Delhi High Court
Denso India Limited vs ... on 5 May, 2015
Author: Sudershan Kumar Misra
Bench: Sudershan Kumar Misra
IN THE HIGH COURT OF DELHI
COMPANY PETITION NO. 673/2014
Reserved on 8th April, 2015
Date of pronouncement: 5th May, 2015
In the matter of
The Companies Act, 1956 & the Companies Act, 2013 (to the extent
applicable):
And
Petition under Sections 100 to 105 of the
Companies Act, 1956 and other
applicable provisions of the Companies
Act, 2013 read with Companies (Court)
Rules, 1959
And
Denso India Limited
.. Petitioner Company
Through Mr. Ajay Vohra, Sr. Advocate
with Mr. N. P. S. Chawla, Advocate for
the petitioner
Ms. Aparna Mudiam, Assistant Registrar
of Companies for the Regional Director
SUDERSHAN KUMAR MISRA, J.
1. This petition under Sections 100 to 105 of Companies Act, 1956 and other applicable provisions of the Companies Act, 2013 read with Companies (Court) Rules, 1959 has been filed by Denso India Limited (hereinafter referred to as the 'petitioner company') for confirming the reduction of its issued, subscribed and paid-up share capital.
2. The registered office of the petitioner company is situated at New Delhi, within the jurisdiction of this court.
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3. The petitioner company was originally incorporated under the Companies Act, 1956 on 22nd November, 1984 with the Registrar of Companies, NCT of Delhi & Haryana at New Delhi under the name and style of SRF Nippondenso Limited. The company changed its name to Nippondenso India Limited and obtained the fresh certificate of incorporation on 19th October, 1994. The company again changed its name to Denso India Limited and obtained the fresh certificate of incorporation on 1st October, 1996.
4. The authorized share capital of the petitioner company, as on 31st March, 2014, was Rs.30,00,00,000/- divided into 3,00,00,000 equity shares of Rs.10/- each. The issued share capital of the company was Rs.28,06,20,000/- divided into 2,80,62,000 equity shares of Rs.10/- each fully paid up. The subscribed and paid up share capital of the company was Rs.27,87,96,440/- divided into 2,78,79,644 equity shares of Rs.10/- each fully paid up.
5. A copy of the Memorandum and Articles of Association of the petitioner company has been filed on record. The audited balance sheet, as on 31st March, 2014, of the petitioner company, along with the report of the auditors, and the provisional unaudited balance sheet and profit and loss account, as on 30th June, 2014, of the petitioner company have also been filed.
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6. It has been submitted by the petitioner that the equity shares of the petitioner company were listed and traded on the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), Delhi Stock Exchange (DSE) and Madras Stock Exchange (MSE). It is further submitted that one of the promoters of the petitioner company namely, Denso Corporation, holding 47.93% of the paid up capital of the company, vide its letter dated 26.04.2013 proposed to voluntarily delist the equity shares of the petitioner company from the aforesaid stock exchanges by acquiring upto 73,98,019 equity shares held by public shareholders in the petitioner company. Thereafter, Denso Corporation vide a public announcement dated 12.08.2013 made an offer to acquire the shares of the petitioner company and the final price for accepting the equity shares in the Delisting Offer was fixed at Rs.145/- per equity share. It is further submitted that pursuant to the acquisition of the equity shares, Denso Corporation along with other promoter and promoter group shareholders of the petitioner company held 93.02% of the subscribed and paid up equity share capital of the petitioner company, as on 03.10.2013. It is further submitted that many of the shareholders for various reasons including change of address, improper contact details, misplaced share certificates and due to expiry of the offer date missed the exit opportunity given by the holding company and have been deprived of an opportunity to make liquid their investment, therefore, Denso Corporation gave a Final Exit Opportunity to remaining non promoter public shareholders, who had not tendered their shares in the Delisting Offer/whose tender of CP 673/2014 Page 3 of 8 offer shares had been rejected in the Delisting Offer, to participate in the acquisition process for a period of one year from the date of delisting i.e. 05.11.2013 and is valid upto 04.11.2014.
7. It is further submitted by the petitioner that as on 08.08.2014, the promoters of the petitioner company were holding 95.94% of the paid up capital of the company and the remaining 4.06% of the paid up capital of the company were held by non-promoters/public being approx. 8000 in number, which clearly indicate that large number of non promoter shareholders individually held insignificant shares. It is also submitted that even after sending the reminder letters to these shareholders, the said shareholders are not traceable due to various reasons and therefore the possibility of such shareholders offering their shares under the Final Exit Offer is highly improbable. It is further submitted that the Board of Directors of the petitioner company have decided to reduce the share capital of the company in accordance with the provisions of Sections 100 to 105 of the Companies Act, 1956 since in their view it is the only practical and economically efficient option available to the petitioner company in order to give exit opportunity to the shareholders since the shares held by them are no longer marketable and are illiquid stocks.
8. It is pleaded that the petitioner company is authorized by virtue of provisions of Article VII (h) of its Articles of Association to reduce its share capital, as per the provisions of the Companies Act, 1956. CP 673/2014 Page 4 of 8
9. The Board of Directors of the petitioner company in their meeting held on 25th August, 2014 have unanimously approved the proposed reduction of the issued, subscribed and paid up share capital of the petitioner company. A copy of the resolution passed at the meeting of the Board of Directors of the petitioner company is placed on record.
10. A special resolution has been passed at the Annual General Meeting of the equity shareholders of the petitioner company held on 23rd September, 2014 confirming the proposed reduction of the share capital. A copy of the minutes of the special resolution passed at the Extra Ordinary General Meeting is placed on record. The petitioner company does not have any secured creditor, as on 30th September, 2014. Further, the petitioner company has 45 unsecured creditors, out of which 39 unsecured creditors holding 98.93% of the total unsecured debt have given their consents/no objections in writing to the proposed reduction of share capital.
11. Learned counsel for the petitioner company has submitted that the proposed reduction in capital does not violate or override or circumvent any provision of the Companies Act, 1956 and other applicable provisions of the Companies Act, 2013. It is further submitted that no investigation proceedings under Section 235 to 251 of the Companies Act, 1956 are pending against the petitioner company. CP 673/2014 Page 5 of 8
12. In the aforesaid background, this petition is filed seeking approval of the resolution passed at the Annual General Meeting held on 23rd September, 2014. The Form of Minutes proposed to be registered under Section 103(1)(b) of the Act and annexed with the petition is reproduced as under:
"The subscribed and paid-up equity share capital of Denso India Limited is henceforth INR 26,74,88,900/- divided into 2,67,48,890 equity shares of INR 10/- each fully paid up or such higher amount, depending upon the number of equity shares held by the promoter shareholders as on the record date to be fixed by the board of directors of Denso India Limited or as on 30th November, 2014, whichever is later, reduced from INR 27,87,96,440/- divided into 2,78,79,644 equity shares of INR 10/- each fully paid up. At the date of registration of this minute, the issued equity share capital shall be deemed to be equal to the amount of subscribed and paid-up equity share capital and the remaining equity shares shall be unissued out of the authorized share capital of the Company."
13. By order dated 5th November, 2014, notice of this petition was directed to be issued to the Regional Director, Northern Region and citations were directed to be published in the newspapers 'Business Standard' (English) and 'Jansatta' (Hindi) in terms of the Companies (Court) Rules, 1959. The petitioner has filed an affidavit showing compliance regarding service on the Regional Director, Northern Region as also publication of citations in the aforesaid newspapers on 20th November, 2014. Copies of the newspaper clippings containing the publications have been filed along with the affidavit. CP 673/2014 Page 6 of 8
14. In response to the notice issued, Mr. A. K. Chaturvedi, Regional Director, Northern Region, has filed his report dated 6th January, 2015 raising no objection to the proposed reduction of share capital of the petitioner company.
15. Despite publication of notice, no objection has been received from any creditor or any member of the public. The petitioner company, in the affidavit dated 5th January, 2015 of Sh. N.P.S. Chawla, Advocate of the petitioner company has submitted that neither the petitioner company nor its counsel have received any objection pursuant to citations published on 20th November, 2014. Thus, there appears to be no legal impediment in allowing the present petition.
16. In view of the averments made in the petition and there being no objection from any creditor or any member of the public, the petition is hereby allowed. The resolution passed by the petitioner company in its Annual General Meeting held on 23rd September, 2014 for reduction of its share capital is approved. The 'Form of Minutes' proposed to be registered under Section 103(1)(b) and annexed to the petition as Annexure 'N', is also approved.
17. A certified copy of this order be delivered to the Registrar of Companies within thirty days from today. The Registrar of Companies, on receipt of the certified copy of this order and minutes approved by this CP 673/2014 Page 7 of 8 Court, is directed to register the same and effect the necessary alteration with regard to the company.
18. The notice of registration of this order and the resolution of the company shall be published in the 'Business Standard' (English) and 'Jansatta' (Hindi) within 14 days of the registration aforesaid.
19. The representative of the Regional Director submitted that keeping in view of the fact that the matter involved examination of extensive records and prioritized hearings, at least, costs of Rs.2.0 lakhs should be paid by the petitioners. Learned counsel for the petitioners submitted that his client has no objection to pay these costs. Consequently, let costs of Rs.2.0 lakhs be deposited by the petitioner with the Common Pool Fund maintained by the Official Liquidator within two weeks from today.
20. The petition stands allowed in the above terms.
Dasti SUDERSHAN KUMAR MISRA, J.
May 05, 2015 CP 673/2014 Page 8 of 8