This aspect came up for consideration before this Court in Reckitt Benckiser (India) Ltd. [122 (2005) DLT 612], albeit, in context of reduction of share capital. In that case also, the scheme of the reduction was such that many shareholders like the applicants in the instant case were deprivation of their shareholdings on payment of certain price. The Court took note of the general rule that it was the prescribed majority of the shareholders which is entitled to decide whether there should be a reduction in capital or not. After taking note of various judgments, the Court has culled out the following principles:
“20. The principles, which can be distilled from the aforesaid judicial dicta, are summarised as under:
(i) The question of reduction of share capital is treated as matter of domestic concern, i.e. it is the decision of the majority which prevails.
(ii) If majority by special resolution decides to reduce share capital of the company, it has also right to decide as to how this reduction should be carried into effect.
(iii) While reducing the share capital company can decide to extinguish some of its shares without dealing in the same manner as with all other shares of the same class. Consequently, it is purely a domestic matter and is to be decided as to whether each member shall have his share proportionately reduced, or whether some members shall retain their shares unreduced, the shares of others being extinguished totally, receiving a just equivalent.
