M/s. Tellerco Travel and Foreign Exchange Private Limited vs Registrar of Companies

This is an application filed under Section 66 of the Companies Act, 2013 by M/s. Tellerco Travel and Foreign Exchange Private Limited (for brevity the Company) (CIN: U63090KL2019PTC058068) for the following reliefs:

i. That the reduction of capital resolved on by the special resolution set out in paragraph 10 above be confirmed;

ii. That the bankers of the Company be directed to unfreeze the current account of the Company with immediate effect.

iii. That the requirement of issuing notice to creditors and publishing newspaper advertisements may kindly be waived.

iv. That to this end all directions necessary and proper be made and given;

v. That the proposed minute set out in paragraph 19 be approved.

The applicant is incorporated with the Registrar of Companies, Kerala on the 21st day of May 2019 (21.05.2019), under the provisions of the Companies Act, 2013 with the name and style “Tellerco Travel and Foreign Exchange Private Limited” a Company limited by shares. The Registered Office of the Company is situated at Door No. 6/671/11, 2nd Floor, Trine Tower, Seaport-Airport Road, Thrikkakkara, Kakkanad, Ernakulam, Kerala- 682 021. The original authorized share capital of the company was Rs.10,00,000 (Rupees Ten Lakh only) and the issued and subscribed and paid-up share capital was Rs. 10,000 (Rupees Ten Thousand only) as on 31.03.2020. Thereafter the authorized share capital was raised to Rs. 2,00,00,000/- (Rupees Two Crore only) divided into 20,00,000 (Twenty Lakh only) Equity Shares of Rs. 10/- (Rupees Ten only) and the issued and subscribed and paid-up share capital of the Company to Rs. 60,10,000/-(Rupees Sixty Lakh Ten Thousand only) divided into 6,01,000 (Six Lakh One Thousand only) equity shares of Rs. 10/- (Ten) each.

The main objects of the Company are:

i. To carry on the business of transporters, travel/tourist agents, and contractors, and to act as packed tour operators, or promote the provisions of conveniences 0f all kinds in the way of through tickets Circular tickets, sleeping cars or berths, reserved places, hotels and boarding end/or lodging accommodation and guides, resting rooms, baggage transport and otherwise and to carry out the business of dealers or agents in foreign, exchange or to act as full-fledged/ restricted money changers subject to the approval of RBI or such other regulatory bodies, and to provide consultancy in the field of foreign exchange management both in India or abroad.

Article 39 of the Articles of Association of the Company provides that the company from time to time, in compliance with the provisions of the Companies Act, may reduce its capital. Copy of Memorandum of Articles of Association is annexed. Article 39 of Articles of Association is reproduced herein: -

“The company may, by special resolution, reduce in any manner and with, and subject to, any incident authorized and consent required by law,

a) Its share capital;

b) Any capital redemption reserve account; or

c) Any share premium account.”

The applicant submits that the Company was incorporated with the view to run a foreign exchange business under the name and style of Tellerco Travel and Foreign Exchange Private Limited. In view of the same, the company had proposed to apply for a Full-Fledged Money Changer License (FFMC) from the Reserve Bank of India. The primary requirement for applying for a multiple branch FFMC license with the Reserve Bank of India is the minimum authorized and paid-up capital to be of Rs. 50 Lakhs. The Company had originally authorized share capital of Rs. 10,00,000/- (Rupees Ten lakhs only). The issued and subscribed and paid-up share capital of the company was Rs. 10,000/- (Rupees Ten Thousand only). On 15.06.2020 the authorized share capital was raised to Rs. 2,00,00,000/- (Rupees Two Crore Only. On 10.08.2020 the issued and subscribed and paid-up capital was raised to Rs. 60,10,000/- (Rupees Sixty Lakh Ten Thousand only) with the intention to apply for the FFMC license with the Reserve Bank of India. However, the Covid-19 pandemic and the related lockdown affected the business plans of the Company adversely. The company and the management had to endure the Second Wave of the Covid-19 pandemic which affected the promoters personally as well as financially. The management of the Company was also informed by its bankers (Axis Bank) that its current account is frozen as the Company has not been able to start the business of foreign exchange. In view of the above, the applicant did not pursue applying for FFMC License.

It is submitted that the Board of Directors at their meeting held on 10.08.2021 deliberated about not continuing any business activities and to shut down the Company as early as possible in near future. Since the management has decided not to carry out any business activities and to shut down the Company, the surplus capital funds that are not required to be utilized for the business of the Company are required to be handled and it became necessary to carry out the reduction of capital of the Company to pay off the surplus paid-up share capital to the shareholders.

The learned counsel for the applicant further argued that the Company is now proposing to undertake a scheme of capital reduction whereby the Company would reduce the issued, subscribed, and paid-up equity share capital from Rs. 60,10,000/- (Rupees Sixty Lakh Ten Thousand only) consisting 6,01,000 (Six Lakh One Thousand) equity shares of Rs. 10/- (Rupees Ten only) each, to Rs. 5,00,000/- (Rupees Five Lakhs only) consisting 50,000 (Fifty Thousand) equity shares of Rs.10/- (Rupees Ten only) each, by cancelling and extinguishing Rs. 55,10,000/- (Rupees Fifty-Five Lakh Ten Thousand only) of the total issued, subscribed, and paid-up equity share capital of the Company, by Rs. 5,51,000 (Five Lakh Fifty-One Thousand) equity shares of Rs.10/- (Rupees Ten only) each. It is further submitted that the reduction of Capital in the manner proposed herein would enable the Company to have an ideal capital structure commensurate with the current business and assets and the proposed reduction of share capital will not adversely affect the company and its shareholders, creditors, employees, and other stakeholders as a whole. The applicant also submits that the Company has not accepted any deposits from the public till the date.

It is further stated that the notice of AGM was served and Special Resolution has been passed in a duly held Annual General Meeting on 08.10.2021 in accordance with Section 66(1) of the Companies Act, 2013, approving the proposed reduction of share capital. Thereafter the Board of Directors of the Company passed a resolution on 21.12.2021 approving the proposed reduction of share capital.

It is further stated that the Company has received an unsecured loan from the Director- Mr. Nibu Varkey as on 31st March 2021. The Statutory Auditor certifies that Mr. Nibu Varkey is the only creditor in this company and the attested certificate has also been produced by the applicant. The applicant Company obtained the No Objection Certificate from the creditor Mr. Nibu Varkey and produced it along with this application.

The applicant stated that the members holding 100% share capital of the Company voted in favour of the special resolution, for reduction of share capital and none of the members voted against the resolution. It is further stated that the accounts maintained by the Company conform to Accounting Standards specified under Section 133 of the Companies Act, 2013 and to that effect a certificate from the Statutory Auditor of the Company has been obtained and there are no reservations or adverse remarks or disclaimer made by the auditors in their report for the financial year ended on 31.03.2021. It is further submitted that there are no pending inspections, inquiries or investigations against the Company under the Companies Act or any other prevailing laws in India.

The applicant further stated that the Company is not having any foreign investments and, therefore, was not required to comply with the provisions of FEMA and RBI guidelines in respect of Foreign Direct Investment (FDI). A certificate from the Statutory Auditor of the Company is placed on record that the proposed reduction of share capital does not involve extinction or reduction of any liability in respect of the unpaid share capital or payment to shareholders of the company and involves the cancellation of paid-up share capital which is lost or is unrepresented by available assets as per the details given in the resolution as under:

"RESOLVED FURTHER THAT pursuant to Section 66 and such other applicable provisions of the Companies Act, 2013 read with the Articles of Association of the Company and in accordance with the approval by members at the annual general meeting held on 08.10.2021 and subject to the sanctions and approvals of the appropriate authorities as may be required, subject to the confirmation by the Honourable National Company Law Tribunal and subject to such terms, conditions or modifications if any, as may be prescribed by such authorities while granting the Such approvals, consents or permissions and which may be agreed to by the Board of Directors of the Company, the Board of Directors be and is hereby approve the draft scheme placed before the Board and accordingly the Company's Issued, Subscribed and Paid-up Equity share capital of Rs. 60,10,000/-(Rupees Sixty Lakh Ten Thousand only) consisting of 6,01,000 (Six Lakh One Thousand) Equity Shares of Rs.10/- (Rupees Ten Only) each fully paid up be reduced by cancelling and extinguishing a sum of Rs. 55,10,000/-(Rupees Fifty-Five Lakh Ten Thousand only) of the total issued, subscribed and paid-up share capital of the Company, comprising 5,51,000 (Five Lakh Fifty-One Thousand) equity shares of Rs. 10/ (Rupees Ten Only) each held equally by the shareholders of the Company Mr. Nibu Varkey and Mr. Santhosh Kumar Janardhanan Unnithan."

"RESOLVED FURTHER THAT, the reduction of Rs. 55,10,000/- (Rupees Fifty-Five Lakh Ten Thousand only) comprising 5,51,000 (Five Lakh Fifty-One Thousand) equity shares of Rs.10/- each in Share Capital of Tellerco Travel and Foreign Exchange Private Limited is to be done by returning an amount of Rs. 55,10,000/ (Rupees Fifty-Five Lakh Ten Thousand only) to the individual shareholders of the Company.

"RESOLVED FURTHER THAT for the purpose of giving effect to the above resolutions, the Board be and is hereby authorized to do all such acts, deeds, matters and things as they may at their absolute discretion deem necessary or desirable for effective implementation of the resolution and to settle any questions, difficulties or doubts that may arise in this regard as they may in their absolute discretion deem fit.

It was argued that the proposed reduction of share capital will have no adverse impact on the employees as there are no employees on the roll of the company as on 31.03.2021 and the tax implication arising out of such reduction is subject to the final decision of the Income Tax authorities.

The Assistant Registrar of Companies (AROC) on behalf of the Registrar of Companies (ROC) in his Report stated that the total numbers of the promoters of the Company are 2, the net worth of the Company is Rs. 55,93,399 and the turnover is Rs. zero as per the latest Annual Returns for the financial year ended 31.03.2021 filed by the applicant company with Registrar of Companies, Kerala.

Since all the requisite statutory compliances are fulfilled and no objections are received from any shareholders, this application is allowed. The reduction of capital of Company as per provisions of the Companies Act, 2013 is confirmed and sanctioned.

The company is directed to file a copy of this order with the Registrar of Companies within 30 days from the date of the receipt of a copy of this order. All concerned regulatory authorities are directed to act on receiving the certified copy of the order.

Applicant company is directed to publish notices in the form of the minute proposed to be registered under Section 66(5) of the Companies Act, 2013 and minutes of reduction by the concerned Registrar of Companies, Kerala, in two newspapers, namely ‘Indian Express’ in English and ‘Mathruboomi’ in Malayalam, both having wide circulation in Kerala, within 30 days of registration.

The application is allowed and disposed of in terms of the above order.