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2021 (6) TMI 687 - Tri - Companies LawReduction of share capital - extinguishment of shares - whether the proposed reduction of capital by way of extinguishing the shareholding of 24 per cent. shareholder is just and equitable and not prejudicial to the interest of the outgoing shareholder? - HELD THAT:- In IL and FS Engineering and Construction Co. Ltd. v. Wardha Power Co. Ltd. [2012 (12) TMI 621 - ANDHRA PRADESH HIGH COURT] wherein it was held that in the case of a reduction of capital, a court cannot interfere with the discretion and commercial wisdom of the stakeholders and the board of directors. If the reduction is one which is properly passed by the shareholders who are treated equitably and have had the facts explained to them, and provided the creditors are safeguarded, the court will habitually sanction reductions. The net worth of the company as at March 31, 2019 before and after giving effect to the proposed reduction of share capital are INR 3,056.01 lakhs and approximately INR 3,001.26 lakhs (subject to adjustment based on the actual dollar rate on the date of payment), respectively - The capital reduction shall not adversely affect the company's ability to honour its commitments or meet its liabilities or settle the dues of all the creditors in the ordinary course of business and the company would continue to have a positive net worth after giving effect to the capital reduction. Therefore, the present reduction of the share capital shall not prejudice any creditors of the company. The reduction of share capital is contemplated as under the articles of association of the company - the settled law as laid down in several judicial decisions and the vital aspect that the outgoing shareholder, Mr. Gopi Suri Babu, has no objection to the proposed scheme of reduction, but has consented to receive the said consideration upon negotiations and mutual agreement between the parties, this Bench approves the reduction of capital without valuation of actual shares, by carving out an exception considering the extraordinary circumstances of this case. Application disposed off.
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