9911796707
TMI Blog2018 (8) TMI 1482X X X X Extracts X X X X X X X X Extracts X X X X ..... .21/66(1)/CB/2017nd 1642/2016) wherein the Tribunal has passed an order confirming the Reduction of Share Capital. 2. The brief facts of the case are that the Respondent No.1 is a company incorporated under the Companies Act, 1956. Respondent No.1 was a listed company at Madras Stock Exchange, which was a Regional Stock Exchange. With the advent of nationwide stock exchanges, trading of securities in such Regional Stock Exchanges (RSE) started to decline and Madras Stock Exchange discontinued its operations. To safeguard the interest of shareholders of such companies, SEBI issued guidelines in the form of Exit Circulars. With the de-recognition of the Madras Stock Exchange, the shares of the Respondent No.1 were moved to the Dissemination Board of National Stock Exchange for delisting of shares on the derecognized Stock Exchanges under Regulation 28(2) of the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 and thus were out of the control of the Respondent Company. As per instructions of SEBI on Exit Circular, the Board of Directors of Respondent No.1 at their meeting held on 13.10.2016 decided to pay off capital of the non-promoter shareholde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd by an independent valuer from the panel of expert valuers of the designated stock exchange as prescribed in the SEBI circular dated 10.10.2016. The objector stated that while determining the value, the present available cash and bank balance, non-current investment and liabilities was not considered. Therefore, the valuation of the shares is devoid of merits and therefore, should stand rejected. 4. After hearing the parties the Tribunal passed the following order: "23.We confirm the reduction of shares capital of Applicant company by approving the minutes of Special Resolution dated 12.12.2016 passed by the shareholders for reduction of share capital from Rs. 1,07,68,090/- consisting of 10,76,809 equity shares of Rs. 10/- each fully paid up to Rs. 43,48,470/- consisting of 4,34,847 issued, subscribed and paid up equity shares of Rs. 10/- each, fully paid up by cancelling 6,41,962 issued, subscribed and paid-up equity shares of Rs. 10/- each, being the shares held by non-promoter shareholder (as defined in the explanatory statement) of the 1st Respondent Company, and paying against the shares cancelled a sum of Rs. 107/- per equity shares of Rs. 10/-. 24.In terms of the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h such companies shall obtain listing upon compliances with the listing requirements of the nationwide stock exchange or to provide exit opportunity to shareholders. 11. Learned counsel for the appellant states that the combined reading of the exit circulars reveals that each of the circular is supplementing each other and not in supersession of each other and are required to be complied with harmoniously. 12. Learned counsel for the appellant submitted that as per the exit mechanism prescribed, the fair price of the shares is to be determined by an independent valuer in the panel of the designated stock exchange and the promoters shall purchase the shares in the DB at that price. 13. Learned counsel for the appellant stated that the Board of Directors in its Meeting on 13.10.2016 decided to reduce 641962 equity shares held by non-promoter/public/majority shares holders and stated that the Resolution passed in that meeting is illegal. 14. Learned counsel for the appellant further stated that the promoters used the company funds to purchase the shares of non- promoters/public/majority shareholders and without giving any option to such shareholders to accept or reject the offer s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. 18. Learned counsel for the Respondent No.1 submitted in his reply at para 3(L) stated that there is nothing legally wrong in not mentioning about the Regional Director's affidavit dated 18.9.2017 in the impugned NCLT judgement and order dated 4th October, 2017. Learned counsel further submitted that since the Respondent No.3 in his time barred affidavit dated 18.9.2017 had referred to and incorporated the objections of the complainants, including those of the appellant, the Tribunal during the arguments considered all the objections and examined them on their merit and thereafter rejected the same by a reasoned order. 19. Learned counsel for the Respondent No.1 stated that the appellant have not pointed out the correct law and facts before this Appellate Tribunal due to which the Hon'ble Appellate Tribunal has passed the ex parte order dated 17.10.2017 directing that "no payment be made to any shareholders pursuant to the impugned order dated 4th October, 2017 passed by the Tribunal". 20. Learned counsel for the Respondent No.1 that no objections were received from the creditors, Registrar of Companies and Regional Director, Southern Region within the three months' time spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isted from the Madras Stock Exchange. Learned counsel further submits that Special Resolution dated 12.12.2016 was passed for the purpose and the same was confirmed by the impugned order dated 4.10.2017. 24. Learned counsel for the Respondent No.1 submitted that the appellant has levelled the allegation of Fraud against it. He further submitted that mere mention of "fraud" is not sufficient and appellant has to give the particulars of fraud with dates and time which the appellant has failed to provide. 25. Learned counsel for the Respondent No.1 submitted that utilising of Securities Premium Account in paying off shareholders is permissible under sub-section (1) of Section 52 of the Companies Act, 2013. He further stated that therefore, the contention of the appellant that the share premium reserve can be utilized only for "buy back" of shares as per Section 52(2)(c) is erroneous and untenable. Learned counsel has relied upon the judgement In re:Nestle India Ltd (MANU/DE/2751/2008) wherein reference was made to Madras High Court decision in Parry's Confectionary Ltd (2004) 122 Comp Cas 99. 26. Learned counsel for the Respondent No.1 relied upon the decision of Hon'ble Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exit the non-promoter shareholders at a premium of Rs. 97/- per share who forms the majority of the shareholders i.e. 59.61% of the equity shares. It is next submitted that the company has furnished the voting by the equity shareholders on the resolutions of the company by e-voting and also by postal ballot. 30. It is next stated in the report that the Respondent No.3 has received complaints from the shareholders and the main complaints are as under: a) Company has stated that the valuation was done on Discounted Cash Flow Method(DCF) and Net Assets Value(NAV) and the company has taken the DCF method of valuation and has not sent the valuation report alongwith the notice to the shareholders. b) The complainants have further stated that a perusal of the financial statement of 31.3.2016 reflects the book value of each shares is at Rs. 356/- per share without the underlying assets. c) The complainants has stated that the non promoter shareholders are in a majority and after their exit the promoter shareholders are the sole beneficiaries and the amount of premium arrived at by the promoter shareholders are unfair. d) The shareholders has stated that in the voting by evoting an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther hand, it is stated that the valuation arrived by the complainants-shareholders is very close to the value of the shares valued at NAV method i.e. Rs. 351 per share by the company valuer. Respondent No.3 further stated that complainants -shareholders has force in their arguments and the company should have considered the highest valuation arrived at by the valuer for existing non-promoter shareholders who are in majority. Respondent No.3 further stated that the company will be having sufficient reserve, after making the above payment to non promoters, and the beneficiary will be the promoters and the value of their shares post payment will increase significantly. 33. As regards complaint No.(c), Respondent No.3 has stated that in view of the complaint No.(b) there is some force in the submission of the non-promoter shareholders. 34. As regards complaint No.(d), Respondent No.3 has submitted that as explained in earlier paras there is some force in the submission of the non-promoter shareholders and the shareholders submission. 35. As regard complaint No.(d), Respondent No.3 has stated that the scrutinizer should have segregated the voting by the promoters and the existing non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18.9.2017 of the Respondent No.3 was not considered by the Tribunal whereas the Learned counsel for the Respondent No.1 argued that since the same was not filed within the statutory period, therefore, the Tribunal was legally right in not taking the same into consideration while passing the impugned order dated 4.10.2017. Therefore, first of all we will decide this issue. 42. Learned counsel for the appellant has argued that the affidavit dated 18.9.2017 of the Respondent No.3 which was filed before the pronouncement of judgement dated 4.10.2017 was not considered by the Tribunal. Learned counsel further argued if the same would have been considered by the Tribunal then the order dated 4.10.2017 would have been different. Learned counsel for the Respondent No.1 argued that the Respondent No.3 had not filed their objection/affidavit during the statutory period of three months, therefore, the Tribunal was right in pronouncing the judgement and there is no illegality in it. Learned counsel for Respondent No.1 in his summary of arguments dated 23.2.2018 at para 3 submitted that "R1 Company came to know of RD's aforesaid Report for the first time from the Appeal Paperbook." On the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
