Tribunal approves share capital reduction for Petitioner Company following compliance with procedural requirements and creditor consent.

The Tribunal confirmed the reduction of share capital for the Petitioner Company, approving the resolution passed in the Extraordinary General Meeting. The company complied with procedural requirements, obtained creditor consent, and addressed objections raised by the ROC. The Tribunal emphasized that reduction of share capital is a commercial decision and approved the alteration of the company's Memorandum of Association. The company was directed to file necessary documents with the ROC within 30 days.

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Issues Involved:
1. Application under Section 66 of the Companies Act, 2013 for confirming the reduction of share capital.
2. Compliance with procedural requirements under NCLT (Procedure for Reduction of Share Capital of Company) Rules, 2016.
3. Financial soundness and creditor consent.
4. Valuation report and ROC objections.
5. Legal precedents on reduction of share capital.

Issue-wise Detailed Analysis:

1. Application under Section 66 of the Companies Act, 2013 for confirming the reduction of share capital:
The Petitioner Company sought confirmation for reducing its share capital from Rs. 61,67,000 divided into 61,670 equity shares of Rs. 100 each to Rs. 37,17,000 divided into 37,170 equity shares of Rs. 100 each. Simultaneously, the company proposed issuing 24,500 6% non-cumulative redeemable preference shares of Rs. 100 each to the holders of the reduced equity share capital. The reduction was resolved by a special resolution passed in the Extraordinary General Meeting (EOGM) held on 30.05.2018.

2. Compliance with procedural requirements under NCLT (Procedure for Reduction of Share Capital of Company) Rules, 2016:
The company complied with procedural requirements by sending notices to the Central Government, Registrar of Companies (ROC), and all creditors. Notices were also published in newspapers. The company filed affidavits confirming dispatch and publication of notices and submitted tracking reports and postal receipts. No objections were received from any stakeholders, including creditors and shareholders.

3. Financial soundness and creditor consent:
The company’s financial position was sound, with no qualifications, reservations, or adverse remarks from auditors. The statutory auditor confirmed that the company had neither accepted any deposits nor was in arrears of any deposits or interest. The company obtained No Objection Certificates from all unsecured creditors, and the ROC confirmed no pending prosecutions against the company.

4. Valuation report and ROC objections:
The ROC objected to the absence of a valuation report and non-compliance with certain procedural requirements. The petitioner argued that a valuation report was unnecessary as the reduction involved issuing preference shares of equivalent value to the reduced equity shares. The company provided evidence of compliance with notice requirements and filed Form GNL-2 instead of GNL-1, which was deemed sufficient by the Tribunal.

5. Legal precedents on reduction of share capital:
The Tribunal referenced several legal precedents, including Elpro International Limited, Reckitt Benckiser (India) Ltd., and Sandvik Asia Limited, emphasizing that the reduction of share capital is a domestic matter based on commercial considerations. Courts generally do not interfere unless there are serious allegations of bad faith. Selective reduction and valuation matters are within the company’s discretion if stakeholders are satisfied.

Conclusion:
The Tribunal confirmed the reduction of share capital, approving the minutes of the EOGM dated 30.05.2018. The company was directed to alter its Memorandum of Association accordingly and file the necessary documents with the ROC within 30 days. The order was to be consigned to records, and the Registry was instructed to issue the order in FORM No. RSC-6.

Form of Minutes:
The issued, subscribed, and paid-up share capital of Saraswati Offset Printers Private Limited was reduced from Rs. 8,30,03,880 to Rs. 1,66,00,770, divided into 2,41,404 equity shares and 14,18,673 preference shares of Rs. 10 each.

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