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Issues:
Reduction of share capital under sections 78, 100, 101, 102, and 103 of the Companies Act, 1956. Analysis: The judgment concerns an application under various sections of the Companies Act, 1956, regarding the reduction of share capital by a company. The company sought an order for the reduction of capital based on a special resolution passed at a general meeting. The resolution aimed to reduce the premium for certain shares from Rs. 130 to Rs. 95 per share by canceling a liability for payment. The reasons for the reduction included the completion of a project for which funds were raised, and the decline in the market value of the company's shares post-issue. The board of directors recommended the reduction, stating it would benefit the company and its stakeholders. The legal framework for reducing share capital was discussed, emphasizing the need for a special resolution and court confirmation under sections 100 and 101 of the Act. The court's role in safeguarding the interests of creditors and shareholders during the reduction process was highlighted. The judgment outlined permissible methods for reducing capital, including extinguishing liabilities on shares and adjusting share values based on available assets. The court addressed the concerns of objecting creditors and the need to protect their interests before confirming the reduction. Special circumstances that may justify dispensing with creditors' objections were explained, emphasizing the court's duty to ensure fairness among shareholders and safeguard minority interests. The procedural requirements for reducing share capital, as per the Companies (Court) Rules, 1959, were also mentioned. In this case, objections from creditors were considered, and the company assured that dues were settled or secured. To address creditor concerns, a sum was directed to be kept in a fixed deposit. The court approved the formulated minutes reflecting the reduction and directed the company to update its memorandum of association accordingly. The judgment concluded by disposing of the case and granting an urgent copy of the order upon application. Overall, the judgment provides a detailed analysis of the legal provisions and considerations involved in the reduction of share capital by a company, emphasizing the court's role in ensuring fairness and protecting the interests of stakeholders throughout the process.
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