TaxTMI 
TaxTMI 
2024 (8) TMI 1284
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted by shares and having share capital with the name 'Azim Premji Custodial Services Private Limited'. Later, the Petitioner Company was converted to a public limited company with effect from 28.03.2013 and further the name of the Petitioner Company was changed to 'Wipro Enterprises Limited' with effect from 19.04.2013. The Petitioner Company was again reconverted into a private company with effect from 22.05.2015 bearing CIN No. U15141KA2010PTC054808. The registered office of the Petitioner Company is situated at Wipro House, No.8, 7th Main, 80 Feet Road, Koramangala 1st Block, Bengaluru- 560034. 3. A copy of Memorandum of Association and Articles of Association has been placed on record as Annexure-A to the Petition. The main objects of the Petitioner Company inter alia are as under: (a) 'To carry on the business of extracting, manufacturing, processing, buying, selling, importing, exporting and dealing in fatty acids, edible and nonedible oil of every description (including its by-products) used for domestic, industrial or any other purpose using any oil bearing substances that may be in existence or that may come into existence in future. 4. I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ings approving the reduction of the share capital of the Petitioner Company, a majority of the non-promoter shareholders approached the promoters of the Company requesting them to purchase their entire shareholding in the company by way of secondary sale. Pursuant to the requests from a majority of the non-promoter shareholders (Selling Shareholders) the promoters of the Company have purchased the entire shareholding of the Selling Shareholders through one of the promoters entities (which is also a part of the promoter group of the Petitioner company) being Azim Premji Trust (APT) at the share per share price at which the Company has proposed to undertake the capital reduction. 9. Pursuant to the completion of the Share Transfers, the non-promoters shareholding of the Petitioner Company aggregating to approximately 1.55% of the paid-up share capital of the company has been transferred to APT being a part of the promoter group of the Company. As a result of such transfer as of the date of this petition the public non-promoter shareholding in the Petitioner Company aggregates to 4,044 Equity shares held by 9 non-promoter shareholders which represents approximately 0.00083% of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....58,119 (Forty Eight Crores Thirty Six Lakhs Fifty Eight Thousand One Hundred and Nineteen only) equity shares of Rs. 10/- each by cancelling and extinguishing the paid-up equity share capital of Rs. 40,440/- (Rupees Forty Thousand Four Hundred and Forty Only) divided into 4,044 (Four Thousand Forty-Four) equity shares of Rs. 10/- each held by the non-promoter shareholders of the Petitioner Company representing in aggregate approximately 0.00083% (zero point zero zero zero eight three percent) of the total issued, subscribed and paid-up equity share capital of the Company from the non - promoter equity shareholders being the Remaining Identified Shareholders more particularly set out hereinbelow, for an aggregate consideration of Rs. 66,88,776/- (Rupees Sixty-Six Lakhs, Eighty Eight Thousand Seven Hundred and Seventy Six Only) being determined for 4,044 (Four Thousand Forty Four) equity shares at 1,654/-(Rupees One Thousand Six Hundred and Fifty-Four Only) per Equity share to be paid out of the free reserves of the Company as per the latest audited financial statements. The details of the non-promoter shareholders whose all and entire shareholding in the Company aggregating to 4,044....
X X X X Extracts X X X X
X X X X Extracts X X X X
....akhs Eighty-One Thousand One Hundred and Ninety only) consisting of 48,36,58,119 (Forty-Eight Crores Thirty-Six Lakhs Fifty-Eight Thousand One Hundred and Nineteen only) equity shares of Rs. 10/- each by cancelling and extinguishing the paid up equity share capital of Rs. 40,440/- (Rupees Forty Thousand Four Hundred and Forty Only) divided into 4,044 (Four Thousand Forty-Four) equity shares of Rs. 10/- each held by the non- promoter shareholders of the Petitioner Company representing in aggregate approximately 0.00083% of the total issued, subscribed and paid-up equity share capital of the Petitioner Company. 12. It is submitted that there are Nil Secured Creditors and 2,789 (Two Thousand Seven Hundred Eighty-Nine only) Unsecured Creditors of the Petitioner Company cumulatively Rs.24,84,87,91,028/- of the Petitioner Company, as on 31.10.2023. The certificate confirming the list of Secured and Unsecured Creditors by Managing Director of the Petitioner Company is furnished as ANNEXURE-L of the Petition and certificate by the Statutory Auditors regarding the correctness of the list of Creditors as on 31.10.2023 is furnished as ANNEXURE- M of the Petition. 13. The Petitioner Comp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....otal value of unsecured debt of the Petitioner Company. 3. Issue Notice to the Unsecured Creditors having an outstanding debt above Rs.10,00,000/- as on 31st October, 2023 and also to the ROC and RD. Registry is directed to prepare the notice and the learned Counsel for the Petitioner is permitted to collect the notice and serve it on the unsecured creditors having an outstanding debt above Rs.10,00,000/-, ROC & RD through e-mail as well as by speed post and is directed to file a proof of service duly enclosing the corresponding tracking report in the Registry within one week. The Petitioner is also permitted to carry out paper publication in 'The Hindu', English Daily, Bengaluru Edition and 'Udayavani' in Kannada Daily, Bengaluru Edition. 4. Upon receiving the notice, period of one month is granted to ROC, RD and three months to the aforesaid Creditors for filing their reply, and two week's thereafter is granted to the Petitioner for filing rejoinder, if any, thereto. 5. List the case on 14.03.2024." 18. In compliance to the said order, the Petitioner Company has filed the Compliance Affidavit vide Diary No. 78 dated 03.01.2024. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty shares of Rs. 10/- each by cancelling and extinguishing the paid up equity share capital of upto 7,51,97,520/- (Rupees Seven Crore Fifty-One Lakhs Ninety-Seven Thousand Five Hundred and Twenty Only) divided into 75,19,752 (Seventy-Five Lakhs Nineteen Thousand Seven Hundred and Fifty-Two) equity shares of Rs. 10/-each held by the non-promoter shareholders of the Petitioner Company representing in aggregate upto 1.55% (one point five five percent) of the total issued, subscribed and paid-up equity share capital of the Petitioner Company. The shareholders resolution stated in the petition is stated as under: "RESOLVED FURTHER THAT if any of the identified Shareholders transfer/ sell (including any transmission of the equity shares to the legal heirs) their equity shares to any person (including the legal heirs but excluding the promoter group) prior to completion of the share capital reduction/ "Record Date", then the capital Reduction shall apply to the new shareholder (excluding the promoter group) as well, who may have bought/acquired equity shares from the Identified Shareholders, and the equity shares held by such transferees (for avoidance of doubt, excluding the pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....apital of the Petitioner Company. (g) Para 8: That the Board of Directors of the Company at their meeting held on 19.06.2023 had considered and approved the proposal for the reduction of paid-up share capital of the Company. (h) Para 9: The Company has approved the proposal for reduction of paid-up capital by passing resolution vide Annual General Meeting held on 10.08.2023. The resolution for the present capital reduction was filed by the Petitioner Company in Form No. MGT-14 vide SRN: AA4372036 filed dated 29-08-2023 and the said form was approved by this office. (i) Para 10: That as per clause 2.5 of the petition, the Board of Directors of the Company by way of a circular resolution dated November 08, 2023 approved the updated list of the non-promoter shareholders consequent to the Share Transfers, for the purpose of capital reduction. (j) Para 11: That the petitioner company has submitted Certificate from the Directors dated 08/06/2023 certifying that the Statement of Creditors as on 31/10/2023, a sum of Rs.24,84,87,91,028/- is payable towards Unsecured Creditors. However, Consent/NoC may be required from individual unsecured creditors subjec....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (o) Para 16: That the Petitioner Company obtained valuation report from an independent valuer Ernst & Young Merchant Banking Services LLP and also obtained fairness opinion report from a leading merchant banker, Axis Capital Limited, Merchant Banker. (p) Para 17: That the fair value as per Valuation Report and the Fairness Opinion is Rs. 1,582/- and the Board and shareholders approved a consideration of Rs. 1,654/- (One Thousand Six Hundred and Fifty-Four Only) per equity share, which includes a premium of 4.55% over and above the fair value of the equity shares of the Petitioner Company. (q) Para 18: The reduction of share capital involves return of the paid-up share capital represented by the equity shares held by the Identified Shareholders, by the Petitioner Company, at a price which is 4.55% over and above the fair value of the equity shares of the Petitioner Company. In this regard, the Petitioner Company may be directed give justification for making. (r) Para 19: That, the copy of advertisement for Reduction of Capital as per NCLT Rules has not been attached along with the application submitted by the Petitioner Company. It is not known whether ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te the Petitioner Company has not received any objection from any of the Creditors. The Petitioner Company is a large conglomerate and having revenue more than rupees 15,000 crores and considering the nature and volume of business, the Petitioner Company has creditors in its ordinary course of business. Further, the Petitioner Company undertakes to settle the dues of creditors in the normal course of its business as and when it is due. 5. Regarding the observations at Para 12, 13 & 14 of the Report: it is submitted that observations are matter of record and is not required to be traversed. 6. Regarding the observations at Para 15 of the Report: it is submitted that the Pay- out pursuant to Reduction of Share Capital shall be from the Bank balance (cash and cash equivalents schedule) as appeared in the Asset side of the Balance Sheet. As per the audited financials as at 31.03.2023, the Company is having Rs.1,324 crores as cash and cash equivalents and the pay-out pursuant to reduction of capital is Rs. 66,88,776 only. Certificate from the auditor of the Company confirming that the Accounting Treatment for the Reduction of share capital is in compliance with the app....
X X X X Extracts X X X X
X X X X Extracts X X X X
....unsel for ROC and RD states that there are no further observations after considering the reply filed by the Petitioner Company. It was further noted that on 04.04.2024, Shri Amith L.M. undertook to file Vakalath for Creditor, namely, Zenith Metaplast and sought time to file objections. Accordingly, he was granted two weeks' time to file the same. However, no Vakalath or objections have been filed by the Creditor. However, the Petitioner has filed a Memo regarding the ongoing arbitration case between the Petitioner Company and Zenith Metaplast Pvt. Ltd./Creditor enclosing an Interim Order dated 19.04.2024 passed by the Sole Arbitrator vide diary no.2499 dated 25.04.2024 and the same is taken on record. 22. On 21.05.2024, Ld. Counsel for Zenith Metaplast Pvt Ltd/Creditor appeared and mentioned the matter before this Tribunal and requested to take Vakalatnama and the Statement of Objections on record as the same was duly e-filed by them on time. 23. Zenith Metaplast Private Limited, the creditor of the Petitioner Company has filed the statement of objections vide Dy.No.2859 dated 21.05.2024 contending as under: (a) The instant petition is not maintainable and suffer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pursuant to the order dated 22.02.2024 of Hon'ble High Court of Bombay and therefore the said claims and demands of Zenith are a subject matter of arbitration proceedings initiated between the Petitioner and Zenith. c) The Petitioner Company is a profit making and financially sound company. It is also important to note that no other creditor constituting more than 99.9% of the total value of the debts owed by the Petitioner has raised any objection to this scheme of capital reduction and Zenith also not raised any objection on the financial strength of the Petitioner Company. 25. We have carefully perused the pleadings of the parties and extant provisions of the Companies Act, 2013 and the Rules made thereunder. The matter regarding the counterclaim of the creditor is pending before the Arbitrator and the interest of the creditor is in no way affected by the proposed reduction of capital. 26. The Petitioner Company avails the option of reduction of paid-up share capital which is in consonance with Section 66 of the Companies Act, 2013. Following are the provisions: "66. Reduction of Share capital (1) Subject to confirmation by the Tribunal on an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty 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. It is 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 deem to be inequitable or unfair transaction. (c) In the decision of Precious Energy Limited v. Regional Director in Company Appeal (AT) NO. 17/2021 passed by Hon'ble NCLAT wherein it is held that "It is seen from the record that the reduction of the Share Capital was approved by the Shareholders of the appellant Company unanimously by way of special resolution with the objective of redu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0/- (Rupees Four Hundred Eighty-Three Crores Sixty-Five Lakhs Eighty-One Thousand One Hundred and Ninety only) consisting of 48,36,58,119 (Forty-Eight Crores Thirty-Six Lakhs Fifty-Eight Thousand One Hundred and Nineteen only) equity shares of Rs. 10/- each by cancelling and extinguishing the paid-up equity share capital of Rs. 40,440/- (Rupees Forty Thousand Four Hundred and Forty Only) divided into 4,044 (Four Thousand Forty-Four) equity shares of Rs. 10/- each held by the non-promoter shareholders of the Petitioner Company representing in aggregate approximately 0.00083% (zero point zero zero zero eight three percent) of the total issued, subscribed and paid-up equity share capital of the Petitioner Company from the non-promoter equity shareholders being the Remaining Identified Shareholders more particularly set out herein below, for an aggregate consideration of Rs. 66,88,776/- (Rupees Sixty-Six Lakhs, Eighty-Eight Thousand Seven Hundred and Seventy-Six Only) being determined for 4,044 (Four Thousand Forty-Four) equity shares at 1,654/-(Rupees One Thousand Six Hundred and Fifty-Four Only) per Equity share to be paid out of the free reserves of the Petitioner Company as per the....