JUDGMENT : ( 1. ) THE petitioner company, namely the Indian National Press (Indore) Limited, has filed this petition under Section 101 of the Companies Act, 1956, for confirming the resolution passed by the company regarding reduction of its share capital. ( 2. ) THE petitioner-company was registered on February 10, 1983 under the provisions of the Companies Act, 1956 as a company with limited liability. The registered office of the company is situated at Free Press House, 3/54, Press Complex, Agra-Bombay Road, Indore-452 008 (MP ). ( 3. ) THE objects of the company are : (a) To carry on in India or abroad the business of printing and publishing newspaper, magazines, journals, books, news letters, pamphlets and any other daily or periodical in any Indian or foreign languages, under any name including names/titles registered by Indian National Press (Bombay) Ltd. with the Registrar of Newspapers, Govt. of India, New Delhi. (b) To carry on business as importer, exporter, agent, broker, stockists, distributors, processors, manufacturers or otherwise to buy, sell, exchange and deal in all commodities, materials, things and articles used in the business of printing and publishing. (c) To carry on the business of printers, publishers, stationers, lithographers, stereotypers, electrotypers, photographic printers, photo lithographers, chrome lithographer photographers, bookbinders, on job basis or contract basis or otherwise, (d) To carry on business as importers, exporters, agents, brokers, stockists, distributors, processor, manufacturer or otherwise buy, sell, exchange and deal in all commodities, things and articles mentioned in the object clause of the company under these presents. (e) To amalgamate or merge with any other company or to act as a subsidiary or holding company for any other company and to enter into partnership, with any other person, firm or company club, trust, association or enter into any arrangement for sharing profits or losses, union of interest, co-operation of association of persons, joint ventures or reciprocal concession for attainment of main, incidental and other objects to the company under these presents. ( 4. ) THE capital of the company is Rs. 25,000,00 divided into 25,000 equity shares of Rs. 100 each of which 20,506 equity shares have been issued and have been fully paid up or credited as fully paid up. ( 5. ) SHORTLY after its incorporation, the company commenced its business and has since then been carrying on its business of printing and publishing newspapers, etc. 25,000,00 divided into 25,000 equity shares of Rs. 100 each of which 20,506 equity shares have been issued and have been fully paid up or credited as fully paid up. ( 5. ) SHORTLY after its incorporation, the company commenced its business and has since then been carrying on its business of printing and publishing newspapers, etc. , and are printers and publishers of the Indore edition of the Free Press Journal. ( 6. ) THE memorandum and articles of association of the said company are filed as annexure-A. By Article 11 of the articles of association of the company, it is provided that the company may, from time to time, reduce its capital by a special resolution, the wordings of which are as follows : " The company may, from time to time, by special resolution, reduce its capital in any manner for the time being authorised by law and in particular (without prejudice to the generality of the power) capital may be paid off on the footing that it may be called up again or otherwise. This article is not to derogate from any power the company would have if it were omitted. " ( 7. ) THE company, since its inception, has been incurring heavy losses due to severe economic and financial constraints in the newspaper industry and according to the annual report and accounts of the company for the year ended December 31, 1985 (annexure-B), the company has accumulated losses of Rs. 39,52,386. 23. Further, according to the company, although there is a surplus in the present working, it is not adequate to recover the total loss in the very near future. Hence taking into consideration all the losses suffered, the capital of the company is not fairly represented, for, with the available assets, it would be impossible to make good the capital which is already lost and not represented by available assets. ( 8. ) FURTHER, according to the company, the accumulated losses will adversely affect the prospects of obtaining institutional finance which will be required for the development and modernisation of the company. Further, dividends can be declared only after set off of the accumulated losses against future profits, in terms of Section 205 of the Companies Act, 1956. ( 8. ) FURTHER, according to the company, the accumulated losses will adversely affect the prospects of obtaining institutional finance which will be required for the development and modernisation of the company. Further, dividends can be declared only after set off of the accumulated losses against future profits, in terms of Section 205 of the Companies Act, 1956. The company is also not able to apply for enlistment of the shares with a recognised stock exchange on account of the large accumulated losses as this comes against the guideline issued in this regard. Hence, unless the company is able to write off the losses or totally restructure the capital base, it will affect the future of the company and the shareholders will be deprived of any return on their investment. ( 9. ) THEREFORE, the company, in order to give a true and fair view of the capital structure after considering the facts referred hereinabove and the report of the auditors of the company, M/s. D. Y. Ranade and Co. , thought it necessary to reduce the capital at least by Rs. 18,45,540 out of the said sum of Rs, 39,52,386. 23 so that a true and fair position of the capital structure of the company is reflected in the balance-sheet. ( 10. ) FURTHER, according to the company, the proposed reduction is for the benefit of the company and its shareholders and by the said reduction, the company is in a position to give a true and fair view of the capital structure of the company to the outsiders who have dealings and transactions with the company and the company will also be able to reduce its expenses which is adding to the losses that are being incurred by the company. This will also be economical for the company and its shareholders. ( 11. This will also be economical for the company and its shareholders. ( 11. ) THEREFORE, by a special resolution of the company, passed in accordance with Section 189 of the Companies Act, 1956, at an extraordinary general meeting held on September 8, 1986, for which notice dated August 30, 1986 (annexure C), was issued, it was unanimously resolved that the capital of the company should be reduced by reducing the value of the share of the company subject to the confirmation of the High Court of M. P. Bench at Indore and the following resolution was adopted and the minutes of the said extraordinary general meeting are annexure E : " RESOLVED pursuant to Section 100 of the Companies Act, 1956 and subject to confirmation of the Honble High Court of Madhya Pradesh Bench at Indore that the paid-up equity capital of the company be reduced from Rs. 20,50,600 divided into 20,506 equity shares of Rs. 100 each fully paid up and that such reduction be effected by cancellation to the extent of Rs. 90 share of the paid up capital of the company which has been lost so as to bring the paid up capital almost in parity with and making it representative of the assets at present held by the company. RESOLVED further that the capital clause of the memorandum of association of the company be accordingly altered after the aforesaid reduction becomes effective and operative. RESOLVED further that the company should take necessary steps for obtaining confirmation of the Honble High Court for the aforesaid resolution and scheme of reduction and on such confirmation each of the shareholders would present his/her or their share certificates to the company so that the share certificates be suitably amended to give effect to their reduction. " ( 12. ) FURTHER, according to the company, the proposed reduction of the capital does not involve either diminution of any liability in respect of any paid up capital of the company or the payment to any shareholder of any paid up capital. The proposed reduction as has been stated hereinabove is by cancelling the paid up capital which has been lost or is not represented by available assets. The company has creditors and the proposed reduction will not be prejudicial to the interest of the creditors in any manner whatsoever. ( 13. The proposed reduction as has been stated hereinabove is by cancelling the paid up capital which has been lost or is not represented by available assets. The company has creditors and the proposed reduction will not be prejudicial to the interest of the creditors in any manner whatsoever. ( 13. ) THE form of the minutes proposed to be registered under Section 103 (l) (b) of the Companies Act, 1956, is as follows: " Paid up equity share capital of the company, namely, Indian National Press (Indore) Limited henceforth is Rs. 2,05,060 divided into 20,506 equity shares of Rs. 10 each reduced from Rs. 20,50,600 divided into 20,506 equity shares of Rs. 100 each. So, at the date of registration of these minutes, all the said shares have been issued and are deemed to be fully paid up. " ( 14. ) FURTHER, according to the company, unless the orders herein are made, the interest of the company and its shareholders will be seriously prejudiced and the company and its shareholders will have to suffer serious loss and injury and the shareholders, in the near future, will have no hope of any return of their capital invested in the shares in, and of, the company and it is just and equitable that the proposed reduction be confirmed by this court. ( 15. ) THE petitioner company has, therefore, prayed that: (a) the petitioner be allowed reduction of the capital resolved by a special resolution set out in paragraph 8 of the petition be confirmed; (b) the proposed minutes be approved ; (c) the suffixed word "and reduced " to the name of the company be dispensed with. ( 16. ) AFTER the said petition was filed under Rule 46 of the Companies (Court) Rules, summons in Form No. 19 was published in the English edition of the Free Press Journal published from Indore dated September 29 1986, the summons in Hindi was published in the Free Press Journal, Indore dated September 30, 1986, in the English edition of the Free Press Journal published from Bombay dated September 27, 1986, and in the Hindi edition of the Navshakti published from Bombay dated September 27, 1986. The Gazette notification in the M. P. Gazette was also published in the Gazette dated October 10, 1986. ( 17. The Gazette notification in the M. P. Gazette was also published in the Gazette dated October 10, 1986. ( 17. ) SHRI Shantilal Porwal, son of Ganpatsingh Porwal, who is working as an accountant in the said company has filed his affidavit dated October 29, 1986, enclosing therewith a list of creditors, as on September 30, 1986, giving all the necessary details, who have given their "no objection " to the reduction, numbering 1 to 25, amounting to Rs. 31,84,510. 89 as also the list of creditors, including depositors, from whom the no-objection consent letter has not been received, numbering 27 to 38 amounting to Rs. 1,20,831. 12. ( 18. ) AFTER the publication of the notices issued by this court, none has appeared so far to oppose this petition. ( 19. ) LEARNED counsel for the petitioner-company, Shri R. G. Wagh-mare, submitted that so far as the creditors, including the depositors who have-not given their consent to the reduction and who have to recover a sum of Rs. 1,20. 831,12, are concerned, for the security of their dues, the company is prepared to furnish bank guarantee of a nationalised bank for which a reasonable time be given to the company to furnish the same in the name of the Additional Registrar of this court at Indore. ( 20. ) THE need for reducing capital may arise in various ways, for example, trading losses, heavy capital expenses, and assets of reduced or doubtful value. As a result, the original capital may either have become lost or a company may find that it has more resources than it can profitably employ. In either case, the need may arise to adjust the relation between capital and assets. ( 21. ) THE company has the right to determine the extent, the mode and incidence of the reduction of its capital. But the court, before it proceeds to confirm the reduction of capital, must see that the interests of the minority and that of the creditors are adequately protected and there is no unfairness to it, even though it is a domestic matter of the company. But the court, before it proceeds to confirm the reduction of capital, must see that the interests of the minority and that of the creditors are adequately protected and there is no unfairness to it, even though it is a domestic matter of the company. The power of confirming or refusing to confirm the special resolution of a company to reduce its capital is conferred on the court in order to enable it to protect the interest of person who dissented or even of persons who did not appear, except on the argument and hearing of the petitioner. ( 22. ) IN the present case, according to the articles of association, the company is empowered to reduce its capital by passing a special resolution in accordance with law, which has been done in the present case. Some creditors (marked as annexure A to W) have, in writing, submitted that they have no objection/consent to the proposed reduction of capital. In the present case, there is nothing on record to indicate that the proposal is unjust or unfair. That apart, the company is prepared to give a bank guarantee of a nationalised bank by way of security relating to the creditors who have not given their consent to the proposed reduction. ( 23. ) IN the result, this petition is allowed. The special resolution passed by the company for reduction of its share capital is confirmed as contemplated by Section 102 of the Companies Act. The draft of the minute submitted by the company is approved. ( 23. ) IN the result, this petition is allowed. The special resolution passed by the company for reduction of its share capital is confirmed as contemplated by Section 102 of the Companies Act. The draft of the minute submitted by the company is approved. The company shall, within a fortnight from to-day, publish in the newspaper " The Free Press Journal" published from Bombay and Indore, notice of the registration of the order and of the minute as have been approved ; that within a period of two weeks from today, the words " and reduced" shall be added to the name of the company as the last words thereof ; that the company shall, within two weeks from today, publish the reason for reduction or the causes that led to it in the aforesaid journals published from Bombay and Indore ; that a certified copy of this order, including the minute as approved, be delivered to the Registrar of Companies within 21 days from this date ; that notice of the registration by the Registrar of Companies of this order and of the said minute be published once each in the M. P. Gazette and in the Free Press Journal published from Indore within 14 days of the registration approved. The company shall, within a period of two weeks from today, furnish a bank guarantee of a nationalished bank to thetune of Rs. ],20,83112 in favour of the Additional Registrar of this court by way of security for the amount payable to the creditors who have not objected nor consented to the proposed reduction. ( 24. ) THE petition is disposed of accordingly.