ELPRO INTERNATIONAL LTD. Vs. STATE

JUDGEMENT

(1.) The Petition before the Court has been instituted under the provisions of Section 101 of the Companies Act, 1956 and seeks an order of the Court for a reduction of the capital of the Petitioner. The Petitioner was incorporated on 27-7-1962 and is a Public Limited Company. The main objects of the Petitioner as provided in its Memorandum of Association, inter alia, include carrying on business of electrical and electronic appliances, apparatus and equipment. The Company was engaged in the business of manufacturing lightening arresters and isolators. In pursuance of the sale of the isolator Division of the Petitioner Company located at Hyderabad, the present business consists of the manufacture of lightening arresters. The Company was initially incorporated with an authorised share capital of Rs. 5 crores divided into 5 lakh equity shares of Rs. 100 each. The present authorised share capital is Rs. 5 crores divided into 50 lakh equity shares each of Rs. 10. The equity shares of the Company are listed on the Bombay Stock Exchange (BSE) and Pune Stock Exchange. The issued and paid up share capital of the Company as on 31-3-2006 is Rs. 3,55,66,770 divided into 35,56,677 shares each of Rs. 10. Upon the proposed reduction, the issued and paid up share capital of the Petitioner shall be Rs. 2,66,75,080. The Company seeks to reduce its share capital by an amount of Rs. 88,91,690 constituting 25 per cent of its issued and paid up share capital.

(2.) The principal reasons underlying the proposed reduction of capital have been spelt out in paragraph 11 of the petition thus:

(3.) The Board of Directors of the Petitioner had in a meeting held on 27-1-2006, passed a resolution in respect of the reduction of the issued and paid up capital of the Company. As aforesaid the Petitioner proposes to extinguish and cancel 8,89,169 shares held by shareholders constituting 25 per cent of the issued and paid up share capital and returning capital to such shareholders at Rs. 183 per equity share of Rs. 10 each so cancelled and extinguished in accordance with Section 100 of the Companies Act, 1956 .