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TMI Blog1974 (11) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... ed office at Bakerganj in the town of Patna. The authorised capital of this company was Rs. 50,00,000 and its issued capital was Rs. 10,00,000. Out of the issued capital 25,000 ordinary shares were applied and allotted at the rate of Rs. 10 per share to 18 persons mentioned in paragraph 3 of the present application (for the sake of brevity hereinafter referred to as the " Mishra group"). 63,890 ordinary shares were subscribed by persons other than these. The Mishra group filed a money suit in the court of the Subordinate Judge, Patna (Money Suit No. 35 of 1954), for realisation of the sum of Rs. 2,50,000, contending that the money given to the company was a loan and not share money. The suit was decreed and it was held that allotment was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e names of the Mishra group in the share register from the very beginning was without any good cause and this court may, therefore, order rectification of the register. It has also been contended that the allotment being void ab initio, the share capital cannot be deemed to have been reduced and thus a special resolution in the circumstances of this case was not necessary nor was there any step necessary to be taken under sections 100 to 103 of the Act. On behalf of the Registrar of Companies it has been said that the company has in fact reduced its share capital and even admitted the fact and this could not be done without taking recourse to a special resolution and complying with the provisions of sections 100 to 103 of the Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xt that in the balance-sheet submitted to the Registrar this amount of Rs. 2,50,000 was shown up to 30th of November, 1964, as subscribed capital. According to the petitioner's case itself, in view of the decision in the money suit and the compromise between the parties, " the said amount was deducted from the total amount of Rs. 8,88,900" (the amount representing 88,890 shares). It was shown in the balance-sheet and annual return for 1965 as follows : Rs. 88,890 ordinary shares of Rs. 10 each 8,88,900.00 Less calls in arrears 28,852.90 Less creditors declared by court as per term of compromise 2,50,000.00 Total 6,10,047.10 It has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l any paid-up share capital which is lost, or is unrepresented by available assets ; or ( c )cither with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the wants of the company ; and may, if and so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly. (2) A special resolution under this section is in this Act referred to as ' resolution for reducing share capital'. " It will thus appear that a company may cancel any paid up share capital which is lost or unrepresented by assets or pay off any share capital and it will be a case of reduction of share capital In the present case this share money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of sections 100 and 104 of the Companies Act, 1956, relating to the reduction of share capital must follow". It did not, however, take steps accordingly. In the subsequent reply by the company the stand taken was that there was no question of reduction of share capital and no steps were necessary in view of the fact that the court had held the allotment of shares to be improper. It must be pointed out in this connection that an appeal had been made by the company against the decree of the trial court but it was only as a result of a compromise that the appeal was withdrawn. In other words, it was the company which as a result of the compromise accepted the position that the aforesaid amount of Rs. 2,50,000 was not share money but loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o all the directors. The facts there also were different from the present one. Learned counsel for the Registrar has placed reliance on several decisions. None of them is, however, on all fours with the circumstances of the present case. The first one is in the case of Homi Cawasji Bhamcha v. Arjun Prasad [1957] 27 Comp. Cas. 6 (Pat.). In this case there was a scheme of reconstruction resulting in the reduction of share capital. The question at issue was whether section 55 of the Act of 1913 was overridden by the special provisions of section 153. It was held that it did not and in a reduction of share capital, the special formalities prescribed must also be complied with. Another decision referred to is in the case of Hindusthan Com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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