Indian Kanoon - Search engine for Indian Law

21. (a) Whether the BIFR and AIFR are empowered to approve the scheme of rehabilitation by reducing the share value of the shareholders in a Sick Industrial Company to the extent necessary for reconstruction and whether the willingness of the shareholders is relevant was considered by the Supreme Court in the decision reported in 1989 (66) Company Cases 132 (Navnit R. Kamani v. R.R.Kamani). In the said judgment it is held that the value of the shares could be determined only at the intrinsic value of the shares and the Board reached the firm conclusion that each share at zero value. Even then the Board directed that the value of the share be reduced to Rs.1/- per share and directed them to transfer the shares at Rs.1/- per share. The said reduction was found perfectly right in order to effectuate the scheme for revival. It is also held that the scheme having been approved by the statutory authority and directions were given to revive the industry in larger public interest and inasmuch as there is a necessary declaration contained in section 2 of the Act, which attracts the applicability of Article 31-C of the Constitution of India, the decision rendered by the Board for reconstruction is unassailable.