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Envin Bioceuticals Pvt. Ltd., Sharda Nagar, Shaharanpur - COMPANY PETITION No. 36 of 2005  RD-AH 16311 (19 September 2006)
Court No. 30.
Company Petition No. 36 of 2005
In the matter of
M/S. Envin Bioceuticals (P) Ltd. Saharanpur.
Hon. Sunil Ambwani, J.
Heard Sri Yashrath for the petitioner and Sri S.K. Saxena, Official Liquidator.
This is an application for reduction of share capital. On 28.3.2006, this Court passed the following order:
"This company petition for reduction of share capital has come up for hearing after advertisement. No objection has been filed.
A perusal of the supplementary affidavit annexing the balance sheet as well as the income tax return shows that the company has submitted a return with loss of Rs. 18717160/- for the assessment year 2004-05. The accounting policy and note on accounts as on 31.3.2004 shows as follows:
"2. SHARE CAPITAL:
The company has increased its Authorised Share Capital to Rs.2.15 Crore from Rs.1.50 Crores divided into 16,50,000 (Sixteen Lacs Fifty Thousand Only) Equity Shares of Rs. 10/- each amounting to Rs./ 1.65 Crore and 50000 (Fifty Thousand Only) 14% Cummulative Preference Shares of Rs. 100/- each amounting to Rs. 50.00 lacs.
during the year new shares have been allotted for unsecured loans taken from the Directors and the Shareholders of the Company on the request received from them. The Company has obtained the co-operation of the Directors and Shareholders by way of waiving off interest on loans provided by them to the Company for the year under review. The said deposits are outside the purview of ''Deposit' under the Companies (Acceptance of Deposits) Rules, 1988 made by the Central Government pursuant to Section 58A of the Companies Act, 1956.
Security deposits received from the Clearing
& Forwarding Agents, Stockists etc. amounting to
Rs. 2,35,482.75 ( Previous Year Rs.6,69,864.67) is exempt from the purview of Companies (Acceptance of Deposits) Rules, 1988 as per Clause No.2(b) (vi) thereunder."
Now by the resolution proposed for acceptance of the Court for reduction of share capital passed in the general meeting of the company dated 13.10.2005, in pursuance of Section 100 of the Companies Act, 1956, the company in order to set off this losses wants to reduce the paid up capital from Rs. 2,10,11,000 divided into 21,01,100 shares of Res 10/- each to Rs. 23,32,221 to Rs. 21,01,100 share of Rs. 1.11 each. The reduction is sought to be effected by cancelling the capital which has been lost and is unrepresented by the available assets to the extent of Rs. 8.89 per share and thereby reduced the loss.
Let notice be issued to Regional Director, Company Affairs, NOIDA, to submit a report as to whether in such events reduction of share capital is permissible, and to report on the balance sheet and accounting policies of the Company. The applicant shall serve a notice on the Regional Director by hand within ten days. His report will be submitted within four weeks. The matter shall be listed again on 4.5.2006 for orders."
Sri Rakesh Chandra , Regional Director, Northern Region, Ministry of Company affairs NOIDA has filed affidavit stating as follows:
"2. That the copy of the petition having been received by the office of the Deponent has been examined and I have acquainted myself with the facts of the matter.
3. That in compliance of this Hon'ble Court order dated 28.3.2006 wherein the Hon'ble Court has directed to the office of the Deponent to report "as to whether in such events Reduction of Share Capital is permissible and to report upon the Balance Sheet and accounting policies of the Company". In this connection it is submitted that
as reported by the Registrar of Companies, Kanpur, there are only 14 shareholders in the Company. There are no qualifications or adverse remarks/comments of the Auditor in the audit report on the accounts for the year ending 31.3.2005. In the notes to the accounts also nothing adverse has been found.
The purpose of Reduction of Capital is due to continuous losses in the Company. The significant part of the capital of the Company has been eroded and is not represented by the available assets in the Company. Main reasons of losses was heavy expenditure incurred by the Company on the cultivation of some import substitution herbs which it could not recover from the crop harvest due to Chinese herbs competition. The Company has stated that even the Income Tax Department has assessed its loss at Rs. 1,72,52,860/- for the financial year 2003-04.
That under section 100(1)(b) of the Act the Company is entitled to approach the Court to cancel the Paid-up Share Capital which is lost or is unrepresented by the available assets. In this case the Company has lost a part of its Paid-up Capital and therefore, has approached for Reduction of Paid-up Capital to that extent."
A perusal of the application and the representation dated 13.10.2005 shows that the company wants to set off the accumulated losses by reducing paid-up capital.
The Central Government and the Official Liquidator have no objection to the proposed reduction.
The company petition is, as such, allowed and the subject resolution for reducing share capital dated 13.10.2005 is confirmed.
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