Daily Bread Gourmet Foods (India) Private Limited vs Nil

A.S. Pachhapure, J.—This petition is filed u/s 101 of the Companies Act, 1956 for confirming the reduction of share capital of Daily Bread Gourmet Foods (India) Private limited.

The Petitioner Company was incorporated under the Companies Act, 1956 on 25th April 2003 in the name of CCD Daily Bread Private Limited and further name was changed to Daily Bread Gourmet Foods (India) Private Limited, which is evidenced by the fresh Certificate of Incorporation issued on 29-12-2006 by the Registrar of Companies. Bangalore, Karnataka. The certificate to this effect has been produced by the Petitioner at Annexure-A.

The Registered office of the Company is situated at No. 43, 4th B Cross, 5th Block, Koramangala Industrial Area, Bangalore and the main objects of the Company is to carry on business of manufacturing, producing, buying, selling, importing, exporting, marketing and to act as dealers and agents of Bakery products including food products, ready to eat items, spices, pickles, condiments; agro products, frozen foods, instant food mixes. Beverages hot and cold. The objectives also -include to carry on the business of purveyors, caterers, dealers and/or contractors in food products of all kinds and description, drinks, provisions and other products and/or as refreshment contractors, sugar and sweetmeat merchants, bankers, confectioners, butchers, fishmongers, milk sellers, butter sellers, poulterers green grocers, ice cream manufacturers, fruiterers, bacon factors, meat sellers, cheese mongers, corn and newer merchants, launderers, cleaners, dry cleaners and carpet beaters, manufacturers and dealers of glassware of various kinds, crockery, cutlery, linen and as licenced victuallers, wine beer, alcohol and spirit merchants, brewers: distillers, importers, manufacturers and dealers of aerated, mineral and artificial waters and other alchoholic and non-alcoholic drinks, furniture and furnishings, and all other articles and things required in the said business. More particularly, the main objects of the company have been enumerated in para 4 of the petition.

The Petitioner company is limited by shares; The authorised share capital of the company as on the date is Rs. 60,00,00,000/- (Rs. Sixty Crores only) consisting of 6,00,00,000 (Six Crores only) Equity Shares of Rs. 10/- (Rs. Ten) each and the issued, subscribed and paid up share capital of the company is Rs. 51,68,14,180/ (Rs. Fifty One Crores Sixty Eight Lakhs Fourteen Thousand One Hundred and Eighty Only) consisting of 5,16,81.418 (Five Crores Sixteen lakhs Eighty One Thousand Four Hundred and Eighteen only) Equity Shares of Rs. 10/- (R3. Ten) each fully paid.

Article 6 A of the Articles of Association of the Company provides as follows:

6A The Company may, subject to the provisions of Section 100 to 105 of the Act, from time to time, by a Special Resolution, reduce its share capital and any Capital redemption reserve account or Share Premium Account, in any manner and with, and subject to any incident authorised and concent required by law.

The audited balance sheet of the Petitioner Company upto 31-03-2010 in respect of the assets and liabilities in total is Rs. 52,26,77,391-00 and the balance sheet of the Company has been produced as per Annexure-C.

It is stated that the Company has to carry forward accumulated losses standing in the Balance Sheet Of Rs. 44,62,89,855/- as on 31-03-2010 and Paid up capital as on 31-03-2010 of Rs. 51,68,14,180. The Equity Value of the Company as certified by the Chartered Accountant is Rs. 20,82,76,114/- (Rs. Twenty Crores Eighty Two Lakhs Seventy Six Thousand One Hundred Fourteen only) i.e., Rs. 4.03/- per share. Thus, the Paid up capital of the company to the extent of Rs. 30,85,38,066 (Rs. Thirty Crores Eighty Five Lakhs Thirty Eight Thousand Sixty Six only) is unrepresented by available assets. As per accounting principle, the Profit and Loss Account credit balances carried forward merely is accumulated losses. To this extent on the liability side, the Paid up Capital exhibited is not represented by any tangible asset.

The said loss is permanent loss and is not just a temporary fall in the value of any asset.

It is under these circumstances that the Petitioner sought for the reduction of the share capital to ensure that the Company''s Share Capital accurately reflects the Company''s net asset position, which will provide the company with maximum flexibility in future fund raising exercises through new share issues.

The Board of Directors of the Company at its meeting held on 20-11-2010 resolved that in supersession of the Resolution passed on 16th August, 2010 and pursuant to the provisions of Section 100 and other applicable provisions, if any, of the Companies Act, 1956 and Article 6A and other enabling provisions of the Articles of Association of the Company and subject to the approval of the shareholders of the Company at a General Meeting by a special resolution and further subject to confirmation of the same by this Court and to such approval, consent, permission and sanction as may be necessary in this regard from the authority(ies) concerned, and considering the equity value of the Company of Rs. 20,82,76,114/- (Rs. Twenty Crores Eighty Two Lakhs. Seventy Six Thousand One Hundred Fourteen only) i.e.. Rs. 4.03/- per share, as certified by the Chartered Accountant, the issued, subscribed and paid up Equity Share Capital of the Company of Rs. 51,68,14,180/- (Rs. Fifty One Crores Sixty Eight Lakhs Fourteen Thousand One hundred and Eighty Only) consisting of 5,16,81,418 (Five Crores Sixteen Lakhs Eighty One Thousand Four Hundred and Eighteen only) Equity Shares of Rs. 10/- (Rs. Ten) each fully paid up be reduced to Rs. 20,67,25,672 (Rs. Twenty Crores Sixty Seven Lakhs Twenty Five Thousand Six Hundred Seventy Two Only) divided into 5,16,81.418 (Five Crores Sixteen Lakhs Eighty One Thousand Four Hundred and Eighteen only) Equity Shares of Rs. 4 (Rs. Four only) each by reason of loss of capital being unrepresented by available assets and paying back the balance money to the extent of Re.0.03 per Equity Share on all Shares and that correspondingly the Authorised Capital comprising 6,00,00,000 (Six Crores) Equity Shares of face value of Rs. 10/- (Rs. Ten) each be reclassified as 6,00,00,000 (Six Crores) Equity Shares of the face value of Rs. 4/- (Rs. Four only) each. A copy of the resolution passed at the Meeting held on 20th November, 2010 is produced at Annexure-D.

Accordingly, by a Special Resolution of the Petitioner Company duly passed in accordance with Section 189 of the Companies Act, 1956 at an Extra-Ordinary General Meeting thereof, held after due notice as provided in the Act on 24-11-2010 it was:

RESOLVED THAT in supersession of the Resolution passed on 9th September, 2010 and pursuant to the provisions of Section 100 and other applicable provisions, if any, of the Companies Act, 1956 (''the Act'') and pursuant to Article 6 A of the Articles of Association of the Company readwith Regulation 46 of Table A of Schedule I of the Act and subject to confirmation of the Hon''ble High Court of Karnataka, or any other competent authority(ies) as may be required in this regard, and considering the equity value of the Company of Rs. 20,82,76,114/- (Rupees Twenty Crores Eighty Two Lakhs Seventy Six Thousand one Hundred Fourteen only) i.e., Rs. 4.03/- per share as certified by the Chartered Accountant, the existing issued, subscribed and paid up Equity Share Capital of the Company of Rs. 51,68,14,180/- (Rs. Fifty One Crores Sixty eight Lakhs Fourteen Thousand One Hundred and Eighty only) consisting of 5.16,81,418 be reduced to Rs. 20,67,25,672/- (Rs Twenty Crores Sixty seven Lakhs Twenty Five Thousand Six Hundred Seventy Two only) divided into 5,16,81,418 (Five Crores Sixteen Lakhs Eighty One Thousand Four Hundred and Eighteen only) Equity Shares of Rs. 4/- (Rs. Four only) each, fully paid up by reason of loss of capital being unrepresented by available assets and paying back the balance money to (he extent of Re.0.03 per Equity share on all Shares and that correspondingly the Authorized Capital comprising 6,00,00,000 (Six Crores) Equity Shares of face value of Ps. 10/- (Rupees Ten) each be reclassified as 6,00,00,000 (Six Crores) Equity Shares of the face value of Rs. 4/- (Rs. Four only) each.

RESOLVED FURTHER THAT the accumulated losses of the Company to the extent of Rs. 30,85,38,066/- (Rupees Thirty Crores Eighty Five Lakhs Thirty Eight Thousand Sixty Six only) be written off by cancelling the paid up Equity Share Capital of the Company by Rs. 6/- per Equity Share amounting to Rs. 31,00,88,508/- (Rupees Thirty One Crores Eighty Eight Thousand Five Hundred Eight only) and repaying Re.0.03 per share for 5.16,81,418 Equity Shares amounting to Rs. 15,50.443/-(Rupees Fifteen Lakhs Fifty Thousand Four Hundred Forty Three only).

RESOLVED FURTHER THAT necessary endorsement in the share certificates which have already been issued, be carried out by the Company Secretary, after the capital reduction becomes operative and effective.

RESOLVED FURTHER THAT the Board of Directors of the Company and/or Company Secretary of the Company and/or such other person(s) as may be authorised by the Board of Directors from time to time, in this regard, be and are hereby severally authorized to take necessary action, including making necessary application to the High Court or any other competent authority(ies) as may be specified in this regard and for following and complying with the directions, if any, given by the High Court or any other competent authority(ies) as may be specified in this regard, for effecting the reduction of the Paid up Share Capital in the manner mentioned above.

The certified copy of the notice calling for the Extra-Ordinary General Meeting of the Company held on 24th November 2010 has been produced at Annexure-E and that of the Special Resolution passed by the share holders on 24-11-2010 is produced at Annexure-F. The certified copy of the minutes of the Extra Ordinary General Meeting of the Company have been produced at Annexure-G and the copy of the list of creditors is produced at Annexure-H.

It has been stated by the Petitioners that the proposed reduction of share capital does not cause any prejudice to the Creditors of the Petitioner Company and it does not involve diminution of any liability in respect of unpaid share capital. The Creditors are also in no way affected by the proposed Reduction of the Share Capital as there is no reduction in the amount payable to any of the credito Rs. No compromise or arrangement is contemplated with the Creditors and there is no significant reduction in the security, which the creditors may have in the Petitioner. Further, it is stated that the proposed reduction of Share Capital would not in any way adversely affect the ordinary operations of the Petitioner or the ability of the Petitioner to honour its commitments or to pay its debts in the ordinary course of business. In these circumstances, the procedure laid down u/s 101(2) of the Act would not be required to be followed and hence, the same is hereby dispensed with.

In the light of the above circumstances and there being no claim or objection to this petition, I find that the minutes of the meeting could be approved.

A certified copy of this order including the minutes as approved be delivered to the Register of Companies within 21 days from the date of receipt of copy of this order.

Vide order dated 10-12-2010 Petitioner was permitted to take out advertisement in English daily "The Hindu" and Kannada daily "Vijaya Karnataka" and the petition was published on 16 12-2010 fixing the date of hearing on 12-01-2011. No objections have been received by any persons interested in the Petitioner company.

The paidup Equity Share Capital of DAILY BREAD GOURMET FOODS (INDIA) PRIVATE LIMITED is henceforth Rs. 20,67,25,672/- (Rs. Twenty Crores Sxity Seven Lakhs Twenty Five Thousand Six Hundred seventy Two only) divided into 5, 16, 81, 418 (Five Crores Sixteen Lakhs Eighty One Thousand Four Hundred and Eighteen Only) Equity Shares of Rs. 4/- (Rs. Four only) each, reduced from Rs. 51,68,14,180/-(Rs. Fifty One Crores Sixty Eight Lakhs Fourteen Thousand One Hundred and eighty only) divided into 5,16,81,418 (Five Crores Sixteen Lakhs Eighty One Thousand Four Hundred and Eighteen only) Equity Shares of Rs. 10/- (Rs. Ten only) each fully paid up at the date of registration of this minutes and the remaining 83,18,582 Equity Shares of Rs. 4/- each are unissued.

In the circumstances, the petition is allowed. The reduction of share capital resolved by the Special Resolution of the Company dated 20-11-2010 set out in paragraph 15 of the petition is confirmed. The procedure prescribed u/s 101(2) of the Companies ACT is dispensed with. The proposed minute as set out in paragraph 19 of the petition is approved.