National Company Law Appellate Tribunal, New Delhi (NCLAT): The Coram of Justice Venugopal. M, Judicial Member and Kanthi Narahari, Technical Member, held that ‘Reduction of Capital’ is a ‘Domestic Affair’ of a particular company in which, ordinary, a Tribunal will not interfere because of the reason that it is a ‘majority decision’ which prevails.
The present Company Appeal was focused on being dissatisfied with the order of the National Company Law Tribunal in rejecting the petition filed under Section 66(1)(b) of the Companies Act, 2013 and granting liberty to file a fresh application.
The reason for the filing the company petition by the appellant was seeking an order confirming the reduction of share capital.
The appellant/company had sought relief to confirm the reduction of issued, subscribed and paid-up equity share capital of the petitioner company (appellant) as resolved by the Members in the Annual General Meeting by passing the special resolution.
Further, the pre-mordial plea of the appellant was that the NCLT had failed to appreciate the creeping in of an ‘inadvertent typographical error’ figuring in the extract of the Minutes of the Meeting characterizing the special resolution as a unanimous ordinary resolution. Moreover, the appellant had fulfilled all the statutory requirements of its own ‘Articles of Association’ which had resulted in the dismissal of the petition seeking approval of ‘Reduction of Share Capital’.
On behalf of the Respondents, it was represented that the members of the Appellant/Company at the ‘Annual General Meeting’ that took place among other things resolved that pursuant to Section 66 of the Companies Act, 2013 and subject to other requisite approvals, the paid-up share capital of the Company would reduce from its present level of Rs 67,47,90,000/- to Rs 4,90,00,000/-.
Analysis and Decision
The Resolution passed in the ‘Annual general Meeting’ of the appellant’s company under Section 66 of the Companies Act was found to be in order by the respondents. Registrar of Companies, Delhi found that the appellant had filed the said resolution keeping in tune with the ingredients of Section 66 of the Companies Act, 2013.
‘Reduction of Capital’ is a ‘Domestic Affair’ of a particular company in which, ordinary, a Tribunal will not interfere because of the reason that it is a ‘majority decision’ which prevails.
A ‘special resolution’ is required to determine those matters for which the Act requires a ‘special resolution’ and except these matters in all other situations an ‘Ordinary Resolution’ is to be passed.
Tribunal after subjectively satisfying itself that the appellant has tacitly admitted its creeping in of typographical error in the extract of the minutes and also taking into consideration of 1st respondent’s stand that the appellant had filed the special resolutions with it, which satisfied the requirement of Section 66 of the Companies Act, 2013 and allows the appeal by setting aside the impugned order passed by the NCLT, thereby confirming the reduction of share capital of the appellant.[Economy Hotels India Service (P) Ltd. v. Registrar of Companies, 2020 SCC OnLine NCLAT 653, decided on 24-8-2020]
Advocates before the Tribunal:
For Appellant: Mr. Sujoy Dutta, Mr. Satvinder Singh, Mr. NPS Chawla and Mr. Surek Kant Baxy, Advocates
For Respondent: Mr. P S Singh, Advocate for ROC, Ms. Chetna Kandtal, Company Prosecutor for R1 and R2