1 csp-296-11.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION jmi COMPANY SCHEME PETITION NO. 296 OF 2011. In the matter of Reduction of Share Capital of Globelink WW India Private Limited. Globelink WW India Private Limited., having its registered Office at Satyam Tower, 2nd floor, Behind USV, Off Govandi Station Road, Govandi Deonar, State of Maharashtra. ..Petitioner. .... Mr. Amish Shroff & Cynthia Peravia, i/b. Rajani Associates, for Petitioner. Mr. D.D. Madon, Senior Counsel, i/b. Mulla & Mulla, for Objectors. .... CORAM : S.J. KATHAWALLA, J. DATE : 15TH JULY 2011. P.C. : By this Company Scheme Petition, Globelink WW India Private Limited (the Petitioner Company) seeks sanction and confirmation by this Court with regard to the special resolutions passed by the Petitioner’s shareholders in its Extraordinary General Meeting (EGM) held on 15th October 2009 for the reduction of its preference share capital. 2. The share capital of the Petitioner Company as on 31st December 2010 is as under :- 2 csp-296-11.doc Particulars Amount (Rs.) Authorised Share Capital : 2,000,000 Equity Shares of Rs.10 /- each 20,020,500 Redeemable Preference Shares of Rs. 10/- each 20,000,000 200,205,000 Issued, Subscribed and Paid-up Share Capital : 35,000 Equity Shares of Rs.10 /- each 20,020,500 Redeemable Preference Shares of Rs. 10/- each 4,350,000 200,205,000 There has been no change in the share capital of the Petitioner Company from December 31, 2010 till the filing of this Petition. The Petitioner Company has only two equity shareholders i.e. CWT Globelink Pte. Limited holding 51% shares and Indian Ocean Logistics Limited (IOL) holding 49% shares. Out of these two shareholders, CWT Globelink Pte. India holds 100% paid up preference share capital. 3. Section 100 of the Companies Act, 1956 (the Act) and Article 4 (c) of the Articles of Association of the Petitioner Company empower the Petitioner Company, by way of a special resolution to reduce its share capital in any manner. The Board of Directors of the Petitioner Company proposed the reduction of the preference share capital of the Company. The reason for the reduction of the preference share capital of the Petitioner Company reads as follows :- “the Company has a comfortable bank balance of Rs. 10,84,68,126/- (Rupees Ten Crores Eighty Four Lakhs Sixty Eight Thousand One hundred and Twenty Six Only) as on November 15, 2010. The Company’s turn-over recorded was Rs.90,71,91,112/- (Rupees Ninety Crores Seventy One Lakhs Ninety One Thousand One Hundred 3 csp-296-11.doc and Twelve Only) for the period April 2010 to October 2010 against its total paid up equity share capital of Rs. 43,50,000/- (Rupees Forty Three Lakhs Fifty Thousand Only) and Rs. 20,02,05,000/- (Rupees Twenty Crores Two Lakhs Five Thousand Only) paid up preference capital [which does not reflect an effective use of the paid-up preference share capital ]. The excess funds injected by way of preference shares was for business undertaking ventures/ projects of which the Company intend to pursue, but not materialize and these excess funds were not utilized since infusion into the Company.” 4. The Board of Directors of the Petitioner Company sent a notice and an Explanatory Statement dated 22nd November 2010 in due compliance of the provisions of the said Act for convening the Extra- Ordinary General Meeting of the shareholders of the Petitioner Company on 26th November 2010 to consider, inter alia, passing of the following special resolution :- “RESOLVED THAT , in accordance with section 100 and other applicable provisions of the Companies Act, 1956, and subject to the confirmation of the High Court Judicature at Mumbai, and other appropriate authorities, if any required, the consent of the share holders be and is hereby accorded to the reduction of paid up preference share capital of the Company from Rs. 20,02,05,000/- (Rupees Twenty Crores Two Lakh Five Thousand Only) divided into 2,00,20,500 (Two Crores Twenty Thousand Five Hundred) preference shares of Rs.10 (Rupees Ten each) to Rs. 11,02,05,000/- (Rupees Eleven Crores Two Lakhs Five Thousand Only) divided into 1,10,20,600 (One Crore Ten Lakhs Twenty Thousand Five Hundred) preference shares of Rs. 10 (Rupees Ten each) RESOLVED FURTHER THAT on such reduction of the paid-up preference share capital, CWT Globelink Pte. Ltd, member of the Company will surrender preference share certificate number 001, evidencing a total holding of 2,00,20,500 (Two Crores Twenty Thousand Five Hundred) 4 csp-296-11.doc preference shares of Rs. 10 (Rupees Ten) each fully paid up and thereupon the Company shall pay to them the net proceeds to which they may be entitled to and thereafter issue share certificate for balance preference shares i.e. 1,10,20,500 (One Crore Ten Lakhs Twenty Thousand Five Hundred) of Rs. 10 (Rupees Ten) each. The payout for this reduction will be made from surplus funds available with the Company, maintained from the Company’s bank accounts.” 5. Accordingly, the AGM of the shareholders of the Petitioner Company was held on 26th November 2010. At the said meeting, both the members of the Petitioner Company were present and both the shareholders unanimously passed the resolutions set out in paragraph 4 above. The minutes of the AGM dated 26th November 2010 is annexed as annexure ‘E’ to the scheme Petition. 6. The Petitioner Company had earlier filed Company Summons for Direction No. 342 of 2011 which was disposed of by Minutes of Order dated 10th June 2011. In view of the averments made in paragraphs 2 to 14 of the further Affidavit dated 3rd May 2011 filed by the Petitioner Company , by the said Minutes the provisions of and the procedure prescribed under section 101(2) of the Companies Act, 1956 was dispensed with. By the Minutes of Order of the same day, i.e. 10th June 2011 the Petition was admitted and fixed for hearing on 8th July 2011. The Petitioner Company was directed to get the notice of hearing of Petition published in two local newspapers and in the Official Gazette of the Government of Maharashtra. The Petitioner Company has complied with the said direction and has filed the Affidavit of Publication dated 28th June 2011. 5 csp-296-11.doc 7. It is therefore submitted on behalf of the Petitioner Company that the reduction of the preference share capital pursuant to the special resolution passed by the shareholders at the EGM held on 26th November 2010 does not effect the Petitioner or its shareholders. The proposed reduction of share capital does not involve diminution of liability in respect of the un-paid share capital. It is therefore submitted that the Company Scheme Petition be allowed as prayed. 8. Today, one Shri Raja Raja Varma has appeared before this Court through his Advocate to oppose the Petition. The said Shri Varma is admittedly not a shareholder or a creditor of the Petitioner Company. Shri Varma is a minority shareholder of the Indian Ocean Logistics Limited (IOL) which in turn holds 49% of the equity share capital of the Petitioner Company. He has alleged that the management of the IOL is guilty of oppression and mismanagement and is no longer acting in the best interest of the IOL. The said IOL had attended the EGM held on 26th November 2010 and has supported the resolutions passed in the said EGM. In view thereof, the shareholder of IOL has no right/locus to appear and oppose the sanction/confirmation with regard to the special resolution passed by the shareholders of the Petitioner Company in its EGM held on 26th November 2010 for the reduction of its preference share capital. If Shri Varma has any grievance against the Company in which he is a minority shareholder i.e. IOL, he is always at liberty to take out appropriate proceedings against IOL. The objection of Shri Varma is therefore rejected. 9. In view of the above, there is no valid objection by any person to the relief sought in the above Company Scheme Petition. The reliefs claimed do not prejudice the Petitioner or its shareholders. 6 csp-296-11.doc Under the circumstances, the Company Scheme Petition is allowed in terms of prayer clauses (a) and (b). [ S.J. KATHAWALLA, J. ]