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TMI Blog1998 (3) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... 997, and approve the minutes as shall be dealt with, infra. The said resolution reads as follows: "Resolved by way of special resolution that pursuant to sections 78 and 100 and other applicable provisions of the Companies Act, 1956, and subject to confirmation of the High Court at Orissa and any other approval/s as may be required, the premium for 18,00,000 ordinary shares of Rs. 10 each which have been allotted on 1 January, 1997, and 21 July, 1997 upon conversion of Zero Coupon Convertible Debentures (ZCCDs) issued on rights basis be reduced from Rs. 130 per share to Rs. 95 per share by cancellation of liability for payment of Rs. 35 per share payable on third and final call. Resolved further that Board of directors of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.00 2.50 32.50 On first call 35.00 2.50 32.50 On second call 35.00 2.50 32.50 On third and final call 2.50 2.50 32.50 Total 140.00 10.00 130.00 ( c )Pursunt to the aforesaid 18,00,000 ZCCDs were duly allotted by the company on 12-12-1996 and 21 -7-1997. On 1 -1 -1997,16,37,366 ZCCDs held by Indian residents out of the said 18,00,000 ZCCDs were duly converted into 16,37,3 66 ordinary shares of Rs. 10 each at a premium of Rs. 130 per share after receipt of approval from the RBI in respect thereof. As per the terms of the said issue, Rs. 2.50 out of the application money of Rs. 3 5 received by the company for each Z ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts received from the Industri- al Finance Corporation of India Limited and the amounts received on the said ZCCDs, the company was able to meet and generate the balance funds required for the said project from internal accruals. ( f )In view, inter alia, of the above, the Board of directors of the company recommended to the shareholders that the share premium on the aforesaid shares be reduced from Rs. 130 to Rs. 95 per share by extinguishing the liability for payment of third and final call of Rs. 35 per share to be received on 2nd call, a sum of Rs. 5 may be appropriated towards capital and the balance sum of Rs. 30 be appropriated towards share premium, thus making the share fully paid up. Such decision and opinion of the Board of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minishing the nominal amount by combining both (1) and (2); (4)diminishing the number of shares by extinguishing the existing liability on certain shares, writing off or repaying the whole amount paid up thereon the cancelling them. The statute has not prescribed the manner in which the reduction is to be carried out nor has it prohibited any method of effecting that object per Lord Herschell, L.C., in British American Trustee Finance Corpn. v. Couper 1894 AC 397, at page 405, quoted with approval by Lord Reid in Re Westburn Sugar Refineries Ltd. [1951] 1 All ER 881 (HL), at page 885, who added that 'paying off capital can be done otherwise than by payment of money'. Important though its task is to see that the procedure by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Special circumstances which would justify a direction for dispensing with creditors' objections must be such as would satisfy the Court that so far as could be reasonably foreseen, the relevant creditors would not be adversely affected by the proposed reduction. But if the creditors actually appear and object, the Court would dispense with a creditor's assent only if the company secured payment of his claim by appropriating a sufficient sum. Re Lucania Temperance Billiard Halls ( London ) Ltd. [1966] 1 Comp. LJ 350 (Ch D): [1965] 3 All ER 879 (Ch D). The power under section 102 is conferred on the Court in order to enable it to protect the interests of dissenting shareholders and even those who do not appear. Before confirming a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue and subscribed shares capital on the date of registration of this minutes is Rs. 7,20,00,000 divided into 72,00,000 ordinary shares of Rs. 10 each on which an aggregate amount of Rs. 7,07,24,500 is paid up towards capital and an aggregate amount of Rs. 12,75,500 is due to be received towards capital in clearance of call in arrears." 10. The company petitioner is directed to take necessary steps to deliver to the Registrar of Companies, Orissa, a certified copy of the order including the minutes as approved within a period of ten days from today. Consequentially, alteration in the memorandum of association of the company petitioner proposed by the special resolution passed in accor dance with section 189 at the general meeting hel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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