Allowed

M/s Menzies Bobba Ground Handling Services Pvt. Ltd., v. -

Telangana HC3 Dec 2014CP/235/2014

Case brief

AI extract

What is this about?

The court allowed a company petition filed under the Companies Act, 1956, seeking confirmation of a reduction in share capital. Upholding a special resolution, the court held that since the company was solvent and the reduction did not affect creditors, the petition was allowed.

What did the court decide?

The company petition was allowed; confirmation of share capital reduction ordered; directions to publish notice and inform the Registrar.

M/s Menzies Bobba Ground Handling Services Pvt… — Company and Corporate | Telangana HC (2014)

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HON’BLE SRI JUSTICE A.RAJASHEKER REDDY

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C.P.No.235 OF 2014

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O R D E R

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This Company Petition is filed under Section 100 to 102 of the Companies Act, 1956 seeking confirmation of the reduction of share capital.

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The facts of the case are that the petitioner company was incorporated on 09.05.2007 and 6-3-345/1/2, Flat No.102, Apurupa Classic, Road No.1, Banjara Hills, Hyderabad-500034, Telangana.

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The main objects of the petitioner company are to carry on the business of ground and ramp handling, passenger and baggage handling, air craft maintenance services and also the business of Cargo handling, forwarding, clearing and Booking agents for Air, Railways, Shipping and Transport Companies etc.,

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Its authorised share capital as on 31.07.2014 is Rs.50,56,48,108/(Rupees fifty crore fifty six lakh forty eight thousand one hundred and eight only) divided into 13,00,000 (Thirteen lakh only) equity shares of Rs.100/(Rupees one hundred only) each, 584 (Five Hundred and eighty four only) 15.75% class I compulsory convertible cumulative preference shares of Rs.643,137/-(Rupees six lakh forty three thousand one hundred and thirty seven only) each, 561 (Five hundred and sixty one only) of 0.01% class II compulsory convertible cumulative preference shares of Rs.100/- (Rupess one hundred only) each. The issued, subscribed and paid capital is Rs.48,78,93,008/- (Rupees forty eight crore seventy eight lakh ninety three thousand and eight only) divided into 11,22,449 (Eleven lakh twenty two thousand four hundred and forty nine only) fully paid up equity shares of Rs.100/- (Rupees one hundred only) each, 584 (Five hundred and eighty four only) 15.75% class I compulsory convertible cumulative preference shares of Rs.643,137/- (Rupees six lakh forty three thousand one hundred and thirty seven only), each and 561 (five hundred and sixty one only) 0.01% class II compulsory convertible cumulative preference shares of Rs.100/- (Rupees one hundred only) each.

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Article 4.11 of the Articles of Association of the petitioner company provides reduction of capital by way of special resolution reduced in accordance with Section 100 of the Companies, Act, 1956.

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The reasons mentioned for reduction of share capital are as follows: It is submitted that the petitioner company is engaged in rendering ground handling services at the airports. The petitioner company has total paid up share capital of Rs.48.79 crores. During the course of its business, the Company has generated the reserves and surplus to an extent of Rs.1.79 crores as on 31.07.2014 and built up various current assets andhuge balance of cash and cash balances after meeting the current liabilities, and has a net worth of Rs.50.58 crores. After an analysis of the various options available to the petitioner company, the Board felt that the restructuring of the company’s existing capital structure becomes imperative. The Board of Directors of the petitioner company after deliberations on the business model, the revenues and after considering other business factors felt that the petitioner company is over capitalized and does not require such a huge capital which it cannot profitably utilize in its business. The Board of Directors of the petitioner company felt that in view of the excess funds available with the petitioner company it has been proposed to pay the part of the share capital to its shareholders which is in excess of wants of the company. After considering the various options available to the petitioner company, the Board of Directors felt that the reduction of 15.75% class I compulsory convertible cumulative preference share capital and 0.01% class II compulsory convertible cumulative preference share capital by returning the excess capital which is in excess wants of the company to the shareholders is the only option available to the company.

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Accordingly, the petitioner company called the extraordinary general meeting on 08.09.2014 after due notice and passed special resolution agreeing to reduce the share capital subject to confirmation of this Court.

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This company petition was admitted on 29.10.2014 and petitioner was directed to publish the admission of hearing of the petition in two daily newspapers. The learned counsel for the petitioner filed a memo dated

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03.12.2014 stating that he has not received any objections in pursuant to the advertisement published. It is also submitted that the petitioner company has no outstanding dues to any of its secured and unsecured loans.

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It is also submitted that reduction of share capital does not involve diminution of any liability in respect of unpaid capital and there are no partly paid up shares but the reduction of capital involves the reduction of paid up share capital to the shareholders of the petitioner company to the extent of Rs.325,427,322/- (Rupees thirty two crore fifty four lakh twenty seven thousand three hundred and twenty two only) divided into 506 (five hundred and six only) 15.75% class I compulsory convertible cumulative preference shares of Rs.643,137/-(Rupees six lakh forty three thousand one hundred and thirty seven) each and Rs.48,700/- (Rupees Forty eight thousand and seven hundred ony) divided into 487 (Four hundred and eighty seven only) 0.01% class II compulsorily convertible cumulative preference shares of Rs.100/- (Rupees one hundred each).

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It is further submitted that the proposed reduction in share capital will not prejudicially affect the petitioner company or its shareholders and the proposed reduction would not in any way adversely affect the ordinary operations of the petitioner company or the ability of the company to honour its commitments or to pay its debts, if any that may arise in the ordinary course of business. The petitioner company further submits that the company is fully solvent and has adequate liquidity and cash reserves to meet all its financial obligations and therefore the interest of its trade creditors shall not in any way be prejudicially affected.

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It is further submitted that the reduction of capital by reducing out of the capital which is in the excess of the wants of the petitioner company and therefore it would not be in the interest of the petitioner company to append words “and reduced” in the name of the petitioner company which may be dispensed with.

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In view of the above facts and circumstances, I do no see any legal hurdle in confirming the reduction of share capital as per the special resolution dated 08.09.2014.

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Accordingly, the company petition is allowed and the learned counsel for the petitioner is directed to publish the confirmation of reduction of share capital in two daily newspapers i.e., Business Standard (English) and Andhra Bhoomi (Telugu) and the same shall be communicated to the Registrar of Companies within thirty (30) days from the date of receipt of copy of the order.

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__________________________ A.RAJASHEKER REDDY,J Date: 03.12.2014 dv

M/s Menzies Bobba Ground Handling Services Pvt. Ltd., v. -

Case brief

What is this about?

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M/s Menzies Bobba Ground Handling Services Pvt. Ltd., v. -

Case brief

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