extent of Rs.2,40,00,000/-."
11. By order dated 23rd February, 2016, notice of this petition was
directed to be issued to the Regional Director, Northern Region.
12. In response to the notice issued, Mr. A. K. Chaturvedi, Regional
Director, Northern Region, has filed his report dated 10th May, 2016
stating that the Regional Director has no objection to the proposed
reduction of share capital of the petitioner company subject to necessary
compliance of observations/violations mentioned in para 7 of his report.
13. The Regional Director in para 7 of his report has stated as under:
(a) The Index, Original Application and synopsis thereto is dated
04.02.2016 whereas affidavit furnished by one of the directors of the
company namely Sh. Avadh K. Sharma is dated November, 2015 duly
notarized by notary public on 23.12.2015;
(b) The company has purportedly passed Special Resolution for the
proposed reduction in the AGM held on 30.09.2015 whereas the copy of
minutes of the AGM enclosed with the petition reveals that no such
special resolution was passed by the members of the company;
(c) As per para 5 of the petition, CFR Project Limited and Global Skills
Management Private Limited are also one of the shareholders of the
captioned company whereas as per Annexure P-2 to the petition, the
name of such shareholders are not shown;
(d) As per shareholders list Sh. Bharat Sharma, Sh. Mayank Sharma,
Sh. Rajiv Jain and Ms. Swati Rawat are nominee shareholders of Avadh
K. Sharma & Sons, HUF whereas the company has not filed MGT-6 of
such shareholders in terms of the provisions of Section 89(6) of the
Companies Act, 1956; and
(e) It has been observed from the previous years' balance sheets that
the company has not made any provisions regarding employees benefits
such as gratuity, leave encashment etc. in compliance of AS-15 and
doubtful debts of Rs.2,74,99,509/- from Escorts Group of companies.
Thus, the balance sheet as at 31.03.2015 is prima facie not reflecting the
true and fair view of affairs of the company to this extent.
14. In response to the aforesaid observations, the petitioner company
has filed an affidavit dated 12th July, 2016 of Mr. Avadh K. Sharma,
Director of the petitioner company has submitted that the Board of
Directors of the petitioner company in their meeting held on 30th July,
2015 approved the proposed reduction and the same was also approved
by the shareholders of the company in their annual general meeting held
on 30th September, 2015. Therefore, the affidavit was furnished in
November, 2015 and was notarized on 23rd December, 2015 but due to
technical error in electronic filing, the documents were accepted in
February, 2016. With reference to the second observation, it has been
submitted that the proposed reduction was duly approved in the special
resolution passed by the company in the meeting held on 30.09.2015,
which was duly reflected in the e-form MGT-14 filed by the company on
30.10.2015. A copy of the said form along with the minutes of meeting
has also been placed on record. With reference to the third observation, it
has been submitted that CFR Projects Limited and Global Skills
Management Private Limited are not the shareholders of the company
and the said fact has wrongly been mentioned in the application. A fresh
list of shareholders of the company has also been placed on record. With
reference to the fourth observation, it has been submitted that the
requisite form MGT-6 was duly filed on 23.05.2016 and a copy of the
same is also placed on record. With reference to the last observation, it
has been submitted that as on the date of filing the balance sheets, there
was no employee of the petitioner company, who was covered under the
payment of gratuity act or having any leave encashment, therefore, no
provision was made for them in the balance sheet. Further, the amount is
due and payable from the promoter company but on account of poor
financial health and protective order of competent authority, payment has
not been realized. Therefore, no provision was made for that amount
since the amount is not bad. In view of the submissions made by the
petitioner, I feel that the observations made by the Regional Director in
para 7 of his report stand satisfied.
15. 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 30th September, 2015 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 'P-4-A', is also approved.
16. 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.
17. The notice of registration of this order and the resolution of the
company shall be published in the 'Business Standard' (English) and
(Hindi) within 14 days of the registration aforesaid.
18. The petition stands allowed in the above terms.
Dasti
SUDERSHAN KUMAR MISRA, J.
August 29, 2016
