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2026 Supreme(Online)(NCLT) 3145
NATIONAL COMPANY LAW TRIBUNAL
Labh Singh, Judicial Member, Rekha Kantilal Shah, Technical Member
ROYAL SECURITIES LTD. VS
COMPANY PETITION No. 138/KB/2025
For the Appellants/Petitioners:Neha Somani, For the Respondents: Dy. Director – For the Office of the R.D.(ER), MCA
A company may reduce its Securities Premium Account to write off a capital reserve deficit arising from a merger, provided it complies with Sections 66 and 52 of the Companies Act, 2013, demonstrates no prejudice to creditors or members, and secures the requisite shareholder and tribunal approval.
Headnote:(A) Companies Act, 2013 - Section 66 and 52 - National Company Law Tribunal (Procedure for Reduction of Share Capital of Company) Rules, 2016 - Reduction of Securities Premium Account - Company sought approval to utilize its securities premium account to write off a debit balance in its capital reserve account arising from a past merger to present a true and fair view of financial statements - Procedure complied with; no prejudice to creditors or members.
Facts of the case:
The petitioner company proposed to reduce its securities premium account by Rs. 51,36,89,590/- to offset a corresponding deficit in its capital reserve account following an approved scheme of amalgamation. The company obtained shareholder approval via special resolution and secured consent from its creditors.
Findings of Court:
Following statutory compliance and the resolution of observations raised by the Regional Director (Eastern Region), the tribunal found no prejudice to stakeholders and granted the requested approval for the adjustment, subject to necessary filings with the Registrar of Companies.
Issues: Whether the proposed reduction of the securities premium account for writing off a capital reserve deficit is compliant with the Companies Act, 2013 and whether it causes prejudice to any stakeholders.
Ratio Decidendi: The tribunal held that internal accounting adjustments to realign reserves, provided they do not involve outflow of funds to shareholders or prejudice creditor interests and adhere to the procedural requirements of the Companies Act, are permissible and merit sanction.
Result: Petition allowed.
| Table of Content |
|---|
| 1. petitioner company seeks reduction of securities premium account for accounting realignment. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11) |
| 2. procedural compliance and regional director's observations regarding the proposed adjustment. (Para 12 , 13 , 14) |
| 3. tribunal approval for accounting adjustment and realignment of reserves. (Para 15 , 16 , 17 , 18) |
| 4. directions for registration of order and publishing public notice. (Para 19 , 20 , 21 , 22 , 23 , 24) |
O R D E R
Labh Singh, Member (Judicial)
1. Heard Ld.Authorised representative for the petitioner.
2. The Petitioner Company has filed this Petition under Section 66 read with Section 52 of the Companies Act, 2013 and read with the National Company Law Tribunal (Procedure for reduction of Share Capital of Company) Rules 2016. The Petitioner Company i.e., Royal Securities Ltd. (‘the Company’) seeks approval of this Tribunal qua Special Resolution passed at the Extraordinary General Meeting of the Equity Shareholders held on 07th August, 2025 to reduce the balance lying in the Securities Premium Account of the Company amounting to Rs. 51,36,89,590 (Rupees Fifty-One Crore Thirty-Six Lakh Eighty-Nine Thousand Five Hundred Ninety only) by applying the same towards adjustment of the debit balance/deficit in the Capital Reserve (arising consequent to the merger), so as to realign and present the true and fair view of the Company’s reserves, and such reduction shall be hereinafter referred to as “the Reduction of Securities Premium”.
3. The Ld. Authorised Representative for the Petitioner Company also submits that the Petitioner Company has received No objection by way of Affidavit from each of the Secured and Unsecured Creditors as mentioned in the list of creditors dated 15th August, 2025.
4. The Ld. Authorised Representative for the Petitioner Company submits that Clause 48(e) of the Articles of Association of the Petitioner Company and Section 66 read with Section 52 of the Companies Act, 2013 (“Act”) read with National Company Law Tribunal (Procedure for Reduction of Share Capital of Company) Rules, 2016 empowers the Petitioner Company to reduce its capital in any manner permitted by law.
5. The Ld. Authorised Representative submits that the reason that has necessitated the Reduction of Securities Premium of the Petitioner Company inter alia are:
a) Pursuant to the Order dated August 12, 2021, passed by the Hon’ble National Company Law Tribunal, Kolkata Bench, in Company Petition CP (CAA) No. 25/KB/2021, the Scheme of Amalgamation of M/s. Intercity Vincom Private Limited, M/s. Pawanputra Merchants Private Limited, and M/s. Wonderful Mercantile Private Limited (hereinafter collectively referred to as the “Transferor Companies”) with M/s. Royal Securities Limited (the “Transferee Company”) has become effective.
b) In accordance with the approved Scheme and consequent accounting treatment, a debit balance of Rs. 51,36,89,590/- has arisen in the Capital Reserve of the Petitioner Company.
c) In order to accurately and fairly reflect the books of accounts and for better presentation of the financial position of the Company, the Board of Directors has decided to write off the negative balance lying in the Capital Reserve Account against the Securities Premium Account in accordance with the provisions of Section 66 read with Section 52 of the Companies Act, 2013, and National Company Law Tribunal (Procedure for reduction of share capital of Company) Rules, 2016.
d) Under Section 52 of the Companies Act, 2013, the balance in Securities Premium Account can only be utilized for purposes specified therein and in any other manner by complying with the provisions of Section 66 of the Companies Act, 2013 in respect of reduction of Securities Premium.
e) The reduction envisaged under this Scheme will not result in any change in the shareholding of the members of the company and would not in any way have any adverse effect on the company’s ability to honour its commitments o
