HYDERABAD INDUSTRIES LIMITED Vs. STATE

JUDGEMENT

(1.) The petition The petition is filed by M/s.Hyderabad Industries Limited purportedly under Section 100 read with Section 78 of the Companies Act, 1956 (for short, the Act). The petitioner Company prays for confirmation of adjustment of share premium against the permanent loss in value of investment made by the Company in Nepal Metal Company Limited ('NMCL' for brevity) as approved by special resolution by Annual General Meeting of the shareholders of the Company. The Company also seeks to dispense with the formality of adding the words 'and reduce' after the name of the Company and approval of the Minute/ Resolution of the General Meeting. Background of petition

(2.) The events and circumstances leading to filing of the present Petition be noticed in brief. The petitioner Company was incorporated under the Act in the year 1956 as Hyderabad Asbestos Cement Products Limited under the provisions of the Hyderabad Companies Act, 1320 Fasli. In 1985 the name of the Company was changed to Hyderabad Industries Limited with effect from 11.11.1985. The authorised capital of the Company is Rs. 1,000 lakhs divided into Rs.95,00,000.00 equity shares of Rs.10/- each and 50,000 preference shares of Rs.100.00 each. 71,47,631 equity shares are fully paid up, but no preference shares have been issued. The Company was incorporated with the object of carrying business of manufacturing and marketing of dyers, printers, finishers, and impregnators of asbestos, cement, cotton, jute etc., and the business of mining and working of asbestos and other minerals. According to Article 15 of Articles of Association of the Company, it may by special resolution and subject to confirmation by the Company Court reduce its share capital

(3.) The petitioner Company made investment of Rs. 115.30 lakhs; presumably from out of its reserve capital, in NMCL, a Company promoted by petitioner Company in Nepal jointly with His Majesty's, Government of Nepal and others. NMCL however, could not make much headway due to various reasons, as a result of which, allegedly the value of investment made by petitioner Comany in NMCL is reduced to nil.