SANDVIK ASIA LIMITED Vs. BHARAT KUMAR PADAMSI

JUDGEMENT

(1.) By this Appeal, the appellant takes exception to the order dated 16-10-2003 passed by the learned Single Judge of this Court in Company Petition No. 478 of 2003. That petition was filed by the present appellant seeking sanction of the Court to the Special Resolution passed by the company at its extra ordinary general meeting held on 13-6-2003 for reduction of its share capital. The Company had proposed a resolution for reduction of paid-up equity share capital. The Resolution was to the effect that the share capital of the company be reduced by paying off/returning to the holders of equity shares other than the promoters at the rate of Rs. 850/- per share i.e. Rs. 100/- by way of face value + Rs. 750/- premium per share, thereby extinguishing all such shares. The company petition was filed under section 100 of the Companies Act seeking sanction of the Court.

(2.) That petition was opposed by the respondents, who are non-promoter shareholders of the company. The company petition was decided by order dated 16-10-2003 and the learned Single Judge declined to sanction the resolution for reduction of the share capital. The company, therefore, is in appeal against that order.

(3.) The learned Counsel for the appellant submits that under section 100 of the Comparries Act, a company may if so authorised by its Articles of Association, by special resolution, reduce its share capital in any way. The three instances of reduction of share capital enumerated in section 100 are only indicative and without prejudice to the generality of the power of the company to reduce its share capital. It is, therefore, submitted by the learned Counsel that every possible method of reduction of share capital of a company is duly encompassed under said section 100, and is subject to and governed by the provisions of sections 100 to 104 of the said Act. A company, subject to confirmation by this Court, is free or open to choose the mode or extent of reduction of its share capital. The confirmation of the Court to reduction of the share capital of a company will be refused only if the provisions of sections 100 to 104 of the said Act are not complied with by the company or if the proposed reduction is unfair or inequitable.