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TMI Blog2020 (2) TMI 1408X X X X Extracts X X X X X X X X Extracts X X X X ..... Member And Chandra Bhan Singh, Technical Member For the Petitioner : Hemant Sethi, Adv. ORDER 1. Heard the learned Counsel for the petitioner Company. No objector has come before the Tribunal to oppose the petition nor any party has controverted any averments made in the Petition. 2. The Counsel for the Petitioner submits that the petitioner Company is currently engaged in the business of software development and maintenance for employee benefits, corporate gifting, expense management, etc. including providing customisation solutions for corporates and banks in India and association with Banks to act as their business correspondents and Technology Service Provider (TSP). The Company is also in the business of selling corporate benefits, corporate gifting and cafeteria digitization solutions to companies either directly or through payroll partners or banks. 3. The authorized share capital of the petitioner Company is ₹ 23,00,00,000/- divided into 2,30,00,000 Equity Shares of ₹ 10 each. 4. The Counsel for the petitioner Company submits that Article no. 5(a) of its Articles of Association of the Petitioner Company empowers it to reduce its share cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23.789% Nil Nil 4 Ramakrishna Gaddipati 5,00,000 2.211% Nil Nil Total 2,26,15,385 100.000% 1,67,35,385 100.000% Addition of Sr. 3 and Sr. No 4 is 58,80,000 equity shares (i.e 26%). Securities premium before and after reduction Particulars Before capital reduction (Rs.) After capital reduction (Rs.) Securities Premium Account 93,19,23,400 88,07,23,400 Upon sanction of the capital reduction, the paid up equity share capital of the Petitioner Company will be ₹ 16,73,53,850/- divided into 1,67,35,385 equity shares of ₹ 10 each, and the securities premium account will stand reduced by ₹ 5,12,00,000/-. 8. The accounting treatment for the aforesaid reduction is as follows:- The face value of the equity shares cancelled under the capital reduction shall be debited to share capital and the difference betwee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t feasible legal option available. 10. The Regional Director had filed a Report dated 31st July 2019 stating therein in Para 8A that the proposed reduction of share capital is selective reduction. Further, the reduction of share capital is selective in detriment and unjust and unfair to the rest of shareholders/members holding equity share capital of the Petitioner Company. Also, the manner in which the selective reduction is proposed is not falling with any of the category of provisions under section 66(1)(a) or (b)(i) or (ii) of the Companies Act, 2013. 11. In response to the observations made by the Regional Director, the petitioner Company has filed Affidavit in rejoinder dated 5th September 2019 and have clarified that so far as observations made by the Regional Director in para 8A in his report in concerned, the Counsel for the petitioner company submits that the petitioner company has not initiated or chosen to undertake the reduction of the Exiting Shareholders (i.e. Essentialentropy Technology LLP and Mr. Ramakrishna Gaddipati) on its own accord. The shareholders whose shares are getting cancelled have approved the reduction in order to seek exit from the Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to object to the reduction have either consented or been paid or secured. 13. On the issue of selective reduction, the Counsel for Petitioner further submitted that section 66 of Companies act, 2013 clearly stipulates the reduction can be effected in any manner therefore selective Reduction is permitted in law. He also invites my attention to the division bench judgment of the Bombay High Court in case of Sandvik Asia Ltd. v. Bharat Kumar Padamsi Appeal No 308 of 2004, dated 4-4-2009 where the Hon'ble Division Bench referring to various judgments confirmed selective reduction of share capital by extinguishing shares of non-promoter shareholders. 14. On the issue that, selective reduction is detriment and unjust and unfair to the rest of the shareholders/members holding equity share capital of the company, the Counsel for petitioner Company submits that the reduction does not involve public at large as it is between the four equity shareholders and the petitioner Company which is a closely held company. The resolution for capital reduction has been passed unanimously at the meeting of the Board of Directors. All the shareholders of the petitioner Company have particip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in rejoinder dated 5th September 2019 filed by the Petitioner Company, the Regional Director has filed a Supplementary Report dated 12 December 2019 wherein the Regional Director has stated the reply of the petitioner Company is Satisfactory with respect to points 8B. However, with respect to point 8A, the Regional Director has re-iterated the same in the Supplementary Report. Accordingly, the Counsel for the petitioner Company states that the same has been clarified in paras 11 to 16 above. 20. In view of the fact that all the shareholders have approved the reduction including shareholders whose shares are being cancelled and as per the law as laid down and as stated hereinabove, Petition for reduction of share capital is allowed. 21. Since the requisite statutory procedure has been fulfilled, the company petition is made absolute in terms of the prayer clause of the Petition. 22. The petitioner company undertakes to file certified copy of the order duly certified by the Assistant Registrar/Deputy Registrar, National Company Law Tribunal, Mumbai Bench with the Registrar of Companies within 30 days of receipt of this order. 23. All concerned regulatory authorities to a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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