- (1.) Per Shri V.P. Singh, Member (Judicial) This is a petition filed under section 66 of the Companies Act, 2013 read with the National Company Law Tribunal (Procedure for reduction of share capital of company) Rules, 2016. The petitioner company seeks approval of this Tribunal qua the special resolution passed at the Extra Ordinary General Meeting (EOGM) of the members of the company held on 12th April,2017 wherein it was resolved that pursuant to the request of one of the major shareholders of the company consequent to the directives of the Income Tax Settlement Commission vide order under section 245D(4) of the Income Tax Act, 1961 dated 30.03.2017 served to the said shareholder and pursuant to the applicable provisions of the Companies Act, 2013 (including any statutory modification or re-enactment thereof) , Memorandum and Articles of Association of the Company, and subject to confirmation by the Hon'ble National Company Law Tribunal and such other approvals, consents, permissions and sanctions as may be necessary to be obtained from appropriate Governmental authorities, departments, offices, institutions, bodies, agencies and third parties and such conditions as may be prescribed while granting such approvals, consents, permissions and sanction, which may be agreed by the Board of Directors, the approval of the members of the company be and is hereby accorded towards cancellation of 19810 equity shares of Rs. 100/- each, by reducing the paid-up share capital of the company which shall be effected by way of:- (a) a selective extinguishment and cancellation of 19810 equity shares which were issued/allotted at a premium of Rs.13,511/- (Rupees thirteen thousand five hundred eleven only) per share to Mr. Naresh Kumar, and having an aggregate paid-up value of Rs. 19,81,000/- (Rupees nineteen lakhs eight one thousand only) and securities premium of Rs.26,76,52,910 (Rupees twenty six crores seventy six lakhs fifty two thousand nine hundred ten only) ("Proposed Capital Reduction") ; and (b) refund of 103 Nos. of Paintings and Sculptures (Fixed Assets) which were acquired from Mr. Naresh Kumar at the time of issuance/allotment of aforesaid equity shares for consideration other than cash, amounting to book value of Rs.30,93,00,000/- (Rupees thirty crores ninety three lakhs only) to Mr. Naresh Kumar in lieu of cancellation of 19810 equity shares of Rs.100/- each and receiving back of the balance amount of sale consideration amounting to Rs.3,96,66,090 from Mr. Naresh Kumar.
(2.) Section 66 of the Companies Act, 2013 came into force w.e.f. 15.12.2016 which corresponds to erstwhile section 100-104 of the Companies Act, 1956.
(3.) The broad facts in the background of the present petition are that the above named company, the petitioner herein ( 'the company') was registered on the 17th day of January, 1967 under the provisions of the Companies Act, 1956 as a company limited by shares with a share capital. The capital of the company is Rs. 1,00,00,000/-(Rupees One Crore only) divided into 50,000 (Fifty Thousand) equity shares of Rs.100/-(Rupees Hundred only) each and 50,000 (Fifty Thounsand) unclassified shares of Rs.100/- (Rupees Hundred only) each of which 39623 (Thirty Nine Thousand Six Hundred Twenty Three) equity shares have been issued and have been fully paid-up. 3.1. Article(s) 37 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. 3.2. In the financial year 2006-07, the company had purchased 103 Nos. of Painting and Sculpture from Mr. Naresh Kumar, son of Late Mr. G.D. Kumar, aged around 88 years, resident of 9/1, Middleton Street, Kolkaata - 700071, one of the shareholders and director of the company, at a total consideration of Rs.30,93,00,000/- (Rupees Thirty Crore Ninety Three Lakh only) . In lieu of the aforesaid purchase, the company had issued / allotted him 19,810 Nos. Of equity share of Rs.100/- each at a premuum of Rs.13,511/- per share aggregating to Rs.26,76,52,910/- (Rupees Twenty Six Crore Seventy Six Lakh Fifty Two Thousand only) on 29.03.2007 to said Mr. Naresh Kumar. The rest amounting to Rs.3,96,66,090/- (Rupees Three Crore Ninety Six Lakh Sixty Six Thousand Ninety only) was adjusted with Mr. Naresh Kumar by way of settlement of his loan amount of Rs.2,38,12,000/- (Rupees Two Crorw Thirty Eight Lakh Twelve Thousand only) and the payment of Rs.1,58,54,090/- (Rupees One Crore Fifty Eight Lakh Fifty Four Thousand Ninety only) in cash. During a settlement in relation to Income Tax dispute by said Mr. Naresh Kumar with Income Tax Settlement Commission, he had requested the company to treat the transaction with regard to the earlier sale of aforesaid paintings by him to company, as null and void and therefore to reverse the said transactions in the books of the company. Upon request of Mr. Naresh Kumar, the Board at its meeting held on 27th March, 2017 after having careful consideration and evaluation, has agreed to treat the aforesaid transaction earlier entered with him in the financial year 2006-07 as null and void subject to compliance with the relevant provisions of the Companies Act, 2013 and applicable Rules made thereunder. Accordingly, the aforesaid decision of the Board has also been submitted with the Income Tax Settlement Commission. On the basis of aforesaid settlement reached by Mr. Naresh Kumar, Income Tax Settlement Commission thereupon directed vide its order under section 245(D) of the Income Tax Act, 1961, dated 30.03.2017 to treat the transaction with regard to the earlier sale of aforesaid paintings and sculpture by him to company, as null and void and therefore to reverse the said transaction in the book of the company. At the request of Mr. Naresh Kumar on the basis of above directives as received from Income Tax Settlement Commission, the Board of Directors of the company at its meeting held on 7th April, 2017, has carefully considered and evaluated the proposal of a selective reduction, extinguish and cancellation of 19810 equity shares of Rs.100/- each which were issued at a premium of Rs.13,511/- (Rupees Thirteen thousand five hundred eleven only) per share to Mr. Naresh Kumar, and having an aggregate paid-up value of Rs.19,81,000/- (Rupees Nineteen Lakhs Eighty One Thousand only) and Securities Premium of Rs.26,76,52,910/- (Rupees Twenty Six Crore Seventy Six Lakh Fifty Two Thousand Nine Hundred Ten only) . Therefore, the company has to reduce the Paintings and Sculptures Account (Fixed Assets) to the extent of Rs.30,93,00,000/- (Thirty Crore Ninety Three lakhs only) . According, the company shall cancel 19,810 Nos. of equity share of Rs.100/- by way of reducing the amount of Rs.l9,81,300/-(Rupees Nineteen Lakh Eighty One Thousand Three Hundred only) from its paid-up share capital of Rs.26,76,52,910/ (Rupees Twenty Six Crore Seventy Six Lakh fifty Two Thousand Nine Hundred Ten only) from its Securities Premium Account. The rest amounting to Rs. 3,96,66,090 (Rupees Three Crore Ninety Six Lakh Sixty Six Thousand Ninety only) shall be recovered in cash from Mr. Naresh Kumar. Pursuant to the provisions of Section 66 of the Companies Act, 2013, the shareholders of the company at their Extra-Ordinary General Meeting held on 12th April, 2017, have also confirmed and approved the aforesaid reduction of the paid-up capital of the company by way of Special Resolution. The Company has also in compliance with the provisions of Section 117 of the Companies Act, 2013, submitted the e-form No. MGT-14 with the Registrar of Companies on 01st May, 2017. The reduction of share capital shall not involve extinction or reduction of any liability in respect of unpaid share capital or cancellation of any paid-up share capital which is lost or is unrepresented by available assets. However, the reduction of share capital shall involve the refund of the fixed assets (103 nos. of painting and sculptures) valued at Rs. 30,93,00,000/- (Rupees Thirty Crore Ninety Three Lakhs only) .;