Reduction Of Share Capital Does Not Exempt Company From Fulfilling Other Statutory Obligations: NCLT Ahmedabad

The National Company Law Tribunal, Ahmedabad comprising of Dr V.G Venkata Chalapathy (Member Technical) and Chitra Hankare (Member Judicial) approved a Section 66 application of Companies Act, 2013 filed by the Mahan Industries, seeking confirmation in the reduction of its share capital. Background of the Case The following case involves an application filed by Mahan Industries under Section 66 of the Companies Act, 2013 for seeking confirmation in the reduction of its share capital. The main objects of the company as set out in its MOA is to carry on business of trading investment, and business of financial company. The authorised capital of the company was Rs 37.3 crores as on December 20, 2022 and the issue, subscribed and paid-up share capital stood at Rs 36 crores. The company through its application has proposed to eliminate accumulated losses which are amounting to Rs 33.61 crores and to restructure its financial health. The new restructure decision was passed by a special resolution by the board in the EGM as held on September 21, 2021. The objective behind the application is to clean the company's balance sheet and enable it to attract future investments. It also helps the company ensure accurate representation of its financial position. The Regional Director, Registrar of Companies or the Income Tax Department has no objection with the reduction and the same will have no affect on the creditors as the company has sufficient assets to discharge liabilities. Judgement of the Court The Tribunal allowed the application for the reduction of the share capital filed by the Mahan Industries under Section 66 of the Companies Act, 2013. It found the proposed capital reduction to be following the applicable laws and stated that no objections have been raised by the Regional Director, Registrar of Companies, or the Income Tax Department. The tribunal also stated that the sanction of reduction does not exempt the company from fulfilling other statutory obligations such as payment of taxes, stamp duties or compliance with SEBI, FEMA and Income Tax Laws. As a result, the company was directed to register the approved minutes under Section 66(5) of the companies act, 2013. Case Title: Mahan Industries Limited Case Number: CP 8 of 2023 (Under Sec 66 of Companies Act, 2013) Tribunal: National Company Law Tribunal, Ahmedabad Coram: Mrs. Chitra Hankare, Hon'ble Member(J) and Dr. Velamur G Venkata Chalapathy, Hon'ble Member(T) For the Applicant: Mr. Nipun Singhvi, Adv. a.w. Ms. Pragati Tiwari, Adv., Mr. Abishek Chhajed, PCS & Ms. Sejal Palan, PCS For the RD: Mr. Shiv Pal Singh For the Income Tax: Ms. Kinjal Vyas, Adv. For Ms. Maithili Mehta, Adv. Date of Judgement: 12.11.2024 Read/DownloadOrder Here

Reduction Of Share Capital Does Not Exempt Company From Fulfilling Other Statutory Obligations: NCLT Ahmedabad

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