TMI Blog2003 (9) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... Company formerly known as W.S. Insulators of India Limited was incorporated on the 23rd day of August, 1961 as a Public Limited Company under the provisions of the Companies Act, 1956 (hereinafter referred to as the "Act"). The name of the Petitioner Company was changed to its present name pursuant to section 21 of the Act and the Registrar of Companies issued a fresh Certificate of incorporation consequent on change of the name on July 15, 1987. As on December 31, 2001, the Authorised share capital of the Company was Rs. 30,00,00,000 divided into 2,00,00,000 equity shares of Rs. 10 each and 10,00,000 redeemable preference shares of Rs. 100 each. The issued and paid up capital of the Petitioner Company as on December, 31, 2001 was Rs. 22,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13.05 crores in addition to a sum of Rs. 6.13 crores advanced to W.S.T.L. for its operations over the years. In view of the above position the sum of Rs. 19.18 crores standing to the debit of WSTL consisting of the amounts advanced and arising on the discharge of Corporate guarantee obligations have become bad and irrecoverable. The Petitioner Company was profitable for several years and had an uninterrupted dividend payment record for 20 years from 1977 to 1997. The accumulated losses in the books of the Petitioner Company as on 31‑12-2001 is Rs. 20.39 crores. Even though the Company is returning to profitable working, it would not be possible to declare dividend to its shareholders until the existing losses are wiped out in full. Ke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not also in any way adversely affect the normal operations of the Company and its ability to meet its commitments. 4. The salient features of the scheme of Arrangement are set out in the petition and the Scheme of Arrangement was approved by the Board of Directors of the Petitioner Company in its meeting held on 8-2-2003. This Court by Order dated 20-3-2003 in C.A. No. 327 of 2003 directed the convening of the meeting of the shareholders of the Petitioner Company and after complying with all the formalities, the separate meetings of shareholders of the Equity shareholders and Preference Shareholders of the Petitioner Company were held. The Chairman of the meetings has filed two reports stating that the scheme of arrangement has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same object and whether the provisions relating to reduction of capital can be said to have been substantially complied with under such arrangement. He has further stated that section 390( b ) defines an arrangement as "including" a re-organisation of share capital. The definition is thus not exhaustive or the types of arrangements contemplated but is only an inclusive definition. The question of the ambit of the word "arrangement" came up for consideration before the Bombay High Court in Investment Corpn. of India Ltd., In re [1987] 61 Comp. Cas. 92, and the High Court has held that the word arrangement is an inclusive definition and contemplates all arrangements and not only the re-organisation of share capital. 8. The learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irrecoverable Loans and Advances and carry forward Losses are intended to be set off against the Share Premium Account held under the head "Reserves and Surplus". 11. A further indication that a reduction of capital is possible by way of a Scheme of Arrangement can also be seen from rule 85 of the Companies (Court) Rules. In the present case, as stated earlier, the Petitioner Company could resume dividends to its shareholders at the earliest without the need for them to wait till the entire losses are set off against the profits made by in future years. This apart, it is also to be noted that there will be no dilution in the security available to the charge holders of the Company consequent to the implementation of the Scheme. Further t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
