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TMI Blog2017 (10) TMI 1404X X X X Extracts X X X X X X X X Extracts X X X X ..... uld prevail on the issue in question. The petitioner-company has failed to follow its memorandum and articles of association of the company, the relevant provisions of the Companies Act, 2013 and FEMA Regulations, 2000 so as to make good violations of the FEMA Regulations as mentioned supra. Therefore, the present petition filed under section 59 of the Companies Act is not maintainable, and it is reliable to be rejected for the grounds mentioned supra. In fact, the concerned authorities have to initiate appropriate action by this time against the company, for violation of FERA Regulations. In view of the above facts and circumstances of the case, the company petition is hereby dismissed - C. P. No. 35/59/HDB/2017. - - - Dated:- 5-10-2017 - Rajeswara Rao Vittanala Judicial Member For the Petitioner : Y. Suryanarayana and A. Nagaraj Kumar ORDER RAJESWARA RAO VITTANALA (JUDICIAL MEMBER).- 1. The company petition bearing No. CP/35/59/HDB/2017 is filed by Relisys Medical Devices Ltd., under section 59 of the Companies Act, 2013 read with rules 70 of the National Company Law Tribunal Rules, 2016 by seeking the following reliefs : (1) To pass order(s) for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S) to Dr. Raju Reddy (trustee of 1007 Reddy Family Trust) non-resident individual, having permanent Address at 45711, Vineyard Ave, Foremont, CA 94536, USA. And fair valued of the shares of the company as the above date was ₹ 64.22 per share. (4) Subsequently, the said CCD were converted to equity shares on August 6, 2013 thus the company has allotted 4,29,419 equity shares at a price of ₹ 31.37 lower than fair value of equity shares (Rs. 64.22) determined upfront. The fair value of shares of the company as on June 6, 2013 is ₹ 31.37 per share. As the company has contravened the provisions of the Foreign Exchange Manangement Act, 1999 while issuing said shares, it is stated to have submitted a compounding application vide its letter dated September 9, 2016 for contravening paragraph 9(1)B of Schedule 1 to Notification No. FEMA 20/2000-RB dated May 3, 2000 as amended from time to time. (5) In pursuance to the said letter of company, the Reserve Bank of India has replied to the company vide reference No HY.FE.FID/1755/ 14.04.542/2016-17, dated March 1, 2017 by, inter alia, advising the company as follows : (i) Unwind the excess shares allotted ; or (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y (Trustee of 1997 Reddy Family Trust) on December 1, 2011 and the fair value of equity shares as on the date of issue of CCDs was ₹ 64.22 per share. However, the CCDs were converted by the company in to 4,29,419 equity shares at the price of ₹ 31.37 lower than the fair value of equity shares (Rs. 64.22) determined upfront and has thereby contravened the provisions contained in at paragraph 5 of Schedule 1 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 as amended from time to time. We advise you to either : (i) Unwind the excess shares allotted ; or (ii) Bring in additional funds equivalent to the shares allotted and thereafter apply for compounding for the contraventions stated. 3. It is to be noted that the contravention would be deemed as continuing till the aforesaid process is complete. 6A. The company has not filed documents with regard to the initial allotment of CCDs (compulsory convertible debentures) totalling 1,92,441, to Non-Resident of Indian (Raju Reddy) Trustee of 1997 Reddy Family Trust on December 1, 2011 : allotment of 4,29,419 equity shares ; the letter dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on any recognised stock exchange in India, and (b) fair valuation of shares done by a chartered accountant as per the guidelines issued by the erstwhile controller of capital issues, in all other cases. 9. Report by the Indian company.-(1) An Indian company issuing shares or convertible debentures in accordance with these Regulations shall submit to Reserve Bank, (A) not later than 30 days from the date of receipt of the amount of consideration, a report indicating : (i) Name and address of the foreign investors, (ii) Date of receipt of funds and their rupee equivalent, (iii) Name and address of the authorised dealer through whom the funds have been received, and (iv) Details of the Government approval, if any. (B) not later than 30 days from the date of issue of shares, a report in form FC-GPR together with, (i) a certificate from the company secretary of the company accepting investment from persons resident outside India certifying that- (a) all the requirements of the Companies Act, 1956 have been complied with ; (b) terms and conditions of the Government approval, if any, have been complied with ; (c) the company is eligible to issue sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000 into compulsorily convertible preference shares by vide passing a special resolution in the extraordinary general meeting held on August 4, 2014. The company has increased its authorised capital from ₹ 25,00,00,000 to ₹ 27,60,00,000 by vide passing a special resolution in the extraordinary general meeting held on August 4, 2014. The company has increased its authorised capital from ₹ 27,60,00,000 to ₹ 28,60,00,000 by vide passing a special resolution in the extraordinary general meeting held on July 18, 2015. The company has re-classified the authorized preference share capital of ₹ 7,00,000 out of 70,00,000 equity shares by vide passing a special resolution in the extraordinary general meeting held on April 30, 2015. 11. They are several contentions prescribed under the articles of association for increasing and reduction of share capital. In any case, the memorandum and articles of association clearly shows that the issue of share capital, its increase, reclassification is done by way of ordinary/special resolutions, etc., as stated supra. In the instant case, the company, has admittedly has not taken any decision with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the FEMA Regulations, that is to be compounded by duly complying with all provisions of law. Therefore, the present petition filed under section 59 of the Companies Act, 2013 is misconceived, apart from lack of merits as discussed supra. The ratio decided in the above case is not applicable to the facts and circumstance of the present case. 14. While, the case is pending adjudication before the Tribunal, the Registrar of Companies at Hyderabad for the State of Andhra Pradesh and Telangana, is directed to furnish his comments on the subject issue vide letter No. NCLT-Hyd/CP/35/59/HDB/2017/2301 dated July 25, 2017. Accordingly, the Registrar of Companies has filed his report vide Reference No. ROCH/Lgal/sec59/28153/Rellisys/Stack/2017 dated July 25, 2017 by, inter alia, stating that the petitioner-company has allotted 4,29,419 equity shares on August 6, 2013 and subsequently filed its balance-sheet for the years 2014 to 2016, which reflects the paid-up capital including the allotment of shares in question. Therefore, he submitted that rectification of register of members by cancelling the excess allotment of shares leads to reduction of paid-up capital. And there is a pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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