Satish Kumar Mittal, J. - (1.) PRAKASH Industries Limited has filed this petition under Section 101 of the Companies Act, 1956 (hereinafter referred to as "the Act") for confirmation of the reduction of share capital due to utilization of its securities premium account for the purpose of meeting the deferred tax liability in terms of Accounting Standard -22, issued by the Institute of Chartered Accountants of India, as resolved by the special resolution passed by the extraordinary general meeting of the company held on 15 -12 -2006; and further for dispensing with the procedural requirement of Section 101(2) of the Act, as the proposed reduction of share capital does not involve either diminution of any liability in respect of unpaid capital or payment to any shareholder of any paid up capital, and the petitioner -company has no creditor or any class of them entitled to object it. Initially, the petitioner -company was registered on 31 -7 -1980, under the provisions of the Act, as a company limited by shares in the name of Prakash Pipes and Industries Limited in the State of Haryana. Subsequently, the name of the petitioner -company was changed to Prakash Industries Limited and a fresh certification of incorporation was issued by the Registrar of Companies. The registered office of the petitioner -company is situated at 15 km stone, Delhi Road, Hissar. The main objects of the petitioner -company are manufacture of all kind of PVC pipes, picture tubes, worsted woollen yarn, steel products like sponge iron, billets, bloom, channel, structure, generation of power through any mode and mining of coal and iron ore, etc., and other objects as set out in the memorandum of association thereof. The memorandum and articles of association of the petitioner -company has been annexed with the petition as annexure P -2. The authorised share capital of the petitioner -company is Rs. 160 crores divided into 15 crores equity shares of Rs. 10 each and 10 lakhs preference shares of Rs. 100 each, of which 98313106%quity shares of Rs. 10 each and 8,00,000 preference shares of Rs. 100 each have been fully paid up or credited as fully paid up and 10910808 equity shares of Rs. 10 each have been paid up to the extent of Rs. 2.50 per share.
(2.) IT is stated in the petition that Article 47 of the articles of association of the company provides that the company may, from time to time, by special resolution reduce its capital in any manner permitted by law. It is further stated that Articles 123(3) of the articles of association further provides that the securities premium account and capital redemption reserve fund may, for the purpose of the articles be applied for paying up of unissued shares to be issued to the members of the company as fully paid bonus shares and for various other purposes in accordance with the provisions of law for the time being in force. The board of directors of the petitioner -company in its meeting held on 11 -11 -2006, resolved to reduce the share capital by utilizing the securities premium account of the petitioner -company for the purpose of meeting the "deferred tax liability" in terms of Accounting Standard -22, subject to approval of its shareholders and confirmation by this court. A copy of the resolution has been annexed as annexure P -3.
(3.) IN the extraordinary general meeting of the company held on 15 -12 -2006, the following special resolution was passed: Resolved that pursuant to Section 78, read with Section 100 and other applicable provisions, if any, of the Companies Act, 1956, and Article 123(3) of the articles of association of the company and subject to the confirmation by the Punjab and Haryana High Court at Chandigarh or National Company Law Tribunal or any other authority, if required, as the case may be, the company be and is hereby authorised to utilize the credit balance in the securities premium account of the company for the purpose of meeting the 'deferred tax liability' in terms of Accounting Standard -22 issued by the Institute of Chartered Accountants of India, Le., 'accounting for taxes on income' and for 'deferred revenue expenses' and for 'capital issue expenses' of the company. Resolved further that the purpose of giving effect to the aforesaid resolution, the board of directors of the company (including any committee of the board for this purpose) be and is hereby authorized to take all such acts, deeds, matters and things as may be considered necessary.;