The petitioner has taken out present petition seeking below mentioned reliefs/directions:- “14(A) That the reduction of capital as approved by the Equity Shareholders on 02.09.2011 by Special Resolution as set out in paragraph 9 above be confirmed;
(B) That to this end, all inquiries and directions, necessary and proper be made and given;
(C) That the proposed minutes be approved;”
2. When the petition was circulated for hearing, after considering the reliefs prayed for, the details mentioned in the petition and the material made available on record, certain details were called for and certain clarifications were asked for from the learned counsel for the petitioner. So far as the clarification with regard to the number of shareholders who attended the meeting and cast their votes in favour of or against the resolution is concerned, the learned counsel for the petitioner had requested for time to place said details on record. It appears that subsequently, additional affidavit dated 16.12.2011 came to be filed wherein the petitioner mentioned below mentioned details:-
“An Extra Ordinary General Meeting of the shareholders of B.R.Metal & Alloys (Guj.) Private Ltd. was (in pursuance of notice dated 2nd August, 2011) held on 2nd September, 2011 at 11.00 A.M. at registered office of the Company at F/4, New Madhavpura Market, Near Police Commissioner Office, Shahibaug, Ahmedabad – 380 004, when the following shareholders were present:
Mr. Babuprasad R. Shah Member Mr. Ghanshyam B. Shah Member Mr. Kailash B. Shah Member Mrs. Manjuben K. Shah Member Mrs. Chandaben G. Shah Member Mrs. Kanchanben B. Shah Member Mr. Nishant Kailash Shah Member Babuprasad R. Shah (HUF) Proxy Mr. Smit Kailash Shah Proxy Miss. Riddhi Ghanshyam Shah Proxy Miss. Siddhi Ghanshyam Shah Proxy Mr. Babuprasad R. Shah was voted to the chair.
The Chairman announced that since the quorum for the meeting was there, the formal proceedings of the meeting could commence. He then formally extended a very warm welcome to the shareholders of the General Meeting and introduced his colleagues on the board to the shareholders.
The Notice convening the meeting together with the Explanatory Statement annexed thereto was read.”
3. It is necessary to note that the number of equity shares of the company, as mentioned in the application, is 64,49,600 of Rs.10/- each. The petitioner has not mentioned the total number of share holders of the company, who hold the said 64,49,600 shares and/or who holds how many shares out of the said 64,49,600 shares. Without mentioning the said details, the petitioner has placed on record the details of the number of persons, who, as claimed in the petition, attended the meeting convened for the purpose of considering the resolution.
3.1 Besides this, in view of the fact that the petitioner has mentioned in para-9 of the petition that the petitioner had declared undisclosed income before the Income Tax Department in the revised Income Tax Return for the assessment year 2010-11 and a sum of Rs.70,00,000/- was credited to the Capital Reserve Account, it was considered appropriate, in view of the proposed resolution and its effect, to invite the comments from the Income Tax Department and therefore, under order dated 19.12.2011, notice to the Income Tax Authority was directed to be issued.
The notice was made returnable on 11.1.2012.
Learned counsel for the petitioner has submitted that the petitioner could not serve the notice to the Income Tax Department. Until now, the notice has remained unserved. Even after the returnable date of the notice, i.e. after 11.1.2012, the proceedings were adjourned to 30.1.2012. On 30.1.2012 same position prevailed and the petitioner did not make any appropriate request for fresh notice or another opportunity to serve the notice to the Income Tax Department, however, so as to not adversely affect the interest of the petitioner, the proceedings were adjourned on 30.1.2012 to today, i.e. 15.2.2012.
4. Today also, the same position continues and now-today Mr. Shah, learned advocate, has appeared instead of Mr. Mehta, learned advocate for the petitioner. Mr. Shah, learned advocate for the petitioner, has submitted that due to shortage of time, the petitioner could not serve the notice to the Income Tax Department and fresh notice may be granted.
The Court declined the request and asked the petitioner to make submissions on merits of the matter.
In response to the said opportunity also, Mr. Shah, learned advocate for the petitioner, requested for time.
The request was declined and the Court again asked Mr. Shah, learned advocate for the petitioner, to make submissions on merits.
However, learned counsel merely repeated the requests for adjournment instead of making submissions on merits of the matter.
5. I have examined the record of the petition and also considered the proposed resolution. On perusal of the petition and other material placed on record, including the Memorandum and Articles of Association as well as the copy of the Balance-Sheet for the year ending 31.3.2011, it is noticed that the petitioner has not made out any justification in support of the request except stating that the shareholders have approved the resolution. The reason and object to resort to the process or remedy of reducing the paid up capital from Rs.6,44,96,000/- to Rs.5,74,96,000/-, i.e. from 64,49,600 equity shares to 57,49,600 equity shares, any justification with regard thereto is not made out. It is stated in the petition that equity shares aggregating in value of Rs.7,00,000/- have been surrendered by the respective shareholders. However, any details as to whether the procedure and the requirements prescribed under the Act for surrendering the shares was followed or not and/or whether the company's memorandum and Articles of Association permits such surrender and if it does then on what conditions and such aspects have not been made clear. On the contrary, the petitioner has proceeded to mention that the undisclosed income which came to be subsequently declared before the Income Tax Department, included in the said value as well. Without substantiating the submission that creditors will not be affected by the proposed resolution, if allowed, the petitioner has made the statement in the petition that the reduction of paid up capital is not going to affect the secured or unsecured creditors more so when 7,00,000 fully or partly paid share have been surrendered and when the company seems to have already accepted such surrender, which in turn is likely to result into out flow of large sum out of company's capital. This may, probably, affect the capital vis-a-vis liability ratio. Such eventualities may or may not occur, however, what is more relevant, at this stage, is that the petitioners has neither mentioned and dealt with the said and such other aspects in the petition nor has the company explained these aspects in any manner, not even during the hearing, though asked by the Court.
6. Since any justification in respect of the resolution and the request has not been made out and any submissions in support of the request having not been made and also in view of the fact that the petitioner did not care to serve the process to the Income Tax Department though the Court specifically and expressly observed in the order that before considering the petition and the request made by the petitioner, it is considered appropriate and necessary in the facts of the present case to take into account the response of the Income Tax Department, the petition does not deserve to be entertained. Hence, the petition fails. Consequently, the petition stands rejected. Notice is discharged.
(K.M.Thaker, J.) kdc