TaxTMI 
TaxTMI 
1998 (3) TMI 545
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....l meeting held on 29-9-1997, and approve the minutes as shall be dealt with, infra. The said resolution reads as follows: "Resolved by way of special resolution that pursuant to sections 78 and 100 and other applicable provisions of the Companies Act, 1956, and subject to confirmation of the High Court at Orissa and any other approval/s as may be required, the premium for 18,00,000 ordinary shares of Rs. 10 each which have been allotted on 1 January, 1997, and 21 July, 1997 upon conversion of Zero Coupon Convertible Debentures (ZCCDs) issued on rights basis be reduced from Rs. 130 per share to Rs. 95 per share by cancellation of liability for payment of Rs. 35 per share payable on third and final call. Resolved further that Board of direc....
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.... 32.50 On second call 35.00 2.50 32.50 On third and final call 2.50 2.50 32.50 Total 140.00 10.00 130.00 (c)Pursunt to the aforesaid 18,00,000 ZCCDs were duly allotted by the company on 12-12-1996 and 21 -7-1997. On 1 -1 -1997,16,37,366 ZCCDs held by Indian residents out of the said 18,00,000 ZCCDs were duly converted into 16,37,3 66 ordinary shares of Rs. 10 each at a premium of Rs. 130 per share after receipt of approval from the RBI in respect thereof. As per the terms of the said issue, Rs. 2.50 out of the application money of Rs. 3 5 received by the company for each ZCCD was appropriated and credited to share capital account and the balance Rs. 32.50 was appropriated and credited to the share premi-um account of the compa....
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....ance funds required for the said project from internal accruals. (f)In view, inter alia, of the above, the Board of directors of the company recommended to the shareholders that the share premium on the aforesaid shares be reduced from Rs. 130 to Rs. 95 per share by extinguishing the liability for payment of third and final call of Rs. 35 per share to be received on 2nd call, a sum of Rs. 5 may be appropriated towards capital and the balance sum of Rs. 30 be appropriated towards share premium, thus making the share fully paid up. Such decision and opinion of the Board of directors of the company was taken and formed at its Board meeting held on 14-8-1997, and 1-9-1997. (g )The said reduction will have beneficial results for the company, i....
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....hole amount paid up thereon the cancelling them. The statute has not prescribed the manner in which the reduction is to be carried out nor has it prohibited any method of effecting that object per Lord Herschell, L.C., in British & American Trustee & Finance Corpn. v. Couper 1894 AC 397, at page 405, quoted with approval by Lord Reid in Re Westburn Sugar Refineries Ltd. [1951] 1 All ER 881 (HL), at page 885, who added that 'paying off capital can be done otherwise than by payment of money'. Important though its task is to see that the procedure by which a resolution is carried through, is formally correct and that creditors are not prejudiced, it has the further duty of satisfying itself that the scheme is fair and equitable between the di....
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....rs would not be adversely affected by the proposed reduction. But if the creditors actually appear and object, the Court would dispense with a creditor's assent only if the company secured payment of his claim by appropriating a sufficient sum. Re Lucania Temperance Billiard Halls ( London) Ltd. [1966] 1 Comp. LJ 350 (Ch D): [1965] 3 All ER 879 (Ch D). The power under section 102 is conferred on the Court in order to enable it to protect the interests of dissenting shareholders and even those who do not appear. Before confirming a reduction the Court must see that the interests of the minority shareholders and of the creditors are adequately protected and that there is no unfairness even though this is an internal matter of the company': In....