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CP No.38/Chd/Hry/2021

THE NATIONAL COMPANY LAW TRIBUNAL

CHANDIGARH BENCH, CHANDIGARH

(through web-based video conferencing platform)

CP No.38/Chd/Hry/2021

Under Section 66 read with

Section 52 of the Companies

Act, 2013

IN THE MATTER OF:

Escorts Limited

having its registered office at

15/5, Mathura Road, Faridabad, Haryana – 121003

CIN No.L74899HR1944PLC039088

PAN:AAACE0074B

…. Petitioner Company

Judgment delivered on: 23.12.2021

Coram: HON’BLE MR. HARNAM SINGH THAKUR, MEMBER (JUDICIAL)

HON’BLE MR. SUBRATA KUMAR DASH, MEMBER (TECHNICAL)

Present through Video Conferencing : -

For the Petitioner Companies:

1) Mrs. Munisha Gandhi, Senior Advocate

2) Mr. Vaibhav Sharma, Advocate

3) Ms. Salina Chalana, Advocate

For Income Tax Department:

1) Mr. Yogesh Putney, Senior Standing Counsel

Per: SUBRATA KUMAR DASH, MEMBER (TECHNICAL)

JUDGMENT

The Petitioner Company was incorporated on October 17, 1944, in Lahore

under the provisions of the Companies Act, 1913, under the name ‘Escorts

(Agents) Limited’. Further, consequent to the fresh Certificate of Incorporation

dated January 18, 1960, issued upon change of name by the Registrar of

Companies, Delhi and Haryana, the name of the Petitioner Company was

changed to ‘Escorts Limited’. The shares of the Petitioner Company are listed on

BSE Limited (“BSE”), the National Stock Exchange of India Limited (“NSE”) and

the Delhi Stock Exchange Limited (“DSE”). The registered office of the Petitioner

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CP No.38/Chd/Hry/2021

Company is currently situated at 15/5, Mathura Road, Faridabad - 121003,

Haryana, India. A certified true copy of the Certificate of Incorporation is annexed

in the main petition and marked as Annexure-A.

2.

The Petitioner Company is engaged in the business of manufacturing,

developing, designing, improving, hiring, repairing, buying, selling, dealing in

importing and exporting ferrous and non-ferrous castings and of all kinds and all

machinery, implements, spare parts, appliances, apparatuses, lubricants and all

other things capable of being used therewith or in manufacture, maintenance and

working thereof.

3.

The petitioner company submits that the proposed preferential issue and

allotment has been approved by the Board of Directors of Company keeping in

view the future outlook of the Company, its growth targets and prospects,

additional funding requirement for the purpose of further expansion of its agri-

machinery business. And also with the aim of attracting a globally reputed player

such as the Investor in the Petitioner Company to meet its business objectives

and at the same time to ensure that there is no dilution in shareholding of the

existing shareholders (including public shareholders) of the Petitioner Company

in the long run. The same has been submitted in para 13 of the petition.

4.

The Petitioner Company submits that by Article 8 of the Articles of

Association of the Petitioner Company, it is provided that the Petitioner Company

may, from time to time, by Special Resolution, reduce its share capital in any

manner permitted by law. Article 8 of the Articles of Association is reproduced

below:-

“8. The Company may (subject to the provisions of Section 52, 55, 66

and any other provisions of the Act) from time to time by Special

Resolution, reduce its capital and any Capital Redemption

Reserve Fund or other premium account in any manner for the time

being authorised by law.”

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CP No.38/Chd/Hry/2021

5.

The

background, reasons/rationale,

commercial justification of the

reduction of share capital by the Petitioner Company is as under (Annexure-Q of

the petition):-

“i.

The proposed reduction of the equity share capital of

Company is being undertaken in accordance with the

provisions of Section 66 read with Section 52 of the Act and

the rules made thereunder and specifically the Rules, which

permit a company to undertake a reduction of its share

capital in any manner, read with the Listing Regulations (as

defined hereinafter) and the SEB