( 1 ) THE petitioner, namely, Essar Steel Limited has filed this petition under Section 78 and 100 to 103 of the Companies Act, 1956 before this Court seeking following prayers :- (a) That the reduction of the share capital of the petitioner by cancellation of part of equity share capital being 20,47,33,113 (Twenty Crore forty Seven Lacs Thirty Three Thousand One hundred and Thirteen) equity shares of the face value of Rs. 10/- and fresh issuance of preference shares in lieu thereof as resolved by the special resolution of the Petitioner at its 27th Annual general Meeting held on July 19, 2003 be confirmed and passed by this Honble Court; (b) That the proposed Minutes as set out in Para 14 hereinabove, be approved; (c) That the procedure laid down under Section 102

( 2 ) AND (3) of the Act, as regards the creditors be dispensed with, on such terms as the Honble court may deem fit; (d) That the Petitioner be dispensed with the use of the words "and reduced"; 2. The capital of the petitioner Company as per the latest audited balance-sheet as on 31. 03. 2003, when the present petition was filed, are as follows :- share CAPITAL AS ON 31. 03. 2003 authorised : rs. 150,00,00,000 Equity Shares of 1500,00,00,000 rs. 10/- each 1,00,00,000 Redeemable Cumulative preference shares of Rs. 100/- each 100,00,00,000 ________________ 1600,00,00,000 ================ issued and Subscribed 33,42,12,890 Equity shares of rs. 10/- each 334,21,28,900 paid up : 33,42,12,890 Equity Shares of Rs. 10/- each 330,34,99,589

( 3 ) IN Annual General Meeting held on 19. 07. 2003, the authorised capital was raised from Rs. 1,600 Crores to rs. 5,000 Crores. The Company has consequently allotted 17,76,19,893 Equity Shares of Rs. 10 each fully paid up to Essar Investments Limited and as such status of authorised, Issued and Paid capital as on 01. 08. 2003 was as follows :- authorised :-

rs.

460,00,00,000

Equity Shares of Rs. 10/- each

4600,00,00,000

30,00,00,000

0. 01% Redeemable Cumulative

Preference shares of Rs. 10/- each

300,00,00,000

10,00,00,000

Redeemable Cumulative

.

Preference shares of Rs. 10/- each

100,00,00,000

5000,00,00,000

Issued & Subscribed

51,18,32,783 Equity Shares of Rs. 10/- Each

511,83,27,830

Paid Up :

51,18,32,783 Equity Shares of Rs. 10/-each

507,96,98,519

( 4 ) SHORTLY after its incorporation, the Company commenced its business and it is carrying it on since then.

( 5 ) UNDER Article 48 of the Articles of Association of the Company, it is provided that the Company in general Meeting may reduce its capital in any manner authorised by Section 100 of the Act. The Company, therefore, decided to reduce its share capital by exercising powers conferred on the Company under Article 48 of the Articles of Association and also in the manner laid down under Section 100 of the Act. The circumstances which led to the Company to reduce its share capital are as under :-The petitioner Company was established in 1976 and has its registered office and manufacturing facilities at Hazira, Dist. Surat and manufactures Hot rolled Steel Coils. The petitioner Company has a capacity to produce 2. 20 Million Tones of Hot Briquetted iron and 2. 40 Million Tones of Hot Rolled Coils per annum. The petitioner company has also set up down-stream facilities comprising of Hot Skin Pass Mill (having capacity of 1. 20 Million Tones per annum) and slitting and shearing line (having capacity of 0. 40 million Tones per annum ). The petitioner Company has increased production capacities of the plant through indigenous developments. The production levels have been stabilised and the petitioner Company has been achieving reasonably high capacity utilisation consistently. The quality of petitioner Companys product is well established and the petitioner Company is countrys largest exporter of Hot rolled Steel Coils for the last five years. The petitioner Company has obtained secured borrowings/credits from various banks and financial institutions to finance its bus