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TMI Blog2021 (12) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... pany are as under: "to carry on the business of manufacturers, assemblers, fabricators, importers, exporters, buyers, sellers, distributors or otherwise dealers in computers like micro, mini and/or personal computers and their components, accessories and peripherals, etc." 4. As per Article 8 of the Article of Association of the Petitioner Company, the Petitioner Company may, by special resolution, reduce its share capital in any manner permitted by law which is in excess of the want of the Petitioner Company: "8. The Company may (subject to the provisions of Sections 55 and 66 of the Act) from time to time by special resolution - reduce its capital and any Capital Redemption Reserve Account or Premium Account in any manner from the time being authorised by law, and in particular, capital may be paid off on the footing that it may be called upon again or otherwise. The Article is not derogate from any power the Company would have if it were omitted." 5. The Petitioner Company has made the following prayers: i) That the Reduction of Capital resolved on by the Special Resolution set out in paragraph 8 above be confirmed; ii) That to this end all directions necessary and pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the quantitative reconciliation of materials issued for and generated from processing based on theoretical standards and actual quantity of goods sold. Value of e-waste division inventories considered in the financial statement as at 31.03.2020 amounted to Rs. 624.87 Lakhs owing to the nature of inventory and in the absence of sufficient audit evidence. 11. The Paid-up Share Capital of the Company shall stand reduced to the extent of the face value of the Shares so extinguished. 12. In order to comply with the terms of the Awards passed by the Arbitral Tribunal, the Board of Directors of Cerebra Integrated Technologies Limited met on 12.08.2019 and approved the Scheme of Reduction of Share Capital subject to the Shareholders' approval. 13. The proposal of Reduction of Capital does not involve either the diminution of any liability in respect of unpaid capital as there are no partly paid up shares or the payment of any shareholder of any paid-up capital. The proposal also does not involve any payouts to any person whosoever and will only strengthen the financial position of the Applicant Company by reducing the Paid-up Capital and thereby enhancing the value of each Equity S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble National Company Law Tribunal, Bengaluru Bench, the consent of the Equity Shareholders be and is hereby accorded to the proposed reduction of the Paid up Share Capital of the Company by cancelling the extinguishing Paid-up Equity Shares Capital of Rs. 9,20,00,000/- (Rupees Nine Crores Twenty Lakhs only) divided into 92,00,000 (Ninety Two Lakhs) Equity Shares of Rs. 10/- (Rupees Ten only) each fully paid up, from Rs. 1,21,19,66,320/- (Rupees One Hundred Twenty One Crores Nineteen Lakhs Sixty Six Thousand Three Hundred Twenty only) divided into 12,11,86,482 Equity Shares of Rs. 10/- (Rupees Ten only) each to Rs. 1,11,99,66,320/- (Rupees One Hundred Eleven Crores Ninety Nine Lakhs Sixty Six Thousand Three Hundred Twenty only) divided into 11,19,86,482 Equity Shares of Rs. 10/- (Rupees Ten only) each fully paid up. 17. Ishwar & Gopal, Chartered Accountant, the Auditor of the Company has also issued a report dated 15.09.2020 confirming that the Company has 142 creditors as on 15th September 2020. 18. As per the Certificate dated 14.09.2019 of Ishwar & Gopal Chartered Accountants, the proposed accounting treatment as specified in Clause 7 of Part III of the Draft Scheme of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheme, it is noticed that the Statutory Auditor and the Secretarial Auditor of the Company have qualified in their report about non-compliance of the provisions of Companies Act, 2013 and other Acts and Rules for the last three years. Certain qualifications are very serious in nature. b) The Company has to comply with CSR compliance for the year 2018-19 and 2019-20. In this year this listed company was to spend an amount of Rs. 16.27 lakhs but spent only Rs. 4.25 lakhs. Likewise, in the year 2019-20, total Rs. 43.15 lakhs was to be spent under CSR but spent only Rs. 10.33 lakhs and remain Rs. 32.82 lakhs unspent. No proper justification for the unspent amount has been given as required under Section 135 of the Companies Act, 2013. Accordingly, the Company need to file Compounding Application under Section 135 of Companies Act, 2013 read with 134 of the said Act and Rules made thereon. c) The Secretarial Audit/Statutory Auditor have qualified that the company violated Section 185 of the Companies Act, 2013. The said violation is continuing for the last 3 years. The Petitioner Company may be advised to file Compounding Application under Section 441 of the Companies Act, 2013. d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors in their report were duly replied by the Directors in the Boards' Report for the respective years and the Management had taken proper steps to overcome all the non-compliances. Further, being the Managing Director of the Company, they hereby undertake to file requisite compounding application to the said non compliances before the appropriate authorities. b) It is also submitted the Company has complied with Corporate Social Responsibility (CSR) compliance for the year 2018-19 and 2019-20. According to Section 135 of the Companies Act, 2013, if the Company fails to spend such amount, the Board shall, in its report made under clause (o) of sub-Section(3) of the Section 134, specify the reasons for not spending the amount. For 2018-19 Annexure VII to the Board's Report, the reason for not spending the amount was specified as under: However, during the year under review, the Company's spend on the CSR activities has been less than the limits prescribed under the Companies Act, 2013 due to non availability of proper verified projects. For 2019-20-Annexure VI to the Board's Report, the reason for not spending the amount was specified as under: However, duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -up Capital of the Company from Rs. 108,49,66,320/- to Rs. 120,39,66,320/- in the year 2017-18 and from Rs. 120,39,66,320/- to Rs. 121,19,66,320/- in the year 2018-19. The Company had received in principle approval from National Stock Exchange and BSE Limited for listing such shares and it hereby confirms that all the compliances relating to Section 42 were complied with. h) Further, it is submitted that all the above mentioned observations are not having any negative effect on the proposed reduction of share capital as the reduction of Share Capital will not have any impact on the Company's responsibility to comply with the said provisions as well as the proposed reduction will not have any negative impact on the Company's profitability, Cash flow as well as the net worth. Because the proposed reduction is only to the extent of the Share Capital which is not represented by the assets and which is purely on the compliance of the Arbitral Award passed by the Sole Arbitrator, Hon'ble Justice Shri V. Jagannathan, Former Judge, High Court of Karnataka. i) The Petitioner Company avails the option of reduction of paid-up share capital which is in consonance with Section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that if majority by a special resolution decides to reduce share capital of company, it has also right to decide as to how this reduction should be carried into effect. iii) Further observed that while reducing the share capital, company can decide to extinguish some of its shares without dealing in the same manner as with all other shares of the same class. The company limited by shares is permitted to reduce the share capital in any manner, thereby a selective reduction is permissible within the framework of law. On the question of valuation as well, an observation was that valuation of shares is a technical matter, which requires considerable skill and experience. If the stakeholders are satisfied with the value, can approve the transaction of reduction of share capital which should not deemed to be inequitable or unfair transaction. iv) On the same lines, in one of the decision of the Bombay High Court in Sandvik Asia Limited v. Bharat Kumar Padamsi & Ors. (Company Application No. 290 of 2003), Order dated 04.04.2009, the proposal of capital reduction was upheld. In the said case, the Single Judge Bench of the Court declined to sanction and approve the reduction of the sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 (Ninety Two Lakh) Equity Shares of Rs. 10/- (Rupees Ten only) each fully paid up, from Rs. 1,21,19,66,320/- (Rupees One Hundred Twenty One Crores Nineteen Lakhs Sixty Six Thousand Three Hundred Twenty only) divided into 12,11,86,482 Equity Shares of Rs. 10/- (Rupees Ten only) each to Rs. 1,11,99,66,320/- (Rupees One Hundred Eleven Crore Ninety Nine Lakh Sixty Six Thousand Three Hundred and Twenty only) divided into 11,19,86,482 Equity Shares of Rs. 10/- (Rupees Ten Only) each fully paid up. 26. In terms of the above, the necessary alteration shall be made in the Memorandum of Association by the Petitioner Company for reduction of the paid-up share capital. The copy of the altered Memorandum of Association and the minutes approved along with the order shall be delivered to the ROC by filing the E form INC, within 30 days of the receipt of the copy of the order. Accordingly, the Registry shall prepare an order in FORM No. RSC-6 as per the National Company Law Tribunal (procedure for Reduction of Share capital of the Company) Rules 2016 and issue to the Applicant. Ordered Accordingly. To be consigned to the Records Form of Minutes RESOLVED THAT in full compliance with the Awards ..... X X X X Extracts X X X X X X X X Extracts X X X X
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