2016 (6) TMI 1021 - HC - Companies Law

Scheme of capital reduction of the Company - Held that - The present petition was admitted by this Court on 28th March 2016 and the same was ordered to be advertised in Indian Express , English daily and Jaihind Gujarati daily, both Ahmedabad editions. The same direction has been complied with by the company and the notice of the petition has been duly advertised in the aforesaid newspapers 6th April 2016. The same is confirmed by affidavit dated 11th April 2016. Pursuant to the said advertisement no one has come forward to raise any objections opposing the sanction to the proposed capital reduction. The said fact has been confirmed by the additional affidavit dated 16th June 2016 placed on record today. Having perused the Petition and more particularly the reasons given in support of the proposed reduction, in my view there is no reason not to confirm the proposed action of the Petitioner to reduce its capital. The said proposal does not prejudicially affect anyone. Accordingly the resolution dated 18th March 2016 is hereby confirmed.

Summary

Issues:
Petition seeking confirmation for the scheme of capital reduction under sections 100 to 103 of the Companies Act, 1956.

Analysis:
1. The petitioner company, initially named Eagle Creek Property Developers Private Limited, later changed to Eagle Creek Knowledge Processing Services Private Limited and then to I 4 Knowledge Processing Private Limited, sought confirmation for the reduction of Preference Share Capital due to the abandonment of a project and unutilized capital from US-based investors.

2. Previous court orders confirmed the reduction of Preference Share Capital in tranches, with specific repayments made to investors like M/s Eagle Creek Fund LLC, Strategic Insurance Marketing Solution, and Jose Dorothy Hong Farm Partnership, resulting in a remaining capital of &8377; 1,04,50,000/- as of 31st December 2015.

3. A special resolution was passed in accordance with the Companies Act, 1956, to reduce the excess Preference Share Capital to NIL by canceling shares held by Strategic Insurance Marketing Solution and Jose Dorothy Hong Farm Partnership, with subsequent transfer to the Capital Reserve Account.

4. The petition was admitted, advertised in newspapers, and no objections were raised opposing the proposed capital reduction, especially since it did not involve the repayment of paid-up Share Capital and had no Secured or Unsecured Creditors.

5. The court, after reviewing the petition and reasons for reduction, found no prejudice to any party and confirmed the resolution dated 18th March 2016, approving the reduction of capital.

6. The minute under Section 103(1) was approved, confirming the reduction of Preference Share Capital from &8377; 1,04,50,000/- to NIL, as per the special resolution and court sanction.

7. The prayers in the petition were granted, directing the publication of the Notice of Confirmation of Reduction of Capital and approving of Minutes in specified newspapers within 14 days of registration with the Registrar of Companies.

8. The petition was disposed of with no orders as to costs, concluding the legal process of capital reduction for the petitioner company.