The reduction of share capital in a company under a rehabilitation scheme is contingent and subject to modification until successful implementation. The repeal of SICA and the introduction of the Insolvency and Bankruptcy Code affected the jurisdiction of Civil Courts in such matters.

JUDGMENT

Arindam Mukherjee, J. - The plaintiff is a company within the meaning of the Companies Act, 2013 with its registered office at New Delhi and an office at Kolkata but outside the Ordinary Original Civil Jurisdiction of this Court.

2. The defendant is the widow of one Vishwanath Poddar, a shareholder of the plaintiff-company. The defendant is a resident of 4B/S, Mayur Apartments, 3A, Loudon Street, Kolkata- 700017 within the Ordinary Original Civil jurisdiction of this Court.

3. The plaintiff-company was declared a sick company on 27th May, 1988 under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as the SICA) by the Board of Industrial and Financial Reconstruction (BIFR). Industrial Credit and Investment Corporation (now ICICI Bank Limited) was appointed as the Operating Agency (OA) to prepare a Rehabilitation Scheme for revival of the plaintiff in accordance with the provisions of the SICA.

4. The said Vishwanath Poddar had filed a writ petition, being W.P. No.3569 of 1993 (Vishwanath Poddar vs. Board of Industrial and Financial Reconstruction & Ors.) before this Hon'ble High Court which was disposed of by an order dated 5th September, 1994. Another shareholder had challenged the said order in the Hon'ble Supreme Court in SLP (Civil) No. 10187 of 1995 wherein an order was passed directing the BIFR to formulate a revival scheme and to expeditiously conclude the proceedings.

5. The BIFR sanctioned a rehabilitation scheme on 10th June, 1996 (1996 Rehabilitation Scheme). The said 1996 Rehabilitation Scheme was challenged by the plaintiff before the Appellate Authority for Industrial and Financial Reconstruction (hereinafter referred as AAIFR). AAIFR by an order dated 6th March, 1997 approved the 1996 Rehabilitation Scheme with certain modifications. The order dated 6th March, 1997 was challenged in C.W.P No.1797 of 1997 before the Delhi High Court wherein by an order dated 31st July, 2000 the matter was remanded back to AAIFR for reconsideration. AAIFR ultimately approved a scheme on 10th October, 2000 which was different even from the updated 1996 Scheme submitted by the Operating Agency (OA) on 3rd October, 2000. The order of AAIFR dated 10th October, 2000 was subject to challenge in a writ petition being W.P. (C) No. 1516 of 2001 (Metal Box India Ltd. & Anr vs. AAIFR & Ors) before the Delhi High Court which was disposed of by an order dated 16th July, 2001 directing implementation of the upgraded 1996 Scheme with certain modifications.

6. At the time when the scheme was sanctioned on 16th July, 2001 the paid up share capital of the plaintiff had stood increased from Rs.15.48 crores to Rs.20.23 crores in view of contributions brought in by the promoters of the plaintiff-company between 2000 and 2006. Ultimately after few subsequent rounds of litigation, the AAIFR passed an order on 4th December, 2007 allowing reduction of the existing paid up share capital of the plaintiff-company by 99 per cent. As a consequence, thereof, equity share capital and preference share capital of the plaintiff-company was reduced. The equity share capital with which we are concerned was reduced to Rs.20.23 lakhs from Rs.20.23 crores.

7. Thereafter, the plaintiff filed the order dated 4th December, 2007 along with Form 21 to record the reduction of share capital with the Registrar of Companies. The plaintiff also issued and allotted to all its equity shareholders one equity share of the face value of Re.1/- each for every 10 equity shares of Rs.10/- each held by the shareholders as on 29th December, 2007. So the said Vishwanath Poddar, the husband of the defendant herein was according to the plaintiff issued and allotted 50 equity shares with face value of Re.1/- each for the 500 shares of Rs.10/- face value as held by him in the plaintiff-company.

8. The Rehabilitation Scheme which according to the plaintiff was sanctioned under the provisions of Section 18(2) (f) of SICA, 1985 was operative till