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In Re : M/s Induri Farm Ltd.

2016 (11) TMI 459 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI

Conversion from public to private company - Held that:- The Petitioner has complied with provisions of Section 14 to be read with Rule 68 of NCLT Rules, 2016. Therefore, having regard to all the circumstances, the conversion from public to private is in the interest of the Company which is being made with a view to comply efficiently with the provisions of Companies Act, 2013 causing no prejudice either to the members or to the creditors of the Petitioner. Therefore, the conversion is hereby all .....

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13 (herein below referred as "the Act"). At the outset, it is worth to reproduce the relevant portion of the Section as under:- "Alteration of Articles. 14. (1) Subject to the provisions of this Act and the conditions contained in its memorandum, if any, a company may, by a special resolution, alter its articles including alterations having the effect of conversion of- (a) a private company into a public company; or (b) a public company into a private company: Provided that&hellip .....

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Companies Act, 2013 was fairly large; hence, in the interregnum, certain arrangements were made by the Ministry of Corporate Affairs, and one of such arrangements was in respect of the provisions of Section 14 of Companies Act, 2013. In this regard, during the hearing of this C.P., a notification dated 11.06.2014 is placed on record; relevant portion extracted below:- "Ministry of Corporate Affairs 'A' Wing, 5th Floor, Shastri Bhawan Dr. Rajendr Prasad, New Delhi-110001 Dated: 11 Ju .....

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ction (2) of section 14) have not been notified. In view of this, the corresponding provisions of Companies Act, 1956 (Proviso to sub-section (1) and sub-section (2A) of Section 31) shall remain in force till corresponding provisions of Company's Act, 2013 are notified. The Central Government has delegated such powers under the Companies Act, 1956 to the Registrar of companies (ROCs) vide item No. (c) of the notification number S.O. 1538(E) dated the 10th July, 2012 and this delegated power .....

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after the MCA Notification dated 01.06.2016 (to be discussed herein below), the applicability of the old provisions along-with the attached rules got suspended. To proceed with the matter, it is requisite to hold that Rule 33 of the Companies (Incorporation) Rule, 2014, which had prescribed that for effecting the conversion of a Private Company into a Public Company was to be approved by the competent authority i.e. Central Government; had become redundant. 4. My reason to hold Rule 33 as redun .....

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vide section 14(2) of the Act to the Tribunal (NCLT) to pass an appropriate order in connection of proposed conversion had superseded the old provisions. Therefore, the operation of Rule 33 of the Companies (Incorporation) Rule 2014 shall be limited to give effect of the order of NCLT by the Registrar within Fifteen days on receipt. (b) Second reason to proceed with the matter is that once the provision of Section 14(2) (now stood notified supra) has enshrined power to NCLT; hence, the Statute .....

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. Such alteration, for the purpose of this section, has the effect of conversion of a Public Company into a Private Company. The issue in hand is dealt with by second proviso to Section 14(c) which says that any alteration having the effect of conversion of a Public Company into a Private Company shall not come into operation except with the approval of the Tribunal (NCLT). The Tribunal shall make such order as it may deem fit. Further, a procedure is also laid down to give effect of the order o .....

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ered shall be valid as if it were originally in the Articles, meaning thereby, the change so incorporated of "Conversion" shall be in supersession of the old such clauses of an Article. 6. In addition to the introduction of Section 14 in Companies Act, 2013, the MCA vide a Notification dated 21.07.2016 (published in Gazette of India on 22.08.2016 GSR 716 (E)) also framed National Company Law Tribunal Rules, 2016. The Rule connected to conversion of Public Company to Private Company is .....

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Petitioner as prescribed in the Rule are examined as under:- (a) The Board of Directors of Induri Farm Limited (Petitioner) has passed a Resolution in the meeting held on 25.05.2016 approving the conversion to Private Limited Company. Thereafter in Extraordinary General Meeting held on 20.06.2016 the Members have also approved the conversion. The Petitioner has second proviso to Section 14(1) of the Act for the conversion shall not less than three months from the date of passing of special reso .....

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ted character of the Company, it is felt that it would be expedient to convert the Company to a private limited company. ii. The conversion of the Company into a private limited company would help the Company to eliminate and streamline its corporate compliances and increase efficiency in functioning. iii. The members of the Company have unanimously resolved and approved the conversion of the Company into a private limited company. iv. All the creditors of the Company as on 20th June, 2016 have .....

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under:- a. The Authorized Share Capital: The Authorized Share Capital of the Company as on date is ₹ 20,00,000/- (Rupees Twenty Lakhs only) divided into 20,000 (Twenty Thousand) Equity Shares of ₹ 100/ (Rupees Hundred only) each. b. Issued Share Capital: The Issued Share Capital of the Company as on date is ₹ 8,00,000/- (Rupees Eight Lakhs only) divided into 8,000 (Eight Thousand) Equity Shares of ₹ 100/- (Rupees One Hundred only) each. c. Subscribed and Paid-up Share Cap .....

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