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TMI Blog2017 (8) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... ently engaged in (a) providing pharmaceutical and biotechnology companies with services in support of Phase - I - IV drugs and providing services relating to data management / EDC, medical affairs, regulatory services etc. 3. It is stated that the Petitioner Company proposes to reduce its share capital by extinguishing and cancelling its Preference Shares, which have aggregate paid up value of Rs. 27,05,00,000; the Company proposes to pay Rs. 27,05,00,000 to the holders of 2,70,50,000 Preference Shares as on March 31,2016. 4. The Petitioner Company in the para 11 of its Application has shown principal reasons for reduction of share capital stating as under:- I. The Company is no longer engaged in the clinical trial business and its staffing solutions business and therefore has excess capital; II. The Company has adequate cash and liquid assets to continue running its business activities. III. The Company has share capital which is in excess of its requirement to continue the business activities as are being currently undertaken by the Company. 5. It is further pleaded that Article 44 of the Article of Association of the Company empowers such that Applicant Company, by a sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licy directions under FEMA/ RBI as applicable to the present case for reduction of capital. 10. A careful perusal of affidavit of the Regional Director, Northern Region, Ministry of Corporate Affairs, New Delhi gives such impression that his office (of Regional Director) accepts the report of Registrar of Companies as per Para 7 of affidavit, and has no specific objection, subject to his comments and observation made in his affidavit, for grant of relief as prayed for. 11. We considered the facts of the present case and heard the submission of Learned Senior Advocate Shri Navin Sinha, along with by Advocate Shri Rahul Agarwal for of the Applicant Company and Shri Krishna Dev Vyas the CGSC along with Shri M. K. Bagri the Official Liquidator for Central Government. We also perused the content of the affidavit of Regional Director and Report of Registrar of Companies and further supplementary Affidavit filed by Shri Vipul Sharma the Company Secretary of Petitioner Company who has furnished undertaking in reply of RD's Affidavit and assured to make necessary compliance of statutory provisions. 12. The law relating to reduction of share capital of a company is contained in Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n section 133 or any other provision of this Act and a certificate to that effect by the company's auditor has been filed with the Tribunal. 4. The order of confirmation of the reduction of share capital by the Tribunal under sub-section (3) shall be published by the company in such manner as the Tribunal may direct. 5. The company shall deliver a certified copy of the order of the Tribunal under sub-section (3) and of a minute approved by the Tribunal showing- a. the amount of share capital; b. the number of shares into which it is to be divided; c. the amount of each share; and d. the amount, if any, at the date of registration deemed to be paid-up on each share, to the Registrar within thirty days of the receipt of the copy of the order, who shall register the same and issue a certificate to that effect". XXX XXX XXX 13. Having considered the above stated legal and factual aspects of the present case we find that there is no adverse material is available on record which goes against the relief sought for by the applicant company seeking proposed reduction of share capital nor it will prejudicially affect the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the question of reduction of capital is a matter of domestic concern, one for the decision of the majority of the shareholders of the Company. Since the decision for reduction is based on commercial considerations undertaken by businessmen who are in the best position to know of the necessities and interests of the company concerned, in the absence of serious allegations as regards the bona fides of the proposed scheme, the Courts are hesitant. In interfering with the view of the majority. The Court has to consider whether the interests of those members of the public who may be induced to take shares in the company are secured and whether the reduction is fair and equitable as between different classes of shareholders. In the case of William Jones & Sons , In re it has been held : "where no one objects, the Court, in exercise of its discretion, should confirm the reduction of share capital" In Panruti Industrial Co. (P.) Ltd.'s case (supra), the Madras High Court made the following observations: "When exercising its discretion, the court is concerned to see that the reduction is fair and equitable but it is not concerned to consider the motive for reduction.... ..... X X X X Extracts X X X X X X X X Extracts X X X X
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