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2024 Supreme(Online)(NCLT) 226
NATIONAL COMPANY LAW TRIBUNAL
Smt. Anu Jagmohan Singh, Shri Kishore Vemulapalli, JJ
ANAND ENGINEERS PRIVATE LIMITED VS
CP - 95/2023
For the Petitioner:PRAMOD S SHAH AND ASSOCIATE
The court confirmed the reduction of share capital under Section 66 of the Companies Act, ensuring creditor interests are protected and compliance with tax obligations.
Headnote:(A) Companies Act, 2013 - Section 66(1)(b)(i) - National Company Law Tribunal (Procedure for reduction of share capital of Company) Rules, 2016 - Petition for confirmation of reduction of equity share capital - The Petitioner Company sought to reduce its paid-up equity share capital from Rs. 17,16,000 to Rs. 10,18,000 by cancelling 26.46% of its shares, with no objections from creditors - The rationale for the reduction was to provide an exit for outgoing shareholders and was approved by shareholders through a special resolution. (Paras 2, 4, 5, 8, 12)
(B) Compliance with creditor protection - The Petitioner Company ensured that the interests of creditors and stakeholders would not be adversely affected by the reduction, with satisfactory replies to observations made by the Regional Director. (Paras 6, 8)
(C) Tax implications - The Petitioner Company undertook to comply with all applicable provisions of the Income Tax Act, 1961 regarding any tax liabilities arising from the reduction. (Paras 7, 12)
(D)
Findings of Court:
The proposed scheme of reduction was found to be fair, reasonable, and compliant with legal provisions, thus allowing the petition. (Paras 13, 14) (E)
Result: Petition for reduction of share capital allowed.
1. Heard the Learned Counsel for the Petitioner Company. Neither objector, except otherwise stated, has come before this Tribunal to oppose the Scheme and nor has any party controverted any averments made in the Petitions to the said Scheme.
2. The Ld. Counsel for the Petitioner Company submits that the present petition is for confirmation of a Special Resolution passed by the Shareholders of the Petitioner Company on 14 th November, 2022 for reduction of its Equity Share Capital by reducing the Paid-Up Equity Share Capital from Rs. 17,16,000 divided into 17,160 equity shares of Rs. 100/-each, fully paid up to Rs. 12,62,000/- divided into 12,620 equity shares of Rs. 100/- each by cancelling and extinguishing, in aggregate, 26.46% of the total capital issued, subscribed and paid up capital of the company, comprising 4,540/- (Four Thousand Five Hundred Forty) Equity shares of Rs. 100/- (Rupees Hundred) each at premium of Rs. 27,900/- (Twenty-Seven Thousand Nine Hundred) each held by the members of the company.
3. However, the Company has recently completed buy back by- passing Special Resolution dated 06.02.2023 in which the paid – up equity shares capital of the Company has been reduced from Rs. 17,16,000 divided into 17,160 equity shares of Rs. 100/- each fully paid up to Rs. 14,72,000/-divided into 14,720 equity shares of Rs. 100/- each fully paid _ 3 up and after buy back process, the Company now proposes to reduce the paid equity share capital from Rs. 14,72,000 divided into 14,720 equity shares of Rs. 100/- each, fully paid up to Rs. 10,18,000 divided into 10,180 equity shares of Rs. 100/- each fully paid up ”.
4. That the Rationale for the Scheme for Reduction of Share Capital:
- a. The Scheme of Reduction of Capital is made by the Anand Engineers Private Limited, pursuant to the provisions of the Section 66(1)(b)(i) of the Companies Act, 2013, read with the National Company Law Tribunal (Procedure for reduction of share capital of Company) Rules, 2016 and other applicable provisions, if any. The scheme provides for reduction of equity share capital of the Company.
- b. Reason for reduction of Share Capital is to capture the mutual understanding for granting an Exit to the Outgoing Shareholders of the Company.
- c. In view of the above, the Board has decided to reduce the paid-up Equity Share Capital of Anand Engineers Private Limited by cancelling and extinguishing the Equity shares held by the shareholders as on the Effective date of the Scheme.
- d. Further by article(s) 103.8 of Articles of Association of the company authorizes the company to reduce its share capital in any manner and in accordance with the provisions of the Act permitted by law.
- 4 e. The company has passed a special resolution confirming the said reduction of share capital of the company on 14th November, 2022.
5. Ld. Counsel for the Petitioner Company submits that there are 21 (two) Equity Shareholders in the Petitioner Company. The Equity Shareholders of the Petitioner Company have approved the said reduction by passing special resolutions at Extraordinary General Meeting held on 14.11.2022 .
6. There is 1 (one) Secured Creditor and 133 Unsecured Creditors in the Petitioner Company which is total outstanding value of Rs. 11,00,15,717/- as on 30.11.2022. It is submitted that the Petitioner Company has served notices upon all its Secured/ Unsecured Creditors in compliance with the directions of this Tribunal vide Order dated 19.05.2023. The Petitioner Company submitted a letter dated 13.12.2023 stating that it has not received any objection from any of its Creditors for the proposed reduction in share capital. Further, it is also submitted that the reduction is in the best interest of the Company and its stakeholders and that the Petitioner Company has taken all necessary steps to mitigate any adverse impact on its creditors.
7. The Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai, and RoC has filed a Report dated 10 th November, 2023 an
