2022 (5) TMI 1654

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....econstruction (BIFR). Industrial Credit and Investment Corporation (now ICICI Bank Limited) was appointed as the Operating Agency (OA) to prepare a Rehabilitation Scheme for revival of the plaintiff in accordance with the provisions of the SICA. 4. The said Vishwanath Poddar had filed a writ petition, being W.P. No.3569 of 1993 (Vishwanath Poddar vs. Board of Industrial and Financial Reconstruction & Ors.) before this Hon'ble High Court which was disposed of by an order dated 5th September, 1994. Another shareholder had challenged the said order in the Hon'ble Supreme Court in SLP (Civil) No. 10187 of 1995 wherein an order was passed directing the BIFR to formulate a revival scheme and to expeditiously conclude the proceedings. 5. The BIFR sanctioned a rehabilitation scheme on 10th June, 1996 (1996 Rehabilitation Scheme). The said 1996 Rehabilitation Scheme was challenged by the plaintiff before the Appellate Authority for Industrial and Financial Reconstruction (hereinafter referred as AAIFR). AAIFR by an order dated 6th March, 1997 approved the 1996 Rehabilitation Scheme with certain modifications. The order dated 6th March, 1997 was challenged in C.W.P No.1797 of 1997 befo....

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.... to issue the duplicate share certificate. After compliance of the required procedure, by a letter dated 10th February, 2017 the plaintiff forwarded the duplicate certificates recording the name of defendant as the shareholder of 50 shares of face value of Re.1/- each in lieu of 500 shares held by the defendant's deceased husband, the certificate whereof was lost. 10. The defendant by a letter dated 19th February, 2017 refused to accept the said certificates and demanded that 500 shares of face value of Rs. 10/- should be issued in lieu of share certificate of 50 shares of face value of Re.1/- each. The defendant on 11th March, 2017 threatened to institute criminal proceedings against the plaintiff and its directors and thereafter on 21 st March 2017 filed complaint before Security and Exchange Board of India (hereinafter referred as SEBI) alleging fraud by the plaintiff. This prompted the plaintiff to file this suit on or about 22nd September, 2017 claiming a declaration that the paid up share capital of the plaintiff stood reduced to Rs. 20.23 lakhs on and from 10th June, 1996 by virtue of order dated 4 th December, 2007 passed by the AAIFR with a further declaration that the ....

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....nt thereafter by a letter dated 11th March, 2017 once again requested the plaintiff-company to issue 500 shares which was followed by a complaint to Security & Exchange Board of India (SEBI). The suit was instituted on or about 22nd September, 2017 is within limitation. In respect of the relief(s) claimed the defendant is the sole party necessary. The suit is, therefor, maintainable as framed and issue No.3 is decided in favour of the plaintiff. 15. Issue No.1 and 2 are taken up together and being interlinked, are decided as under. 16. Reduction of share capital of company is permissible under the Companies Act, 1956 as also the Companies Act, 2013 by following a specific procedure as laid down therein. This decision is taken after affording the individual share holder to participate in the decision making process wherein they are free to give their views and the majority view or opinion prevails. If the decision to reduce share capital is approved the consequences follows obviously by following the statutory formalities. In the instant case the reduction of share capital in the plaintiff-company has taken place not by such process but as a part of a rehabilitation scheme san....

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....dment) Act, 2002. The 2002 amendment to the Companies Act, 1956 was challenged. The challenge was decided by a judgment reported in 2010 (11) SCC 1 [Union of India v. R. Gandhi, President, Madras Bar Association] which led to certain modifications. The Companies Act, 1956 has been subsequently repealed by introduction of Companies Act, 2013. The SICA, 1985, however, remained in operation till the 2003 Act was brought into operation on 1st December, 2016. The Insolvency and Bankruptcy Code, 2016 (in short IBC) was also introduced from 1st December, 2016. Section 252 of IBC amended the provisions of Section 4(b) of the 2003 Act. Under the amended provision a reference in terms of Section 4(b) has to be made before the National Company Law Tribunal (in short NCLT) under the IBC. Thus the scheme which was sanctioned by the AAIFR in respect of the plaintiff-company remained in operation even after the change in law, only the forum to approach for any direction to work out the implementation of scheme in case of any difficulty changed. The scheme did not achieve finality till it was successfully worked out even after the change in law. The reduction of share capital in the plaintiff- com....

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....21. The plaintiff has sought for a decree for declaration and injunction. Under the provisions of Specific Relief Act, 1963, declaration is ordinarily granted in respect of crystallized rights but can also be granted with regard to a Contingent right as held in the Division Bench judgment of this Court reported in AIR 1980 Cal 45 [Smt. Maya Basak vs. Smt. Kalidasi Dassi and another]. In the facts of the instant case till the Rehabilitation Scheme has not been successfully implemented, the plaintiff's right to claim a declaration that the defendant is entitled only to the reduced number of shares cannot be granted. The consequential injunction cannot also be granted in the facts of the case. Even considering the fact that the plaintiff is seeking a declaration based on a contingent right, the same cannot be granted as such right is not a simplicitor right inter se between two individuals or group of individuals arising out of private documents existing in between. The scheme cannot be treated as a document of like nature. The scheme involves several other rights of diverse nature and not individual rights for which a declaration can be sought for. That apart by passing a declaratory....