R. Systems International Ltd., In re

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The Tax Publishers 2018 TaxPub(CL) 0895 (NCLAT-Del) R. Systems International Ltd., In re COMPANIES ACT, 2013, --Power to compromise or make arrangements with creditors and members --Dismissal of section 230 application by Tribunal Reduction of share capital --Applicability of section 230 v/s. section 66 --Where the application under section 230 was filed in relation to the scheme of arrangement contemplating reduction of share capital and the Tribunal dismissed the said application in view of specific provision contained in section 66, then, the Tribunal failed to notice the 'Explanation' below section 230 that for passing an order under section 230 to compromise or make arrangements with the creditors and the members, the provision of section 66 would not apply for reduction of share capital.--Appellant-company filed application in relation to the scheme of arrangement, which contemplated reduction of its share capital. However, the Tribunal dismissed the said application on the ground that exclusive provision for reduction of share capital was provided under section 66 in the Act. Therefore, appeal was filed against the order. *Held:* The Tribunal referred to section 66, being the specific provision for rejecting the application under section 230, as the scheme of arrangement was related to reduction of share capital. It was evident from Explanation below section 230 that for passing an order under section 230 to compromise or make arrangements with the creditors and the members, the provision of section 66 would not apply for reduction of share capital. Therefore, the Tribunal failed to notice the 'Explanation' below section 230 that under section 66 for reduction of share capital effected in pursuance of the order of the Tribunal under section 230, the provision of section 66 would not apply. Hence, the order of Tribunal was set aside and the matter was remitted back to the Tribunal to decide the application in accordance with law. Companies Act, 2013, Sections 230 & 66 *Review:*R. Systems International Ltd., In re [CA(CAA)-105 (ND) of 2017, dt. 8-12-2017] *REFERRED :* Investment Corpn. of India Ltd., In re (1987) 61 Com Cas 92 & Gujarat Ambuja Exports Ltd. v. Gujarat Electricity Board (2003) 42 SCL 163 SUBSCRIBE FOR FULL CONTENT

The Tax Publishers 2018 TaxPub(CL) 0895 (NCLAT-Del)

R. Systems International Ltd., In re

COMPANIES ACT, 2013,

--Power to compromise or make arrangements with creditors and members --Dismissal of section 230 application by Tribunal Reduction of share capital --Applicability of section 230 v/s. section 66 --Where the application under section 230 was filed in relation to the scheme of arrangement contemplating reduction of share capital and the Tribunal dismissed the said application in view of specific provision contained in section 66, then, the Tribunal failed to notice the 'Explanation' below section 230 that for passing an order under section 230 to compromise or make arrangements with the creditors and the members, the provision of section 66 would not apply for reduction of share capital.--Appellant-company filed application in relation to the scheme of arrangement, which contemplated reduction of its share capital. However, the Tribunal dismissed the said application on the ground that exclusive provision for reduction of share capital was provided under section 66 in the Act. Therefore, appeal was filed against the order. Held: The Tribunal referred to section 66, being the specific provision for rejecting the application under section 230, as the scheme of arrangement was related to reduction of share capital. It was evident from Explanation below section 230 that for passing an order under section 230 to compromise or make arrangements with the creditors and the members, the provision of section 66 would not apply for reduction of share capital. Therefore, the Tribunal failed to notice the 'Explanation' below section 230 that under section 66 for reduction of share capital effected in pursuance of the order of the Tribunal under section 230, the provision of section 66 would not apply. Hence, the order of Tribunal was set aside and the matter was remitted back to the Tribunal to decide the application in accordance with law.

Companies Act, 2013, Sections 230 & 66

Review:R. Systems International Ltd., In re [CA(CAA)-105 (ND) of 2017, dt. 8-12-2017]

REFERRED : Investment Corpn. of India Ltd., In re (1987) 61 Com Cas 92 & Gujarat Ambuja Exports Ltd. v. Gujarat Electricity Board (2003) 42 SCL 163