IN RE: PRAKASH INDUSTRIES LTD. Vs. STATE

JUDGEMENT

(1.) PRAKASH Industries Limited has filed this petition under Section 101 of the Companies Act, 1956 (hereinafter referred to as "the Act") for confirmation of the reduction of share capital due to utilization of its securities premium account for the purpose of meeting the deferred tax liability in terms of Accounting Standard -22, issued by the Institute of Chartered Accountants of India, as resolved by the special resolution passed by the extraordinary general meeting of the company held on 15 -12 -2006; and further for dispensing with the procedural requirement of Section 101(2) of the Act, as the proposed reduction of share capital does not involve either diminution of any liability in respect of unpaid capital or payment to any shareholder of any paid up capital, and the petitioner -company has no creditor or any class of them entitled to object it.

(2.) IT is stated in the petition that Article 47 of the articles of association of the company provides that the company may, from time to time, by special resolution reduce its capital in any manner permitted by law. It is further stated that Articles 123(3) of the articles of association further provides that the securities premium account and capital redemption reserve fund may, for the purpose of the articles be applied for paying up of unissued shares to be issued to the members of the company as fully paid bonus shares and for various other purposes in accordance with the provisions of law for the time being in force.

(3.) IN the extraordinary general meeting of the company held on 15 -12 -2006, the following special resolution was passed: