TMI Blog2016 (3) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... er Ms AparnaMudiam, Asstt. ROC for the Regional Director ORDER Rajiv Shakdher, J 1. This is a petition filed under Section 100 to 105 of the Companies Act, 1956 (in short the 1956 Act) read with Rules 11(1)(a)(3) and 46 of the Companies (Court) Rules, 1959 (in short the Rules) alongwith Section 66 of the Companies Act, 2013 (in short the 2013 Act). 2. In brief, the petitioner company seeks approval of this court qua the special resolution passed at the Extraordinary General Meeting (EGM) of its shareholders, convened on 06.12.2014, wherein, it was resolved that its (fully) paid up share capital be reduced to the extent it reflected the interest of public shareholders . 3. The petitioner company in this behalf avers that public shareholders constitute 5.47% of its total paid up share capital which, in real terms comprises of 2,43,470 equity shares of a face value of ₹ 10 each. 3.1 Therefore the position which obtains as on 30.09.2014 and, which I am told, continues to hold, is as follows :- S. No. Name of Shareholders No. of Shares %age 1. Promoters Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the appellate authority constituted under the SICA i.e. Appellate Authority of Industrial and Financial Reconstruction (in short, AAIFR) vide its order dated 28.07.1989, to wind up the petitioner company. This recommendation was made to this Court, under Section 20(1) of the SICA. 4.7 The petitioner company s woes were further compounded by the fact that, a company petition, being: CP 114/1989 was filed against it, on the ground that it was unable to repay its debts. 4.8 In the said petition, this court vide order dated 06.08.1991, directed, that the petitioner company be wound up. Consequent thereto, the Official Liquidator (OL) attached to this court was ordered to take over the assets of the petitioner company. 4.9 After a long gap, that is, in 2005, one Mr. N.K. Somani, the ex-Director and shareholder, approached this court, with a proposal, to revive the fortunes of the petitioner company. 5. Mr. N.K. Somani, apparently, proposed infusion of funds and also repayment of debts owed to the secured and unsecured creditors which included arrears qua dues owed to legal and statutory authorities. 5.1 Evidently, based on his request, Mr. N.K. Somani was given an op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued and paid up share capital of the petitioner company. 8. It needs to be noticed that the position as on 31.03.2014 was different, to that, which obtained on 30.09.2014, to which, I have made a reference right at the beginning of my discussion. As on 31.03.2014, the public shareholding i.e. equity stake held by persons other than persons in control was 56.32% which in real terms was equivalent to 2,43,470 equity shares. The remaining shares i.e. 43.68% were held by persons in control which, in real terms translated to 1,88,855 shares. 8.1 The change in the equity pattern as between public shareholders and persons in control occurred when, the shareholders of the petitioner company passed a special resolution at the EGM held on 25.03.2014. This occurred on account of a resolution being passed at the said meeting which enabled issuance of equity shares not exceeding 40 Lakh equity shares of ₹ 10 each at par to persons dehors their attribute of holding shares in the petitioner company, in consonance with the provisions of Section 81(1A) of the 1956 Act. 8.2 The object of the preferential issue appeared to be to pay off the unsecured creditors. In consonance with the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner company and, to liquidate the debts owed by it. It is, in this background, that Mr. N.K. Somani brought in Mr. B.K. Agarwal (i.e. its present director) as its strategic investor. This move was, evidently, successful, in as much as, secured and unsecured debts had been paid off, and permission was granted by this court, for institution of a scheme of arrangement. Accordingly, CA 1351/2012 was filed in consonance with the provisions of Section 391(1) and 393 of the 1956 Act. In the application, a prayer was made to recall the winding up order passed by this court. This court, though, directed convening of meeting of shareholders. The Chairperson appointed qua the meeting submitted a report, which revealed, that the shareholders of the petitioner company had consented to the revocation of the winding up order as also, its revival. 14.1 It is thus, averred, that this court vide order dated 19.07.2013 recalled the winding up in the background of the aforesaid short facts. 14.2 It is further submitted that in CP 114/1989, which was filed by a petitioning creditor, an application was moved, wherein, it was clearly mentioned that Mr. B.K. Agarwal would invest upto ₹ 5 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The amount to be brought in by Shri B.K. Agarwal and his group and Shri N.K. Somani shall be converted in the form of share capital which shall be increased suitably and the Board of Directors shall be suitably modified, so that Shri B.K. Agarwal and Shri N.K. Somani may have effective control over the affairs and management of the company, to safeguard his investments in the company 14.3 Reference in this behalf is also made to paragraph 8.3 of the scheme sanctioned by this court on 19.07.2013; when, at which point in time, as noticed above, the winding up order was also recalled. 15. It is, thus, contended, that the allotment of shares on preferential basis was carried out in accordance with the law, and also, in consonance with the provisions of the scheme sanctioned by this court. It is stated that since, funds had to be infused to pay off the creditors, allotment of shares on preferential basis in consonance with the provisions of Section 81(1A) of the 1956 Act read with the Unlisted Public Companies (Preferential Allotment) Rules, 2003 as amended in 2011, was made. 15.1 It is averred that prior to the allotment of shares on preferential basis, which was made on 26. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of share capital would accord an exit route to the public shareholders, who today have an equity stake of only 5.47% in the total paid-up share capital of the petitioner company. The learned counsel reiterated the fact that allotment of shares on preferential basis was made pursuant to a decision taken at the EGM held on 25.03.2014. Mr. Datta also reiterated the fact that Mr. B.K. Agarwal was recognized as a strategic investor and because he had infused funds in the form of an unsecured loan, that it became possible for the petitioner company to pay off its secured and unsecured creditors. Mr. Datta conceded that the allotment of shares on preferential basis brought about a change in the equity pattern. It was the learned counsel s submission that the allotment of shares on preferential basis was carried out in accordance with the relevant provisions of the law as obtaining at the relevant point in time. In support of his submissions, Mr. Datta relied upon the following judgments :- (i). Judgment dated 07.06.2010, passed in Company Scheme Petition No.101/2010, titled : Organon India Ltd. (ii). Sandvik Asia Limited Vs. Bharat Kumar Padamsi Ors., 2009 SC Online Bom 541. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereat, a decision was taken to allot shares on preferential basis. 21.1 Mr. B.K. Aggarwal, who was introduced as a strategic investor had in the intervening years supported the petitioner company by infusing unsecured loans to the extent of ₹ 3,96,98,630.09; a figure set forth by the petitioner company, though, the RD avers that the figure should read as: ₹ 3.88 Crores. 22. Be that as it may, the fact of the matter is that, because funds by way of unsecured loans were infused in the petitioner company by Mr. B.K. Agarwal during its difficult days, allotment of shares on preferential basis was made to him and to other persons, as also, a company which came under his sway. 22.1 It is not the RD s stand before me that the allotment of shares on preferential basis was flawed or illegal. If that position remains undisturbed, then quite naturally the equity pattern of the petitioner company had to change. Consequently, with the allotment of 40 Lakh shares, albeit, on preferential basis, the public shareholding in the petitioner company went down from 56.32% to 5.47%. In real terms, however, the public shareholders continued to hold 2,43,470 shares. 22.2 These shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of 243470 shares of ₹ 10 each, held by public shareholders. 26.1 As indicated above, necessary power for reduction in share capital is contained in Article 48 of the Articles of Association of the petitioner company. 27. For the foregoing reasons, as prayed, the resolution passed, at the EGM, held on 06.12.2014, by the shareholders of the petitioner company is approved. 28. Furthermore, minutes appended as Annexure P-9 to the petition, which are extracted hereinbelow for the sake of convenience, will be registered in accordance with the extant provisions of law with the ROC. ..The capital of Meena Steels Limited is henceforth ₹ 4,20,65,300/- divided into 42,06,530 equity shares of ₹ 10/- each reduced from ₹ 4,45,00,000/- divided into 44,50,000 equity shares of ₹ 10/- each. At the date of registration of this minute, 42,06,530 equity shares have been issued and deemed to be fully paid-up (and the remaining 2,43,470 equity shares are unissued).. 29. In view of the fact that the petitioner company has no secured and unsecured creditors, it is exempted from using the expression AND REDUCED as a suffix against its name. 30. Before, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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