2020 (8) TMI 614 - AT - Companies Law

Reduction of Share Capital - Section 66(1)(b) of the Companies Act - pre-mordial plea of the Appellant is that the National Company Law Tribunal had failed to appreciate the creeping in of an inadvertent typographical error figuring in the extract of the Minutes of the Meeting characterising the special resolution as unanimous ordinary resolution - HELD THAT - Reduction Of Capital is a Domestic Affair of a particular Company in which, ordinarily, a Tribunal will not interfere because of the reason that it is a majority decision which prevails. The term Share Capital is a genus of which Equity and Preference share capital are species - Section 66 of the Companies Act, 2013 mentions the term reduction Of Share Capital . For a valid resolution, it must satisfy the relevant provisions contained under the Companies Act. A special resolution is required to determine those matters for which the Act requires a special resolution and except these matters in all other situations an Ordinary Resolution is to be passed. This Tribunal, after subjectively satisfying itself that the Appellant/Company has tacitly admitted its creeping in of typographical error in the extract of the minutes and also taking into consideration of the 1st Respondent s stand that the Appellant/Company had filed the special resolution with it, which satisfies the requirement of Section 66 of the Companies Act, 2013, allows the Appeal by setting aside the impugned order passed by the National Company Law Tribunal, Bench - Application disposed off.

Summary

Issues:
1. Interpretation of Section 66 of the Companies Act, 2013 regarding reduction of share capital.
2. Compliance with statutory requirements for passing a special resolution.
3. Discrepancy in the meeting minutes leading to rejection of the petition.
4. Validity of the resolution passed in the Annual General Meeting.
5. Adherence to the Articles of Association in reducing share capital.
6. Judicial review of the National Company Law Tribunal's decision.

Analysis:
1. The Appellant challenged the National Company Law Tribunal's order rejecting the petition under Section 66(1)(b) of the Companies Act, 2013. The Tribunal observed that the company failed to meet the specific requirements of Section 66 by not passing a special resolution for reducing share capital, as mandated by the Act and the company's Articles of Association.

2. The Appellant contended that they had fulfilled all statutory requirements, including passing a special resolution, and pointed out a typographical error in the minutes of the meeting. The Tribunal was urged to recognize the unanimous resolution as a special resolution, meeting the criteria under Section 114(2) of the Companies Act, 2013.

3. The Respondents argued that the resolution passed in the Annual General Meeting, duly filed with the Registrar of Companies, was a valid special resolution under Section 66 of the Act. They emphasized that reduction of share capital is a company's internal matter, subject to majority decision, and not typically interfered with by the Tribunal.

4. Considering the arguments, the Tribunal acknowledged the typographical error but found that the special resolution had been filed with the Registrar of Companies, satisfying the legal requirements. Consequently, the Tribunal allowed the appeal, setting aside the earlier order and confirming the reduction of share capital as resolved in the Annual General Meeting.

5. The Tribunal's decision highlighted the importance of complying with statutory provisions, especially regarding special resolutions under the Companies Act, to ensure the validity of corporate actions. The judgment emphasized the significance of accurate documentation and adherence to legal formalities in corporate decision-making processes.

6. This judgment serves as a reminder of the meticulousness required in corporate governance and decision-making, emphasizing the need for strict adherence to legal requirements to avoid disputes and ensure the validity of company actions under the Companies Act, 2013.