- (1.) This is a petition filed under Sections 100 to 104 of the Companies Act, 1956 to obtain sanction of this court qua its prayer for reduction of share capital obtaining in the books of M/s.Pee Yes Yem Hk Holdings Private Limited (hereafter referred to as the petitioner company).
(2.) The captioned petition, along with an application being: CA No. 481/2016, came up before this court for hearing, for the first time, on 29.04.2014. This court, on that date, for the reasons given in the order of even date, dispensed with the procedure laid down in Section 101(2) of the 1956 Act. Accordingly, CA No. 481/2016 was disposed of. 2.1. Furthermore, in so far as the captioned petition is concerned, notice was issued to the Regional Director (in short the RD), which was accepted. Direction was also issued for serving a copy of the petition on the Registrar of Companies (in short the ROC). In addition thereto, the petitioner company was directed to carry out publication in the Business Standard (English) and Malai Malar (Tamil). 2.2. Since then, the petitioner company has filed an affidavit dated 11.07.2016 demonstrating publication in the two newspapers referred to above. The RD has also filed its reply/ affidavit which takes into account the response of the ROC.
(3.) This petition has, thus, been filed in the background of the following facts: 3.1. The petitioner company was incorporated on 15.06.2011 under the provisions of the 1956 Act as a private limited company. As on 31.03.2015, as per its latest audited balance sheet, it had an authorized share capital of Rs.5 crores, divided into 50,00,000 equity shares of face value of Rs.10/- each. Furthermore, as on that date, it has issued, subscribed and paid-up capital, of Rs.5,00,00,000/- comprising of 50,00,000 equity shares of face value of Rs.10/- each. 3.2. Evidently, the Board of Directors (BOD) of the petitioner company at their meeting held on 08.01.2016 approved the reduction of the share capital in accordance with the provisions of Section 78 read with Sections 100 to 104 of the 1956 Act. Resolution to that effect was passed at this meeting. 3.3. Furthermore, the petitioner company also decided to give a notice to the shareholders for convening an Extraordinary General Meeting (EOGM), for enabling them, to consider, passing a special resolution qua the proposed reduction in share capital. Accordingly, notices of the EOGM, which was to be convened on 22.2.2016, along with explanatory statements were dispatched to the shareholders of the petitioner company. 3.4. Consequent thereto, on 22.2.2016, the EOGM of the shareholders was convened, whereat a special resolution was passed approving the reduction in the share capital of the petitioner company. 3.5. The said resolution of the petitioner company, for the sake of convenience, is extracted hereinbelow: "RESOLVED THAT pursuant to the provisions of Sections 100 to 104 of the Companies Act, 1956 and subject to the confirmation of the Hon'ble High Court of Madras, the Paid-up Share Capital of the Company be and is hereby reduced from Rs. 5,00,00,000/- (Rupees Five Crores Only) consisting of 50,00,000 (Fifty Lakhs) Equity Shares of Rs.10/- (Rupees Ten only) each to Rs.4,95,00,000 (Rupees Four Crores Ninety-five Lakhs only) divided into 49,50,000 (Forty-nine lakhs and Fifty Thousand) Equity Shares of Rs.10/- (Rupees Ten only) by extinguishing the 50,000 (Fifty Thousand) Equity Shares as set out herein below, an aggregte sum of Rs.5,00,000/- (Rupees Five Lakhs only) by adjusting the debit balance in Profit and Loss Account representing the Face Value of Rs.10/- (Rupees Ten only) per share and thereby extinguishing all such 50,000 (Fifty Thousand only) Equity Shares which is lost and is unrepresented by available assets. JUDGEMENT_299_LAWS(MAD)7_2016.html 3.6. A perusal of the aforesaid resolution would show that the shareholders at the EOGM, approved reduction of the issued and paid-up share capital of the petitioner company, as obtaining on 31.03.2015, from Rs.5,00,00,000/- to Rs. 4,95,00,000/-. 3.7. Notably, in the petition, it is averred that, since, the petitioner company is expected to generate sufficient cash from its operations to meet its existing requirement, which would include its business operations, it is proposed to reduce the Paid-up equity share capital by Rs.5,00,000/- as on 31.3.2015, as it is in excess of its needs. 3.8. The petitioner company has obtained a certificate from the Chartered Accountant (CA) dated 23.03.2016, whereby, it is certified that the petitioner company does not have any secured creditor. The CA has also issued another certificate of even date, whereby, it is certified, that the petitioner company owes unsecured debts of Rs.8,16,53,423/. Pertinently, the unsecured creditor is none other than the Director of the petitioner company, who has given his consent to the proposed reduction in the Paid-up share capital.;