TaxTMI 
TaxTMI 
2005 (8) TMI 373
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....gh Court. 2. Briefly stated the facts are as follows : The respondents are an investment company. The Reserve Bank of India had issued certain directions to them. The Respondents had challenged the authority and power of the Reserve Bank of India to issue such directions. That challenge ultimately culminated in this Court. By the judgment reported in Peerless General Finance and Investment Co. Ltd. v. Reserve Bank of India [1992] 2 SCC 343 this Court held that the Reserve Bank of India had authority and power to issue direction in order to provide stable, identifiable and monitor able method of operation. This Court held that such directions would ensure security to the depositors at all times and also make the account of the Company accu....
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....of Revaluation Reserve as per the Audited Accounts for the financial year ending on 31st March, 1994, be capitalized and accordingly, the Directors of the company be and are hereby authorized and directed to appropriate the said sum of Rs. 31,08,36,000 to and amongst the members of the Company whose names shall appear on its Register of Members on 7th November, 1994 being the Record Date for this purpose (hereinafter called "the said date") in proportion to the Equity Shares held by them respectively in the Company as on the said date and to apply the said sum of Rs. 31,08,36,000 in paying up in full of the unissued Equity Shares of the Company of Rs. 100 each at par, such shares (hereinafter referred to as the "Bonus Shares") be allotted, ....
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.... not grant an injunction. It only directed that the resolution passed at the Meeting would abide by the result of the Appeal. Accordingly the Meeting was held. The Appellant attended and objected to the Resolution being passed. But the Resolution was passed by a majority. The Appeal was subsequently withdrawn by the Appellant with a liberty to file a fresh Appeal. The Appellant then filed a fresh Appeal, wherein he applied for an injunction restraining the Respondents from issuing the Bonus Shares. The Division Bench of the Calcutta High Court permitted the Respondents to process all formalities but not to effect the delivery of the Bonus share scrips without obtaining prior leave of the Court. This Court refused to interfere in the Special....
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....Any General Meeting may resolve that any amounts standing to the credit of the shares premium account or the Capital Redemption Reserve Account or any monies, investments or other assets forming part of the undivided profits including profits or surplus monies arising from the realization and (where permitted by law from the appreciation in value of any capital assets of the Company) standing to the credit of the General Reserve, Reserve or any Reserve Fund or any other Fund of the Company or in the hands of the Company and available for dividend by capitalized:- (i )by the issue and distribution as fully paid up of shares, debentures, debenture stock, bonds or other obligations of the Company, or (ii)by crediting shares of the Company wh....
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.... only be made out of profits arising from the business of the company and not from the revaluation of capital assets. It was submitted that the High Court erred in holding that the words "available for dividends" only applied to words "other funds of the company or in the hands of the company" and that it did not apply or restrict the other categories laid down under Article 182. 10. On the other hand, on behalf of the Respondents it is submitted that the High Court was right in coming to the conclusion that the words "available for dividends" did not apply to any other categories except the category of funds of the company in the hands of the company. 11. Both sides have also relied on various provisions of the Companies Act, some other ....
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....suggested by the Appellants this portion of Article 182 i.e., issuing of bonus out of Revaluation Reserves would be rendered otiose. So would certain other portions of Article 182 viz., the provision regarding issuing of bonus out of Share Premium Account and Capital Redemption Reserve Account. Section 205 of the Companies Act provides that the dividend could only be issued out of profits of the company. The proviso to sub-section (3) of section 205 permits capitalization of profits or reserve of a company for the purpose of issuing fully paid up bonus shares or paying up any amount for the time being unpaid on any shares held by the members of the company. Thus the Companies Act specifically permits utilization of reserve arising from reva....