In a summons for direction, the Bombay High Court noted the applicant company's plan to reduce its capital from Rs. 10 to Rs. 5 per share. The court observed that specified procedures could be dispensed with given the company's financial status.
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IN THE HIGH COURT JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY SUMMONS FOR DIRECTION NO. 130 OF 2013
In the matter of Sec. 78, 80, 100, 101
to 103 and 105 of the Companies Act, I of 1956;
AND
In the matter of reduction of share capital of M/s. Zenith Global Consultants Limited
Zenith Global Consultants Limited, ) a Company incorporated under the ) provisions of the Companies Act, I of ) 1956 having its registered office at ) Saurab Modi Estate, LBS Marg, Opp.) Shreyas Cinema, Ghatkopar (W), ) Mumbai – 400 086 ) . . . . . . Applicant Called Summons for Directions
Mr. B. B. Parekh with Mr. A. W. Ansari, Advocates for the Applicant Company
CORAM :- N. M. JAMDAR, J. DATE :- 22ND FEBRUARY, 2013
MINUTES OF THE ORDER
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UPON THE APPLICATION of the abovenamed Applicant Company by a Summons for Direction AND UPON HEARING Mr. B. B. Parekh, Advocate for the Applicant Company AND UPON READING the Affidavit of Dr. Bijlani, Director of the Applicant, dated 4th December, 2012 in support of Summons for Directions AND additional Affidavit of Applicant dated 20th December, 2012 and further additional Affidavit dated 9th January, 2013 and Second further affidavit dated 15th January, 2013 AND the Applicant Company having passed a Special Resolution at the Annual General Meeting held on 28th September, 2012 of the Equity Shareholders annexed as Exhibit- ‘F’ to the Company Summons for Directions AND in view of the averments made in paragraph (8) and (9) of the Affidavit-in-support of the Summons for Direction, inter-alia stating that the Applicant Company is not carrying on with any substantial business activity at the present and there is no prospect of substantial business activity being undertaken in near foreseeable future and company is having sufficient assets in hand, and since, the company is not carrying with any business activity the huge capital of the Company is lying blocked, therefore, the Company desires to reduce its capital by reducing the nominal face value of the Share from Rs. 10 to Rs. 5 and the reduction be effected by returning to the holders of the 61,94,832 Equity Shares of face value of Rs. 10/- that have been issued paid up capital to the extent of Rs. 5/- share such capital being in excess of the wants of the Company. The Applicant in paragraph (10) of the Affidavit-insupport states that there are no secured and unsecured creditors of the Applicant and as stated in paragraph (3) of the Additional Affidavit-in-support dated 20th December, 2012 the Applicant has paid over sole trade creditor and in respect of current liabilities the applicant states that the creditors are income tax authorities etc and those were secured by putting it in escrow account with the HDFC bank AND in paragraph (11) of the Affidavit-in-support the Applicant company states that no creditor is likely to be prejudiced as
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much as the proposed reduction of share capital is not involving diminution of any liability in respect of any uncalled capital but contemplates repayment of excess capital not needed in the business of the Company as much as there is sufficient liquidity available. In view of the above, the procedure prescribed under Section 101 (2) is dispensed with.
2 issues framed by the court
Whether the relevant creditors were notified in reduction of capital
Whether the procedure under Section 101(2) can be dispensed with
6 provisions across 1 enactments
Zenith Global Consultants Limited
N. M. JAMDAR
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
