P.N. Shinghal, J.
1. This is a petition of the Rampuria Ice Factory Ltd. Bikaner, under Section 101 of the Companies Act, 1956 for an order confirming the reduction in its share capital by paying a portion of the paid up share capital which is paid to be in excess of the wants of the Company within the meaning of Section 100(1)(c) of the Companies Act.
2. It has been stated in the petition that the capital of the Company is Rs. 8, 50,000 divided into 55,000 ordinary shares of Rs. 10/- each and 33,000 cumulative preference shares of 4 1/2 cent of Rs. 10/- each. The subscribed capital of the Company is stated to be Rs. 3, 33,020/-. The Company commenced its business on April 9, 1946 and is reported to be carrying it on at present. The financial position of the company is reported to have improved to such an extent that the directors felt that the Company will have a surplus fund of about Rs. 100, 000/- which could conveniently be refunded to the share-holders without any loss to the Company as this amount is stated to be in excess of the needs of the Company. It has further been stated that Article 36 of the articles of association provides for such reduction in the capital of the Company by a special resolution. A special resolution to this effect is said to have been passed at an extra-ordinary general meeting of the Company on November 7, 1967 to the following effect-
Resolved that subject to the confirmation of the Rajasthan High Court under Section 100 of the Companies Act, 1956 the subscribed and paid up capital of the company be reduced from Rs. 3, 33, 020/...to Rs. 2, 33, 114/- by way of refunding of Rs, 3/- per share to each share-holder on the 33, 302 ordinary shares of Rs 10/- each fully called and paid up in cash being capital in excess of the wants of the company.
3. It has been prayed that this Court should confirm the reduction of the share capital on the resolution of the Company. A list of the creditors of the company has been enclosed.
4. A detailed order was made on December 12, 1967 for an enquiry to ascertain the debts, claims and liabilities of or effecting the Company as on December 12, 1967 and to prepare a list of creditors in accordance with the procedure laid down by the law. But no objection, was filed by any one, except that Mr. S.K. Mal Lodha appeared on behalf of the Registrar of Companies on July 15, 1968 and prayed for leave to appeal and oppose the petition. He also filed the Registrar's reply in opposition. There was at one stage a dispute about the Registrar's right to oppose the petition, but that objection was waived by Mr. Purohit, learned Counsel for the petitioner, as would appear from this court's order dated December 13, 1968. On that date the learned Counsel were in agreement that there was substantial compliance with the provisions of Section 101(2) of the Companies Act and rules 43-58 of the Companies (Court) Rules, 1952. It was held that all the creditors listed by the petitioner company were entitled to object. Thereupon Mr. Purohit filed an affidavit to the effect, that as a matter of fact, no creditor or any other person had filed any objection except of course for the stand taken by the Registrar of companies in his reply referred to above.
5. I have heard the learned Counsel for the petitioner and Mr. Lodha on behalf of the Registrar of Companies.
6. Mr. Lodha has opposed the confirmation of the resolution in question on the ground that the financial position of the company is not satisfactory and there is no sufficient surplus to justify the reduction in the capital prayed for. To meet this objection, the petitioner has filed an affidavit dated July 31, 1968 showing how the Liquid assets of the company are in excess of its requirement. In paragraph 6 of the affidavit it has been stated that on November 7, 1967, the date on which the resolution in question was passed at the special general meeting of the company, the company had liquid assets amounting to Rs. 1, 38, 142/6 and that on July 29, 1968, the date just before the hearing fixed for July 31, 1963, the liquid assets amounted of Rs. 2, 11, 331/38. There is no rebuttal of this affidavit and it cannot be said that the capital of the Company is not surplus of its requirements, It is well settled that it is not necessary for the Company to show by how much its capital is surplus to its requirements and confirmation of a resolution like the present cannot be refused on any such consideration. It will be sufficient for me to refer in this connection to ex-parte Western Sugar Refineries Ltd. 1951 A.C. 625 in which it has been held that it is essentially a domestic matter which the share-holders and their managers must decide among themselves, how much of the paid-up share capital the Company can dispense with for the future.
7. Having put aside the basic objection of the Registrar of Companies; the points for consideration are whether (i) the articles of association of the Company provide for such reduction of capital (ii) enough provision has been made to safeguard the interests of the creditors, (iii) the proposed reduction is equal and all round for all ordinary share-holders; (iv) any prejudice will be caused by the confirmation to any minority share-holders and (v) the public who have not objected are likely to be prejudiced in their dealings with the Company.
8. A perusal of the Article 36 of the articles of association of the petitioner Company shows that it provides for reduction of capital of the Company by a special resolution in accordance with the provisions of sections 100 to 105 of the Companies Act. This requirement of Section 100 has been fulfilled as aforesaid.
9. So far as the question of, safe-guarding the interests of the creditors is concerned; it appears that although the petitioner gave a list of 29 creditors, their credits only amount to Rs. 3221/53 so that they are petty creditors. It also appears from a perusal of Schedule-A that most o f them are customers of the petitioner who have made petty deposits against supplies taken by them from the Company. All the same, none of them has filed any objection to the petitioner. EXT facie, therefore, there is nothing to show that they are anxious to secure an order for the safe-guarding of their interests. Even then Mr. Purohit has stated at the Bar that the petitioner will have no objection if the court makes an order that the petitioner shall furnish bank guarantee in respect of the debt mentioned in Schedule-A. This condition will; therefore amply safe-guard the interests of the creditors.
10. A perusal of the petition and the special resolution show that the petitioner proposes to reduce the paid-up capital from Rs. 3, 33, 020/- to Rs. 3, 33, 114 by refunding Rs. 3/- per share to each of its 33, 302 ordinary share-holders of Rs. 10/- each. The proposed reduction is, therefore, equal and all round for all the share-holders of that class.
11. There is no allegation that there are any minority share-holders or that any prejudice will be caused to them. This question does not therefore arise for consideration at all.