The central legal point established in the judgment is that a proposed reduction of equity share capital under the Companies Act, 1956 must not adversely affect the company's financial commitments, operations, or net worth and should not prejudicially affect any party.

1. This is a petition filed under sections 100 to 103 of the Companies Act, 1956 seeking confirmation of the proposed Reduction of the Issued, Subscribed and Paid up Equity Share Capital of Gujarat Road and Infrastructure Company Limited, the Petitioner Company.

2. The petitioner company herein was promoted in the year 1999 and commenced the business in the year 2000. The company is engaged in the business of constructing and managing the toll roads in the state of Gujarat. However, as pointed out in greater detail in the Petition, due to inadequate profits or persistent losses during the initial period, the company had opted for corporate restructuring with the lenders under CDR Scheme. The Company has recently paid restructuring charges of Rs. 86,93,67,830/-. are reflected in the Unaudited Provisional Financial Statements as at December 18, 2013 in the form of unamortized loan restructuring charges. Since the unamortized amount of the restructuring charges is a sunk cost to the company and the paid up equity share capital is lost to that extent as is not represented by any asset; it was proposed by the Board of Directors of the Company that such unamortized amount be written off against the paid up equity share capital thereby reducing the paid up equity share capital. The said proposal will enable a more equitable and factual representation of the Company’s assets and liabilities.

3. By a special resolution of the company, duly passed in accordance with Section 189 of the Companies Act,1956, at the Extra Ordinary General Meeting of the shareholders of the petitioner company, held after due notice as provided in the Act, on the 17th December 2013, it was:

“RESOLVED THAT pursuant to the provisions of Sections 100 to 104 and all other applicable provisions, if any, of the Companies Act, 1956 and Article 76 of the Articles of Association of the Company and subject to the sanction / approval by/of Hon’ble High Court of Gujarat at Ahmedabad and / or the National Company Law Tribunal and other appropriate authorities as may be necessary in this behalf, consent of the shareholders of the Company be and is hereby accorded to the Reduction of paid up equity share capital and to effect such Reduction by writing off its “Unamortized loan restructuring charges” against the paid up equity share capital, in such a manner that, the paid up equity share capital of the company be reduced from Rs.142,39,90,900/- divided into 14,23,99,090 Equity shares of Rs 10/- each to Rs. 55,46,23,070/- divided into 5,54,62,307 equity shares of Rs.10/- each by cancelling 8,69,36,783 Equity shares.”

“RESOLVED FURTHER THAT the proposed reduction shall take effect by way of writing off of the Unamortized loan restructuring charges first against the amount of bonus issue of equity shares amounting to Rs.50,85,68,190/- and the balance of Rs.36,07,99,640/- against the paid up equity share capital existing before the bonus issue.”

4. The Petition was admitted by this Court on 26th December 2013 and the same was ordered to be advertised in Ahmedabad edition of “Times of India”, English daily and “Divya Bhaskar”, Gujarati daily. The same direction has been complied with by the company and the notice of the petition has been duly advertised in the aforesaid newspapers on 9th January 2014. The same is confirmed by the affidavit dated 10th day of January 2014. Pursuant to the said advertisement no one has come forward to raise any objections opposing the sanction to the proposed capital reduction.

5. It is further pointed out in the petition that the proposed reduction does not involve diminution of any liability or repayment of paid up capital. The above proposal is not likely to have any adverse impact on the net worth of the Company. It would not in any way adversely affect the ordinary operations of the Petitioner Company or its ability to honour its financial commitments or to pay its debts in the ordinary course of business. The secured and unsecured credi