Rajasthan High Court - Jaipur
Vaibhav Global Ltd vs ======================== on 18 November, 2016
Author: Alok Sharma
Bench: Alok Sharma
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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
AT JAIPUR BENCH
ORDER
(S.B. Company Petition No.4/2016)
VAIBHAV GLOBAL LIMITED a company governed by the provisions of the
companies Act, 1956 having its registered office at K-6B, Fateh Tiba, Adarsh
Nagar Jaiapur-302004 in the state of Rajasthan within the aforesaid jurisdiction
--- Petitioner
Application under Section 52 of the Companies Act, 2013
(corresponding to Section 78, read with 100, 101, 102,
103 and 104 of the Act, 1956.)
Date of Order: November 18, 2016.
PRESENT
HON'BLE MR. JUSTICE ALOK SHARMA
Mr. Sanjay Jhanwar] for the petitioner.
Mr. Prakul Khurana]
Mr. K.J. Mehta, for the Registrar of Companies.
BY THE COURT:
REPORTABLE The matter comes up on a petition filed under Section 52 of the Companies Act, 2013 (hereinafter `the Act of 2013') [corresponding to Section 78 of the Companies Act, 1956 (hereinafter the Act of 1956'), read with 100, 101, 102, 103 and 104 of the Act of 1956, seeking approval of the court for reduction of the share premium account of the petitioner company as per the special 2 resolution passed by the requisite majority of its equity shareholders.
The petitioner company was incorporated on 8-5-1989 under the Act of 1956 as VAIBHAV GEMS LIMITED and in its new avtar consequent to change of its name is known as VAIBHAV GLOBAL LIMITED. A fresh certificate of the company's incorporation indicating its present name was issued on 29-11-2012. Aside of the main objects of the petitioner company under its Memorandum of Association which relate to varied activities of dealing in gems and jewellery, the ancillary objects of the company include investments of different kinds.
The petitioner company incurred significant losses in its businesses primarily from a diminution of its investments in its subsidiaries in the preceding years as of 31-3-2015 and as per its balance sheet had accumulated losses to an extent of Rs.264, 27, 18,509 (Rupees Two hundred and sixty four crores twenty seven lacs Eighteen thousand Five Hundred nine only) reflected in the surplus/ (deficit) head of Reserves & Surplus. However also as of 31-3-2015 the petitioner company's Securities Premium Account showed a surplus of Rs.589, 72, 28,735 (Rupees Five hundred and Eighty Nine crores Seventy Two lacs Twenty Eight thousand Seven Hundred Thirty Five only).
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Article 10 of the Articles of Association of the petitioner company subject to Article 141(d) thereof authorises it to reduce its share capital in any manner by way of a special resolution subject to any incident/s and consent/s required under the Act of 1956. Intending to write off the accumulated losses amounting to Rs.264, 27, 18,509 (Rupees Two hundred and sixty four crores twenty seven lacs Eighteen thousand Five Hundred nine only) in the surplus/ (deficit) under the head of Reserves & Surplus of the company against the Securities Premium Account amounting to Rs.589, 72, 28,735 (Rupees Five hundred and Eighty Nine crores Seventy Two lacs Twenty Eight thousand Seven Hundred Thirty Five only), both as on 31-3-2015, the petitioner company formulated a scheme, which has been annexed to this petition as Annexure-4, for only reduction of its securities premium account. The scheme did not envisage transfer for vesting properties and liabilities in the petitioner company. In the process of reduction of its share premium account full compliance with SEBI Circular No.CIR/CFD/DIL/5/2013 dated 4- 2-2013 read with Circular No. CIR/CFD/DIL/8/2013 dated 21-5- 2013 was to be made. The reduction of the Share Premium Account was also made subject to sanction and approval of all laws of Central and State Government or any other public authority including that of Stock Exchanges in terms of clause 24(f) of the Listing Agreement executed between the petitioner company and the respective stock 4 exchanges. The scheme also envisaged the mandatory approval from shareholders of the company through postal ballot and e-voting and was to be acted upon only if the vote cast by the equity shareholders was more than ¾th of the number of total vote cast by the shareholders. After the special resolution of the equity shareholders as prescribed under Section 100 of the Act of 1956, sanction of jurisdictional High Court under Section 52 of the Act of 2013 corresponding to Section 78 of the Act of 1956 read with Sections 100 to 104 of the Act of 1956 and other provisions was to be obtained.
The Board of Directors of the petitioner company approved the scheme for reduction of the Securities Premium Account through a resolution dated 9-12-2015. Notices of the scheme was thereupon sent to members/ equity shareholders along with explanatory statement for the purpose of passing a special resolution through postal ballot and e-voting. The special resolution considered and passed by the equity shareholders was as under:-
"Reduction of Capital by setting off the accumulated losses against the Securities Premium Account to consider and if thought fit, to pass with or without modification/s the following as a special resolution:
The equity shareholders by postal ballot and e-voting then resolved that "pursuant to the provisions of Sections 78, 5 100 to 104 and all other applicable provisions, if any, of the Companies Act, 1956 read with Section 52 of the Companies Act, 2013 and relevant rules made thereunder, including any statutory modifications or reenactments thereof for the time being in force, relevant provisions of the Company (Court) Rules, 1959 and subject to the confirmation of High Court of Judicature at Jaipur and other appropriate authorities, if any, and subject to such approvals as may be necessary, the consent of the company be and is hereby accorded to the Board of Directors for setting off an amount of Rs.2,64,27,18,509 (Rupees Two Hundred Sixty Four Crores Twenty Seven Lacs Eighteen Thousand Five Hundred Nine only) appearing in the surplus/ (deficit) head of the Reserves & Surplus of the Company as at 31st March, 2015 against the Securities Premium Account amounting to Rs.589, 72, 28,735 (Rupees Five hundred and Eighty Nine crores Seventy Two lacs Twenty Eight thousand Seven Hundred Thirty Five only) to the extent of accumulated losses and consequently, leaving a balance of Rs.3,25,45,10,226 (Rupees Three Hundred Twenty Five Crores Forty Five lacs Ten Thousand Two Hundred and Twenty six only) in the Securities Premium Account as per the scheme of Reduction of Capital (Scheme) with effect from the appointed dated (1 st April, 2015) or such other date as may be approved by the High Court.
Resolved further that approval of the Company be and is hereby granted for execution of appropriate documents, papers, deed and other writings on behalf of the Company as may be necessary or incidental thereto in this regard and the Board of Directors be authorised to do such acts, deeds, matters, things as may be required in connection with the above.
Resolved further that Mr. Sunil Agrawal 6 Chairman and Managing Director, Mr. Rahimullah, Whole time Director, Mr. Puru Aggarwal, Group of CFO and Mr. Brahm Prakash, Company Secretary, be and are hereby severally or jointly authorised to sign, execute and deliver, file petitions, pleadings forms, reports, applications, affidavits, declarations, certificates and all other documents, deeds and writings and take any action that may be required in order to consummate the transactions contemplated therein including represent the company before any regulatory authority and the High Court, in relation to any matter pertaining to the scheme or delegate such authority to another person by a valid power of attorney in successful implementation of the Scheme of Reduction of Capital."
Following the passing of the aforesaid special resolution on 16-1-2016 by the requisite majority of shareholders, e-Form MGT- 14 dated 18-1-2016 has been filed by the petitioner company with the Registrar of Companies in compliance with the provisions of the Act of 2013.
It has been submitted that the special resolution for reduction of share capital as proposed by the Board of Directors and passed by the equity shareholders of the petitioner company with requisite majority neither involves any financial outlay/ outgo from the petitioner company nor does it directly or indirectly involve any outflow from it to its shareholders. Further the reduction of share capital (Securities Premium Account) does not entail diminution of 7 any liabilities of the company in respect of any unpaid capital nor entails payment to any shareholder of any paid-up capital. It has been submitted that hence the reduction of capital (Securities Premium Account) does not result in any prejudice to the shareholders, creditors, or any other stakeholders of the petitioner company nor for that matter adversely affect the ordinary operations of the petitioner company or its ability to honour its commitments or to pay its debts in the ordinary course of its business. It has been submitted that Section 101(2) of the act of 1956 has thus not got invoked. It has been prayed in the circumstances, that the form of minutes under Section 103(1) of the Act of 1956 as set out be confirmed and the reduction of capital (Securities Premium Account) against accumulated losses in the Surplus/ (Deficit) head of Reserve and Surplus of petitioner company in terms of special resolution passed by the Equity Shareholders through postal ballot and e-voting on 16-1-2016 be approved by this court. Other prayers incidental to the approval have also been made.
On 12-2-2016 notices were issued on the petition in form No.5 relatable to Rule 25 of the Companies (court) Rules, 1959 and also published in two newspapers, one vernacular and other English. Copy of the petition was also supplied to Mr. R.K.Meena, who then was acting as the Registrar of Companies.
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Objections to the scheme have been filed by the Registrar of Companies. It has been submitted that the accumulated losses generated by the petitioner company as on 31-3-2015 relate to diminution in the value of investments made by it in its subsidiaries contrary to the main object of the company as per its Memorandum of Association. Then, though it has been admitted that clause 3 of the "incidental or ancillary" objects in the Memorandum of Association provides for the activity of investment, yet it has been reiterated that such investments by the petitioner company in subsidiaries was required to comply with the provisions of Section 149(2A) of the Act of 1956 and this the petitioner company did not, as neither e-form 20 and/ or 23 were filed with the competent authority. Contravention of Section 372A of the Act of 1956 has also been alleged. It has been also submitted that the scheme for reduction of the share premium account under consideration be rejected as is purpose is also not covered by any of the clause (a) to (e) of Section 52(2) of the Act of 2013. It has been emphatically submitted that even otherwise the petitioner company cannot be permitted to resort to Section 52 of the Act of 2013 read with 100-104 of the Act of 1956 to write off its accumulated losses against its securities premium account as the purposes for the utilisation of Securities Premium Account are limited in law and the securities premium 9 account can be utilised only for delineated purpose such as issue of bonus shares from unissued shares of the company, writing off preliminary expenses, writing off the expenses or commission paid or discount allowed on any issue of shares or debentures of the company or providing for the premium payable on the redemption of any redeemable preference shares or of any debenture of the company and for the purchase of its own shares or other securities under Section 68, but for no other purpose. The diminution in value of investments in the subsidiaries of the petitioner company is not a matter covered by Section 52 of the Act of 2013 and hence it has been submitted that the special resolution for reduction of Securities Premium Account passed by equity shareholders of the company with the purported requisite majority on 16-1-2016 is thus ultra vires. It has been submitted that nor can the Securities Premium Account be reduced under Sections 100 to 104 of the Act of 1956 and hence the petition seeking approval of such a scheme for setting of accumulated losses be rejected. Another objections based on non- registration of the petitioner company under the RBI Act, 1934 was also raised in the context of investments into its subsidiaries abroad by the petitioner company.
Objections of the ROC have been emphatically contested and negated by Mr. Sanjay Jhanwar, counsel appearing for the petitioner 10 company. It has been submitted that the activity of investments by the petitioner company is inter alia set out in its objects incidental and ancillary to the main objects and therefore no approval for the such activity under Section 17 read with sub-section 2A of Section 149 of the Act of 1956 was required. Mr. Jhanwar submitted that Section 149(2A) of the Act of 1956 requires taking approval of members of the company through a special resolution only in the event where the activity proposed to be undertaken by the company falls under the head of "other objects" and not where it is covered under the head of objects ancillary to its main objects. It was further submitted that the petitioner company being in the business of gems, jewellery and lifestyle accessories acquired/ incorporated various subsidiaries for the purpose of expansion of the said business. The losses accumulated on the said activity resulting from the diminution of the share value of the subsidiaries are now lawfully sought to be set off against surplus in the securities premium account. Section 52 of the act of 2013 permits/ treats as it does the Securities Premium Account of the company as its paid up share capital. The Securities Premium Account is the property of the equity shareholders, requisite majority of whom has approved the scheme by a special resolution for reduction of share capital. Mr. Jhanwar then submitted that the petitioner company was not at all required to be registered as a Core Investment Company under section 45-I of the Reserve 11 Bank of India Act, 1934 as contended by the ROC, its core business being purchase and sale of goods i.e. jewellery and other related items. Importantly and tellingly at no point of time such registration was ever required by the competent authority under the RBI Act. Yet oddly the said issue has been raised by the ROC quite mechanically, arbitrarily and palpably without jurisdiction which verges on the malafide. Mr. Jhanwar further submitted that the approval from the shareholders of the petitioner company as required under Section 372A of the Act 1956 has indeed been obtained by the petitioner company. Copy of extracts of minutes of the extraordinary general meeting held on 5-9-2005 for the purpose has been annexed with the reply to the ROC's objection.
Mr. Jhanwar has also emphatically denied the assertions made by the ROC that the petitioner company's case for reduction of the Securities Premium Account does not fall under Section 52 of the Act of 2013. Counsel submitted that contrarily Section 52(1) of the Act of 1956 specifically provides that a securities premium account has to be treated as if it were the paid-up share capital of the company. He submitted that the Securities Premium Account can be statutorily utilised for purposes set out in Section 52(2) and 52(3) of the Act of 2013 and hence reduced without the court's approval. But for other purposes it can be utilised by resort to the provisions for reduction of 12 share capital as provided in the Act of 1956 i.e. Sections 100-104 of the Act of 1956. In this context, Mr. Jhanwar submitted that Article 10 of the petitioner company's Articles of Association allows reduction of share capital for any purpose. And when passed as a special resolution by the requisite majority of shareholders it satisfies the precondition under Section 100(1) of the Act of 1956 for reduction of share capital--also constituted of the Share Premium Account as provided under Section 52(1) of the Act of 2013.
Heard counsel for the parties and perused the material available on record.
From the balance sheet of the petitioner company as of 31-3- 2015 it is evident that it had accumulated loss to an extent of Rs.2,64,27,18509/- as shown in its surplus/ (deficit) under the head of Reserves & Surplus. At the same time in its Securities Premium Account, the petitioner company as on the aforesaid date had a surplus balance of Rs.589,72,28,735/-. The Board of Directors of the petitioner company in the circumstance proposed and its equity shareholders at the meeting on 16-1-2016 passed a special resolution approving, with the requisite majority, the adjustment of the accumulated loss of the petitioner company against its Securities Premium Account. From the record it is apparent that in terms of the 13 Article 10 of the Articles of Association of the petitioner Company it could reduce its share capital subject to Article 141(b) of the Articles of Association. It is nobody's case that there is any breach of Article 141(b) of the petitioner company's Articles of Association.
Section 52 of the Act of 2013 and Section 100 of the Act of 1956, inter alia with reference to which the special resolution for reduction of the petitioner company's Securities Premium Account was passed on 16-1-2016 read as under:-
It would be in place to record that Section 52 of the Act of 2013 as notified has replaced Section 78 of the Act of 1956.
Act of 2013:
"Section 52. Application of premiums received on issue of shares.-(1) Where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the premium received on those shares shall be transferred to a "securities premiums account" and the provisions of this Act relating to reduction of share capital of a company shall, except as provided in this section, apply as if the share premium accounts were the paid-up share capital of the company.
(2) Notwithstanding anything contained in sub-section(1), the securities premium account may be applied by the company-
(a) towards the issue of unissued shares of the company to the members of the company as fully paid bonus shares;
(b) in writing off the preliminary expenses of the company;
(c) in writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company;14
(d) in providing for the premium payable on the redemption of any redeemable preference shares or of any debentures of the company; or
(e) for the purchase of its own shares or other securities under Section 68.
(3) The securities premium account may notwithstanding anything contained in sub-sections (1) and (2) be applied by such class of companies, as may be prescribed and whose financial statement comply with the accounting standards prescribed for such class of companies under section 133-
(a) in paying up unissued equity shares of the company to be issued to members of the company as fully paid bonus shares; or
(b) in writing off the expenses of or the commission paid or discount allowed on any issue of equity shares of the company; or
(c) for the purchase of its own shares or other securities under section 68.
Act of 1956:
100. Special resolution for reduction of share capital (1) Subject to confirmation by the Court a company limited by shares or a company limited by guarantee and having a share capital, may, if so authorised by its articles, by special resolution, reduce its share capital in any way; and in particular and without prejudice to the generality of the foregoing power, may-
(a) extinguish or reduce the liability on any of its shares in respect of share capital not paid up;
(b) either with or without extinguishing or reducing liability on any of its shares cancel any paid-up share capital which is lost, or unrepresented by available assets; or
(c) either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share 15 capital which is in excess of the wants of the company;
and may, if any so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly.
(2) A special resolution under this section is in this Act referred to as "a resolution for reducing share capital".
From a reading of Section 52 of the Act of 2013 it is apparent that this provision equates a Share Premium Account of a company to its paid up share capital. For specified purposes as set out in sub- section (2) and (3), the Share Premium Account can be statutorily utilised without any approval of a court. For other purposes the provisions of Sections 100-104 of the Act of 1956 have to be adopted, and approval of the court sought for the reduction of paid up share capital of the company. Section 52 of the Act of 2013 therefore does not disbar/ prohibit application/ utilisation of the share premium account treated thereunder as paid up capital for purposes other than the purposes set out in clauses (a) to (e) of Section 52(2) and Section 52(3) of the Act of 2013. Contrarily it actively so permits as evident from its plain language. And when so done the reduction of the share premium account has to be compliant with Sections 100-104 of the Act of 1956.
The provisions for reduction of share capital presently 16 obtaining are Section 100 to 105 of the Act of 1956. Section 100(1) of the Act of 1956 states that where the Articles of a company provide and where a special resolution of its equity shareholders has been passed a company can reduce its share capital in any way. This general power is followed by illustrative cases where the share capital can be reduced. The illustrations however do not negate reduction of share capital for other purposes. The special resolution for reduction of share capital passed by the requisite majority of equity shareholders has however to be approved by the court. As such where reduction of share capital of a company authorised by its Articles of Association is supported by a special resolution of equity shareholders, the court of which approval is sought is merely to evaluate whether it is reasonable, just and fair and not prejudicial to the interest of the shareholders, creditors or any other stakeholders of the company. If the aforesaid conditions are satisfied, it is not for the ROC or the company court to sit over the judgment of the requisite majority of shareholders as if in appeal.
In the instant case Article 10 of the Articles of Association of the petitioner company allows reduction of share capital in any manner. In the exercise of the aforesaid powers the equity shareholders with requisite majority have passed the special resolution for the purpose of adjustment of accumulated loss of the 17 petitioner company as on 31-3-2015 against the company's Securities Premium Account which is treated as paid up share capital under Section 52 of the Act of 2013, In the context of aforesaid legal position obtaining from the interpretation of Section 52 of the Act of 2013 and Sections 101-104 of the Act of 1956, I find wholly untenable the contention of Mr. K.J. Mehta appearing for the ROC that the share premium account albeit deemed to be part of paid up share capital as per Section 52 of the Act of 2013 cannot be utilized for the purpose of adjustment of accumulated loss of the petitioner company. The aforesaid conclusion as to utilisation of the Securities Premium Account for any purpose outside Section 52(2) of the Act of 2013--(old Section 78 of the Act of 1956) after due approval of the requisite majority of equity shareholders finds support from the judgment of the Andhrapradesh High Court in the case of re:Hyderabad Industries Limited [2004 (3) ALD 832]. A similar view has been taken in the case of re: Prashanth Textiles (P) Ltd [(2015) 192 Company Cases 184 (Madras)]. So too in the case of re-Koyo Bearings India Private Limited [Manu (ka) 3792/2015] and in the case of Tmeic Power Electronics Systems India Private Limited [Manu/Ka/ 2570/ 2014]. This legal position is also buttressed by the judgment in the case of re-DSM Anti Infectives India Limited [Manu/PH/3561/2010], which 18 followed the ratio in the case of Hindalco Industries Limited [(2009)151 Company Cases 446] where the Bombay High court held that since all the shareholders had consented for the utilisation of the securities premium account towards the BRR account, it could be so utilised as the purposes set out in then extant Section 78 of the Act of 1956 (new section 52 of the Act of 2013) were in any event merely illustrative. Such was also the view of the Calcutta High court in the case of Ushacomm India (P) Ltd. [(2006) 2 CHN 473] where the scheme for reduction of the securities premium account for the business reconstruction of the petitioner company was approved. Finally in the case of re: Zee Telefilms Ltd. [2004(6) Bom. Comp. Cases 270] the Mumbai High court having considered the scheme and purpose of reduction of share premium found no illegality or breach of any provision of law in approving its reduction where it was just, fair and proper and wholly within the framework of the law.
As against the weight of the authorities detailed hereinabove as relied upon by Mr.Jhanwar, counsel for the petitioner company, the sole judgment relied upon by Mr. K.J. Mehta, counsel for the ROC while objecting to the approval of the special resolution passed by the equity shareholders of the petitioner company for reduction of the securities premium account by adjusting it with accumulated losses, submitted that the Securities Premium Account can not in any 19 event be utilized for adjustment of accumulated loss of the company. In support of his contention Mr. K.J. Mehta relied on the case of re:Global Trust Bank Ltd. [2004(5) ALD 667] where Andhra Pradesh High Court following its own decision in the case of Hyderabad Industries Limited [2004(3) ALD 832] dismissed the petition seeking approval of the reduction of the share premium account by adjustment of accumulated losses thereagainst.
It is however in place to record that the judgment in the case of Hyderabad Industries Limited [2004(3) ALD 832] relied upon by the AP High Court in rendering its decision in Global Trust Bank Limited, CP No.57 of 2004 [2004(5) ALD 667] was over ruled by the Division Bench of the said High Court in the case of re:Hyderabad Industries Limited [(2005) 123 Comp. Case 458 AP]. Even otherwise the judgment in the case of Global Trust Bank Limited (supra) relied upon by Mr. K.J.Mehta was based in the context of reduction of the share premium account of a banking company governed by the provisions of Banking Regulations Act, 1949 and Reserve Bank of India Act, 1934. This factual scenario does not obtain in the present case, and consequently the said judgment in the case of Global Trust Bank Ltd. [2004(5) ALD 667] is wholly inapposite to the issue at hand i.e. of the reduction of the share premium account of the company engaged in the business of gems/ gold/ jewellery by 20 adjustment of its consolidated losses arising out of diminution in the investments/ shares in related subsidiaries incorporated for the same purpose. Further even otherwise the view taken in the case of Global Trust Bank Limited (supra) is an isolated view against a plethora of judgments to the contrary by different high courts across the country holding that the share premium account of a company can be reduced or utilised for adjustment of the company's consolidated losses where the concerned company's articles of association provide for reduction of share capital and a special resolution for the purpose has been passed by the requisite majority of equity shareholders.
I find no force in the contention of Mr.K.J. Mehta appearing for the ROC that the petitioner company could not have invested in the shares of its subsidiaries. The argument is uninformed of clause 3 of the Incidental and Ancillary objects of the petitioner company with reference to its main objects. Similarly for the reasons aforesaid, equally unsustainable is the contention of Mr. K.J. Mehta that the petitioner company was required to comply with the provisions of Section 17 read with 149(2) of the Act of 1956 for the purpose of making investment in the shares of its subsidiaries. Further the petitioner company has filed a reply to the ROC's objections to the approval of the special resolution of the Securities Premium Account along with extracts of the minutes of Extraordinary General Meeting 21 (EGM) on 5-9-2005 whereunder requisite approval of its equity shareholders under Section 372A of the Act of 1956 was obtained permitting it to invest and acquisition of the Overseas Companies for the expansion of its core business of gems and jewellry. Besides there is nothing on record to show that investments made in its subsidiaries by the petitioner company beginning 2004-2005 were at any point of time objected to by any statutory authority. To raise belated and unwarranted objections thereto without an iota of legal foundation when approval of reduction of share capital with the requisite overwhelming majority of equity shareholders is sought from this court is absolutely unwarranted, unjustified and unsustainable. In any event competent statutory authorities remain free to exercise their power if any wrong doing is established. A theoretical possibility however cannot obstruct approval of the scheme for reduction of share capital (Securities Premium Account) as approved by a special resolution within Article 10 of the petitioner Company's Articles of Association by the requisite majority of the equity shareholders.
From the facts of the case on record it is quite clear that the adjustment of the consolidated loss of the petitioner company as on 31-3-2015 as against the surplus in its Securities Premium Account also as on 31-3-2015 will not cause any prejudice to any creditor of 22 the company or entail reduction in the value of its shares. The decision to adjust the consolidated loss with surplus/ (deficit) in Securities Premium Account is purely a commercial decision with the approval by the Shareholders with the required majority by way of a special resolution. It is in consonance with the Articles of Association of the petitioner company. There is no outflow of any fund or assets of the petitioner company nor any disability resultantly obtains to the company's working in its day to day business, or otherwise, from the reduction of the share capital) (securities premium account). The adjustment sought by the petitioner company only facilitates reflecting of the correct financial statement of the affairs of the company to its benefit in the market place.
Consequently, I would allow this petition and confirm the reduction of the petitioner company's share capital (Securities Premium Account) against the accumulated losses in the surplus/ (deficit) head of Reserves & Surplus of the petitioner company in terms of the special resolution passed by the requisite majority of the equity shareholders of the petitioner company through postal ballot and e-voting on 16-1-2016. I would also approve the form of Minutes under Section 103(1) of the Act of 1956 as set out in para 20 of the petition which is proposed to file with the ROC (Jaipur). The procedure prescribed in Section 101(2) of the Act of 1956 is 23 dispensed with as also is dispensed with is the formalities of the words "And Reduced" while describing capital structure of petitioner company while confirming the approved reduction of share capital (Securities Premium Account).
Publication of reasons for the reduction and other information pursuant to Section 102(2)(b) of the Act of 1956 be and is hereby dispensed with.
The petitioner company shall deliver to the Registrar of Companies, Rajasthan for registration of certified copy of this order within six weeks from the date of the order. Notice of registration of the Registrar of Companies Jaipur Rajasthan of this order and of minutes be published once in daily newspapers Times of India (English) National Edition and local newspaper Dainik Bhaskar (Rajasthan Edition) within two weeks from the date of registration by the Registrar of Companies.
The petition stands disposed of accordingly.
A copy of the order be sent to the Registrar of Companies for necessary compliance.
(Alok Sharma), J.
arn/ 24 All corrections made in the order have been incorporated in the order being emailed.
Arun Kumar Sharma, Private Secretary.