TMI Blog2019 (12) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... of shares, more than 95% of shareholding, appears to be in favour of consolidation of shares. From the records, only two shareholders holding 172 and 335 shares respectively remained as shareholders of the Company and unequivocally their percentage is very minimal and their rights are well protected. The appeal is allowed in terms of Section 61(1)(b) of the Companies Act, 2013, by allowing the Appellant-Company for consolidations of its share capital - impugned order set aside - appeal allowed. - Company Appeal (AT) No. 36 of 2019 - - - Dated:- 11-12-2019 - Mr. A.I.S. Cheema Member (Judicial) Mr. Kanthi Narahari Member(Technical) and Mr. V P Singh Member(Technical) For Appellant: Mr. Shivam Narang, Mr. Saumabho Ghosh, Mr. Raza Abbas, Advocates For Respondent: Mr. P.S. Singh with Mr. Raj Pal Singh, Mr. M. Yadubhushana Rao Advocates JUDGMENT The Appellant- M/s Chembra Peak Estates Limited filed the appeal aggrieved by order dated 5th December, 2018 passed by National Company Law Tribunal, Bengaluru Bench, Bengaluru (in short NCLT), whereby NCLT dismissed the petition filed by the Appellant herein. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention to affect the concern and interest of the minority shareholder. He further submitted that the Appellant Company was always in compliance of the provisions of the Companies Act, 2013 and applicable SEBI regulations and in pursuance thereof a valid offer was made for acquiring shares. 4.2 Shri P.S. Singh, learned Counsel appearing for the Registrar of Companies (in short ROC) submitted that they have filed affidavit vide Diary No. 10731 dated 15.03.2019 and Additional Affidavit vide Diary No. 13311 dated 23.07.2019. He submitted that in its first report dated 15.03.2019 it is stated that the ROC Karnataka, Bangalore had received objection from Mr. Mahendra Girdharilal, Shri P.P. Zibi Jose, Ms. Kavitha, Ms. G. Jaiyashri, Mr. R.M. Govindan, Mr. S. Gopalkrishna Pai and Shri S. Rajjeevi R Pai against consolidation stating that the scheme of consolidation of shares by changing the face value of the shares from ₹ 10/- to ₹ 60,500/- is against the interest of minority shareholders and violates the principle of public policy. 4.3 Learned Counsel for the ROC further submitted that the above objections of the shareholders were taken up with the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Counsel for the Appellant that what steps are being taken to protect the interest of small/fractional shareholders if they are not willing to exit from the company. The learned Counsel for Appellant has drawn our attention to the Board Resolution of the Appellant Company at page-93 of the Paper Book whereby it was resolved that a Trust is required to be created and Trustee will be appointed as per the resolution of Board Meeting dated 19.03.2019 for the purpose of aggregating the fractional entitlements resulting from the consolidation into whole equity shares and will hold the same until its disposal at a fair price equal to ₹ 76/- being more than 15% above the Exit Price arrived at during the Exit Offer provided to the Public Shareholders by the Company and for proportional distribution of the proceeds among the shareholders who would otherwise entitled to fractional entitlement. Further it was resolved that fair value of the shares will represent an attractive exit payment to the shareholders who would otherwise receive fractional entitlement pursuant to the consolidation. The Trustee will give effect to the disposal of the fractional shares and distribute the proceeds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into consideration by the NCLT in passing the impugned order (at paragraph-3 of the impugned order) has already transferred his shares to the Promotor of the Company in which the learned Counsel filed an affidavit vide diary No. 14424 dated 09.09.2019. Further this Bench directed learned Counsel for the Appellant to file affidavit with regard to other objections raised by some of the shareholders apart from Mr. Mr. Mahendra Girdharilal. In compliance thereof, learned Counsel filed an Affidavit vide diary No. 16144 dated 19.11.2019. Before proceeding with the contents of the Affidavit, it is to be noted that NCLT at paragraph 4(b) (page-29 of the Paper Book) referred to the objections received by the RoC, Karnataka referred to the shareholder s who were against the consolidating of shares. 4(b) The office has received objections from Mr. Mahendra Girdharilal, Shri P.P. Zibi Jose, Ms. Kavitha, Ms. G. Jaiyashri, Mr. R.M. Govindan, Mr. S. Gopalkrishna Pai and Shri S. Rajjeevi R Pai against consolidation stating that the scheme of consolidation of shares by changing the face value of the shares from ₹ 10/- to ₹ 60,500/- is against the minator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100 NIL Sold on 03.07.2018 11.08.2018 6. Mr. Gopal Krishna Pai 172 172 Continues to be shareholder 7. Smt. S. Rajeevi Ramananda Pai 335 335 Continues to be shareholder [Emphasis supplied] 13. From the perusal of the list, 5 out of 7 shareholders have sold their shares on respective dates as stated supra two shareholders i.e. Mr. Gopal Krishna Pai holding 172 shares at Sl. No. 6 and Smt. Rajeevi Ramachandra Pai holding 352 shares at Sl. No. 7, continue to be shareholders of the Company. It is submitted that Mr. Laxmi Kant Mohta, the whole time Director of the Appellant- Company, who deposed this Affidavit at Para 4 of the Affidavit states that, he acquired shares of above 5 shareholders in his individual capacity and copies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, as contemplated in the Act, we are of the view that the appeal deserves to be allowed. 16. The reason taken for dismissal of Company Petition by the NCLT does not have any substance. As on the date of EGM, it is evident that the votes cast in favour of the resolution for consolidation of shares is more than 95%. It is noteworthy to mention that during pendency of the Appeal, most of the shareholders, who objected for consolidation of shares, have sold their shares to the Director of the Appellant-Company. Considering and taking into consideration the transfer of shares, more than 95% of shareholding, appears to be in favour of consolidation of shares. From the records, only two shareholders holding 172 and 335 shares respectively remained as shareholders of the Company and unequivocally their percentage is very minimal and their rights are well protected. 17. Therefore, considering the above, the facts and law, we hereby allow the appeal in terms of Section 61(1)(b) of the Companies Act, 2013, by allowing the Appellant-Company for consolidations of its share capital. The Impugned order dated 05.12.2018 passed by NCLT is quashed and set aside. No costs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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