The Chandigarh Bench of the National Company Law Tribunal, by an order dated 17.09.2026 in CP No. 36/Chd/Hry/2026, confirmed a reduction of share capital of CSJ Infrastructure Private Limited under Section 66 read with Section 52 of the Companies Act, 2013 and the National Company Law Tribunal (Procedure for Reduction of Share Capital of Company) Rules, 2016. The company utilised Rs. 42,59,56,019 (Rupees Forty Two Crores Fifty Nine Lacs Fifty Six Thousand and Nineteen only) from its securities premium account to set off the entire debit balance in its profit and loss account. The Tribunal held that the reduction would not adversely affect creditors and allowed the petition.
The Proposed Reduction
The petitioner company, incorporated on 24.01.2006, is engaged in the development and operation of commercial, retail, hospitality and residential premises. Its issued, subscribed and paid-up capital stands at Rs. 46,66,67,870, divided into 4,66,66,787 equity shares of Rs. 10 each. As per its unaudited management certified financial statements as on 15.04.2026, it carried accumulated losses of Rs. 42,59,56,019 under retained earnings, against a credit balance of Rs. 1,44,55,52,130 in its securities premium account.
Writing off accumulated losses is not among the purposes for which Section 52(2) of the Act permits the securities premium account to be applied. Section 52(3) therefore treats such a use as a reduction of share capital, which requires a special resolution and confirmation by the Tribunal under Section 66. The Board approved the proposal on 20.04.2026, and the shareholders unanimously passed a special resolution at an Extraordinary General Meeting held on 22.04.2026. The Articles of Association of the company expressly authorised reduction of its share capital and share premium account.
Following the reduction, the equity share capital remains unchanged at Rs. 46,66,67,870, the securities premium account falls to Rs. 1,01,95,96,111, and the debit balance in retained earnings is extinguished. The total of shareholders’ funds is unaffected. No cash is paid to shareholders, no shares are cancelled and the shareholding pattern does not change.
Position of the Creditors
As on 15.04.2026, the company had two secured creditors owed Rs. 7,18,28,59,031 and fifty one unsecured creditors owed Rs. 13,10,62,04,807. Pursuant to the Tribunal’s order dated 07.05.2026, notices were served on the creditors and statutory authorities and published in English and Hindi newspapers. No objection was received from any creditor or other stakeholder.
The Tribunal recorded that the company is solvent and capable of meeting all its outstanding debts, supported by a net worth certificate issued by a practising Chartered Accountant. It held that creditors are not adversely affected because there is no reduction in the amount payable to any of them and no compromise or arrangement is contemplated with them. The statutory auditors also certified that the proposed accounting treatment conforms to the accounting standards under Section 133 of the Act, and that the company was not in arrears in repayment of deposits or interest.
Observations of the Statutory Authorities
The Regional Director, relying on the report of the Registrar of Companies, noted that the company had filed its financial statements and annual returns, that no prosecution, complaint, inspection or investigation was pending, and raised no objection. The company nonetheless undertook to comply with all legal formalities required to give effect to the reduction.
The Income Tax Department’s report referred to pending penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961 for AY 2014-15, an appeal by the company for AY 2018-19 before the CIT(A), and departmental appeals for AYs 2014-15 and 2015-16 before the Punjab and Haryana High Court. It sought liberty to recover any resulting liability. The company filed an affidavit cum undertaking to comply with the Income Tax Act, 1961 and to discharge any taxes that become payable in accordance with law. The Tribunal found that the observations of the authorities, as clarified, posed no impediment to confirmation.
The Order
The Tribunal confirmed the reduction as set out in the special resolution of 22.04.2026 and approved the minute to be registered under Section 66(5), recording that the securities premium account stands reduced from Rs. 1,44,55,52,130 to Rs. 1,01,95,96,111 and that 4,66,66,787 equity shares of Rs. 10 each remain issued and fully paid-up. The company was directed to serve a certified copy of the order, with the minute, on the Registrar of Companies within thirty days.
Mr. Vaibhav Sharma, Advocate, appeared for the Petitioner Company, i.e., M/s CSJ Infrastructure Private Limited.