2013 (11) TMI 1821 - HC - Companies Law

Summary

Issues:
1. Reduction of share capital under Sections 100 to 105 of the Companies Act, 1956.
2. Compliance with the Companies (Court) Rules, 1959 for confirmation of reduction of share capital.
3. Approval of reduction in share capital by the Board of Directors and shareholders.
4. Publication and approval of special resolution for reduction of share capital.
5. Examination of fairness and equity among different classes of shareholders in the reduction of share capital.

Analysis:
1. The judgment concerns a company petition filed under Sections 100 to 105 of the Companies Act, 1956 seeking confirmation of the reduction of share capital of the petitioner-Company. The petitioner-Company had excess capital due to the withdrawal of a scheme of de-merger, leading to the proposal for reduction in share capital.

2. The petitioner-Company's authorized share capital, details of issued capital, and the process of increase and subsequent reduction in share capital were outlined in the petition. The Board of Directors approved the reduction in share capital in a meeting held on 06.11.2012, and a special resolution was passed on 03.12.2012 for the proposed reduction.

3. The resolution for reduction of share capital was passed unanimously by both equity and preference shareholders of the petitioner-Company. The court noted that there were no objections raised by stakeholders regarding the reduction of share capital, and all necessary steps were taken in compliance with the Companies Act and the Articles of Association.

4. Following the filing of the petition, notices were issued, and after due publication, no objections were received. The court granted permission to dispense with certain procedures and approved the special resolution and proposed minutes for registration under Section 103(1) of the Companies Act.

5. The court emphasized the commercial and business nature of the decision for reduction of share capital, approved by the majority of shareholders. It highlighted the importance of ensuring the interests of all members of the Company, especially regarding fairness and equity among different classes of shareholders. Ultimately, the court found no valid reason to reject the proposed scheme for the reduction of share capital.

In conclusion, the court allowed the company petition, approving the special resolution and directing the petitioner to proceed with the publication and registration of the approved minutes in compliance with the law.