SANDVIK ASIA LTD Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) BY this petition, the petitioner M/s. Sandvik asia Limited is seeking sanction and confirmation by this Court with regard to the Special Resolution passed by the petitioner-company's shareholders at its Extra Ordinary General Meeting held on 13th June, 2003 for reduction of its share capital.

(2.) IT appears that the aforesaid M/s. Sandvik Asia Limited had proposed the resolution for reduction of paid up equity share capital to the effect that the share capital be reduced by paying off/returning to the holders of equity shares other than the promoters (viz. Sandvik AB and Sandvik Finance BV), at the rate of Rs. 850/- per share, i. e. Rs. 100 by way face value plus Rs. 750 by way of premium, per share, thereby extinguishing all such shares. It appears that the said Sandvik AB and Sandvik Finance BV, held 95. 54% of equity share capital in the said company. In pursuance of the aforesaid proposal, the resolution was passed by the company at its Extra Ordinary General Meeting (EOGM) held on 13th June, 2003, whereby the company had approved the said reduction of share capital. At the said meeting, six members who were present, had strongly opposed and spoken against the said resolution. Their main objection has been that there has been discrimination between the members holding equity shares, in the sense one group being the promoters group viz. Sandvik AB and Sandvik Finance BV, are treated separately and the other equity shareholders who are holding 4. 46% shares have no option but to leave the company and accept the amount offered by the company. To put in other words, the said shareholders of nonpromoters group having 4. 46% shares were not given any option but they were to leave even if they do not accept the offer of Rs. 850/- by a particular day. Then in any event, after a particular date they will have to leave the company accepting the compensation of Rs. 850/ -. per share. The main grievance of the opposing shareholders has been that those minority shareholders who were desirous of continuing in the said company and to be associated with the company cannot do so. At the poll in the said meeting 99. 95% of votes were in favour of the resolution and 0. 05 votes were against the resolution.

(3.) MR. Tulzapurkar, the learned Counsel for the petitioner has pointed out that the minority shareholders had objected on four grounds i. e. (i) the said reduction of share capital was not within the preview of section 100 (l) (a)to (c) of the Companies Act, (ii) there was no need at all to reduce the share capital, (iii) there has been a patent discrimination between one class of shareholders to another class of shareholders amongst the equity shareholders and (iv) the only way the company could have reduced the share capital was by way of buying back under section 77-A. Finally the contention of the petitioner was that the compensation offered at Rs. 850/- per share was not a fair and adequate compensation.