Allowed

Kjmc Financial Services Ltd. v. ---------------------------------------------

Bombay HC25 Jul 2008CP/258/2008

Case brief

AI extract

What is this about?

The Bombay High Court made absolute the petition seeking confirmation of the adjustment of the Securities Premium Account against accumulated losses and deferred tax liabilities to extinguish accounts of a discontinued leasing division.

What did the court decide?

Petition made absolute; notice published in newspapers and Government Gazette; parties directed to act on ordinary copy.

Kjmc Financial Services Ltd. Vs… — Company and Corporate | Bombay HC (2008)

¶1

 -: 1 :-

¶2

 IN THE HIGH COURT OF JUDICATURE AT BOMBAY

¶3

 ORDINARY ORIGINAL CIVIL JURISDICTION

¶4

 COMPANY PETITION NO.258 OF 2008

¶5

 CONNECTED WITH

¶6

 COMPANY APPLICATION NO.395 OF 2008

¶7

 In the matter of the Companies Act,

¶8

 1956 (1 of 1956)

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And

¶10

 In the matter of Section 78 and Section
 100 to 104 of the Companies Act, 1956.

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And

¶12

 In the matter of reduction of share

¶13

 capital of M/s.KJMC Financial Services

¶14

 Limited

¶15

 M/s KJMC Financial Services Limited : Petitioner

¶16

 Mr.Sanjay Chaturvedi i/b. Malvi Ranchoddas & Co., for the
 Petitioner.

¶17

 Mr.C.J.Joy i/b. S.K. Mohapatra for Regional Director.

¶18

 CORAM : S.A.Bobde, J.

¶19

 Dated : 25th July 2008.

¶20

 P.C.:

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 1. Heard learned Counsel for the Parties.

¶22

 -: 2 :-

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 2. The Sanction of the Court has been sought for
 reduction of Share Capital as approved in a Special
 Resolution passed at the Extra Ordinary General Meeting
 of the Equity Shareholders of the Petitioner Company held
 on 8th December 2007 in terms of the Minutes:-

¶24

 "1) "RESOLVED THAT pursuant to Section 31 and all

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 other applicable provisions, if any, of the
 Companies Act, 1956, the Articles of Association of
 the Company be altered as follows:

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 In Article 10(c), Article 13, Article 22 and
 Article 193(b)(1) for the word "Share Premium
 Account" the word "Securities Premium Account" be
 substituted."

¶27

 In Article 13 the following new proviso may be
 added:

¶28

 "Provided further that any amount standing to the
 credit of Securities Premium Account may also be
 utilized/applied from time to time by Special
 Resolution and in accordance with the provision of
 the law."

¶29

 -: 3 :-

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 2) "RESOLVED THAT pursuant to Sections 78, 100 and
 other applicable provisions if any, of the
 Companies Act, 1956, Articles 13 and 22 of the
 Articles of Association of the Company and subject
 to the confirmation of the Hon’ble High Court of
 Judicature at Bombay, an amount of Rs.8,55,13,830/-
 (Rupees Eight Crores Fifty Five Lacs Thirteen
 Thousand Eight Hundred and Thirty only) out of the
 balance standing in the Securities Premium Account
 of the Company be adjusted/utilized as stated
 below:

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 Sr. No. Particulars Rs.
 ------ -------------------------- -----------
 Assets/Liabilities/Losses to
 be written off against
 Securities Premium Account:
 --------------------------------------------------
 1. Write off the Net fixed Assets
 given on Lease at WDV (after 5,42,354
 adjusting Security Deposits)
 2. Reversal of accumulated Lease
 Equalization Account adjust- 11,38,72,279
 ment in respect of the Leased
 assets stated at item no.1
 3. Reversal of Deferred Tax
 Liability in respect of the (7,15,76,360)
 Leased assets stated at item
 no.1
 4. Profit & Loss Account Debit 4,26,75,557
 Balance
 Amount to be written off
 against Securities Premium 8,55,13,830
 Account

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 -: 4 :-

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 "RESOLVED FURTHER THAT for the purpose of giving
 effect to the above resolution and for the removal
 of any difficulties/doubts, the Board of Directors
 of the Company (hereinafter referred to as ‘The
 Board’ which term shall be deemed to include any
 Committee or any person which the Board may
 nominate/constitute to exercise the powers
 conferred to the Board under this resolution) be
 and is hereby authorized to do all such acts,
 deeds, matters and things as it may in its absolute
 discretion, deem necessary, expedient usual or
 proper and to settle any question or difficulty
 that may arise with regard to

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 utilization/adjustment of.

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 3. The reasons for passing aforesaid Special Resolution
 is that the Petitioner Company intends to adjust its
 books, without any reduction of capital, by way of
 writing back the deferred tax liability of Rs.7,15,76,360
 (Rupees Seven Crore Fifteen Lakhs Seventy Six Thousand
 Three Hundred and Sixty only) against the net fixed
 assets amounting to Rs.5,42,354/- (Rupees Five Lacs Forty
 Two Thousand Three Hundred and Fifty Four only) and
 accumulated amount of Rs.11,38,72,279/- (Rupees Eleven
 Crore Thirty Eight Lakhs Seventy Two Thousand Two Hundred

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 -: 5 :-

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 and Seventy Nine only) lying in Lease equalization

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 account of the said leasing division created in
 accordance with the recommendations of the Institute of
 Chartered Accountants of India, as set out in Guidance
 Note on Accounting for Leases. The adjusted net assets
 would be as under:

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 Particulars Rs.
 ---------------------------------------------------
 A Net fixed Assets 5,42,354/-

¶40

 B Accumulated Amount lying in
 lease equalization Amount created
 in accordance with the recommen- 11,38,72,279/-
 dations of the Institute of
 Chartered Accountants of India
 as set out in Guidance Note on
 Accounting for Leases

¶41

 -------------
 Total (A + B) 11,44,14,633/-

¶42

 Less Deferred tax liability 7,15,76,360/-
 Adjusted net assets 4,28,38,273/-

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 The Adjusted net assets of Rs.4,28,38,273/- (Rupees Four

¶44

 Crores Twenty-Eight lakhs Thirty-Eight Thousand two
 Hundred and Seventy-Three only) have been either eroded
 or are unrepresented by the available asset, hence it is
 proposed that the same be reduced against the Securities
 Premium Account. In addition to the adjustment as
 aforesaid, the carried forward loss in the profit and
 loss account as on 31st March 2007 aggregating to
 Rs.4,26,75,557/- (Rupees Four Crores Twenty Six Lakhs
 Seventy Five Thousand Five Hundred and Fifty Seven only)

¶45

 -: 6 :-

¶46

 is proposed to be adjusted against the securities premium
 account. Thus the Applicant Company will be required to
 adjust Rs.8,55,13,830/- (Rupees Eight Crores Fifty Five
 Lacs Thirteen Thousand Eight Hundred and Thirty only) in
 its books of accounts against security premium account.
 The effect of the above adjustment will be that all
 accounts relating to leasing division upon discontinuance
 of the said division will get extinguished.

¶47

 4. An Order of dispensation was passed by this Court in
 respect of the procedure under Section 101(2) of the
 Companies Act, 1956 on 28th March 2008 in the Company
 Application No.395 of 2008.

¶48

 5. None of the parties concerned have come forward to
 support or oppose the Petition.

¶49

 6. In pursuance to the direction of the court an
 Affidavit dated 23rd July 2008 has been filed by the
 Regional Director stating that the proposed utilization
 of Securities Premium Account is not prejudiced to the
 interest of creditors, Shareholders and public.

¶50

 7. In these circumstances, the requisite statutory
 procedure has been fulfilled. The Petition is made
 absolute in terms of prayer clause (a) and (b).

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 -: 7 :-

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 8. All concerned parties to act on ordinary copy of the
 order and the from of minutes annexed to this Petition.
 The Petitioner to publish notice in the same Newspaper
 i.e. Maharashtra Times (Marathi) and the Free Press
 Journal (English), circulated in Mumbai and in the
 Government Gazette about registration of Order and
 minutes of reduction by the concerned Registrar of
 Companies, Mumbai.

¶53

 S.A. Bobde, J.

Kjmc Financial Services Ltd. v. ---------------------------------------------

Case brief

What is this about?

What did the court decide?

Kjmc Financial Services Ltd. v. ---------------------------------------------

Case brief

What is this about?

What did the court decide?

What the court decided

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