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TMI Blog2021 (1) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... apital reduction, the negative net worth/shareholders funds of the company as per books may go to ₹ 7,014.59 lakhs (share capital of ₹ 1 lakh + other equity of Rs. (-) 7,015.59 lakhs), the book value per share to Rs. (-) 70,110.81 and the companies borrowings and inter corporate loans to the tune of ₹ 11,354.43 lakhs. In view of negative net worth as per books, and negative book value per share, this Adjudicating Authority is of the considered view that the proposed capital reduction by way of return of capital to its shareholders is not in the overall interest of the company and its stakeholders - Petition allowed. - C. P. No. 4/66/NCLT/AHM/2020 - - - Dated:- 11-12-2020 - Ms. Manorama Kumari (Judicial Member) And Chockalingam Thirunavukkarasu (Technical Member) For the Petitioner : Navin Pahwa , Senior Advocate ORDER CHOCKALINGAM THIRUNAVUKKARASU (TECHNICAL MEMBER). - 1. The instant petition is filed by the petitioner-company Precious Energy Services Ltd. having its registered office at 906-907, Indraprasth Corporate, Opposite Venus Atlantis, 100 Feet Road, Prahladnagar, Ahmedabad-380 015 under section 66 read with section 52 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submitted on behalf of petitioner that the members unanimously approved the resolution by passing a special resolution dated September 24, 2019. A copy of the special resolution is annexed with the petition and is marked as annexure G (pages 139/143). 8. This Tribunal by an order dated January 3, 2020 directed the petitioner-company to issue notices to the Central Government through Regional Director and the Registrar of Companies. This Tribunal also directed the petitioner-company to send individual notices to all the creditors of the company. This Tribunal further directed the company to publish notice in form RSC-4 in widely circulated newspapers in the area where the registered office of the company is situated in English as well as in vernacular language. The petition was directed to be listed for hearing on April 7, 2020. 9. In compliance of the order dated January 3, 2020 the petitioner-company issued notices to the Central Government through Regional Director and the Registrar of Companies in form RSC-2. The petitioner-company also sent individual notices to all the creditors of the company on January 8, 2020 in form RSC-3. The petitioner also published notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial resolution unanimously approving the proposed reduction of share capital. Besides, the present is a matter for reduction of share capital which does not involve any issuance of shares. As such, no further requirements in law are envisaged. It was further submitted that the RBI vide its circular bearing reference A. P. (DIR Series) Circular No. 10, dated August 30, 2005 (the Circular ) has clarified that cancellation by an Indian company of its shares which are held by a non-resident is covered under the automatic route. Therefore, the approval of the Reserve Bank of India ( RBI ) for reduction of share capital held by non-resident shareholders is not required since the same is covered under the automatic route. (iii) So far as the observation with regard to foreign shareholder of the company will have benefit of ₹ 20.22 per share on purchase of shares of the company is concerned, it is submitted on behalf of the petitioner that the company has sole shareholder, viz., M/s. MAIF Investment India Pte Ltd. Singapore. There is no other shareholder of the company and there fore, there is no question of any prejudice to any other stakeholder. (iv) So far as the observatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y shown as ₹ 41,87,67,499 instead of ₹ 74,46,04,143 and requested to treat the amount due to L and T Infra Debt Fund Ltd., as ₹ 74,46,04,143 instead of ₹ 41,87,67,499. 17. Gone through the petition and the documents placed on record, the special resolution dated September 24, 2019 passed by the shareholders of the petitioner-company, the representation made by the Regional Director and Registrar of Companies and the reply thereof by the petitioner-company. 18. In the petition, the rationale for capital reduction is stated as Considering the operating profits earned in the past and expected to be earned in the future and the generally predictable nature of cash flows, the applicant-company intends to replace a part of the capital with borrowed capital, so as to reduce the overall weighted average cost of capital and improve shareholder returns. Accordingly, the applicant-company proposes to undertake reduction of its capital and to return to its share-holders . 19. From the balance-sheets submitted by the company, it is noted that as on August 24, 2020 as per books, the company is having negative net worth/shareholders funds of ₹ 1,609.66 lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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