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2009 (12) TMI 527 - HC - Companies LawScheme of Arrangement - Held that:- When the equity shareholders approved special resolution with regard to adjusting CRR, nothing prevented passing a similar special resolution with regard to transfer of capital reserve and/or FCCB benefit to RRA. When the Scheme of Arrangement is proposed by Board of Directors with regard to three aspects, and a special resolution is passed only with reference to one subject concurrence of majority shareholders cannot be inferred with reference to other aspects. This is also one of the reasons which would disqualify the petition for approval. This Court has carefully perused the annual reports and Balance Sheets of Aurobindo for the years 2000-01 to 2007-08. In none of these, there is no indication for utilizing capital reserve for the purposes intended now by transferring to RRA. As capital is not a free reserve, it cannot be allowed for payment of any future liability or for depreciation of assets or for bad debts. As noticed supra, Aurobindo proposes to transfer capital reserve account to RRA to write-off capital lost and other losses. This is not permissible under law. Therefore, this Court is not inclined to approve the Scheme of Arrangement as proposed.
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