NCLT Kochi Approves Capital Reduction Of Cochin Aircraft Maintenance Company Ltd

It held that “the proposed reduction of paid-up capital is justified on commercial grounds, duly approved by the shareholders, and does not adversely affect any creditors, employees, or other stakeholders. The reduction is proportionate and lawful under Section 66 of the Companies Act, 2013.”

Background:

M/s. Cochin Aircraft Maintenance Company Limited had filed a petition under section 66 of the Companies Act seeking reduction of its share capital. The company proposed to reduce its paid-up capital from ₹1,13,58,450 to ₹25,83,450 by returning ₹87,75,000 to shareholders. The company was initially engaged in the air maintenance and training but had decided to discontinue its aviation related operations due to changes and competition from Cochin International Aviation Services Limited, a subsidiary of CIAL. The shareholders had shifted their focus towards general engineering consultancy, necessitating lesser capital.

The petitioner submitted that most shareholders, being senior citizens, had decided to confine the business to consultancy under Clause III(C)(1) of the Memorandum of Association. It was further submitted that the company has no secured or unsecured creditor and no employees as certified by the statutory auditor. It was further submitted that a special resolution approving capital reduction was passed unanimously at an EGM held on 5 April 2025. Lastly, it was submitted that the reduction was purely to return the excess capital lying idle and does not involve any unpaid share capital.

Findings:

The Tribunal observed that the reduction of share capital was duly approved by the shareholders and no creditors or employees were affected by such reduction as none existed. It further observed that the company's financial position and compliance under section 133 of the Companies Act were satisfactory.

It further held that no objections as to the reduction were raised by the statutory authorities and the reduction was a commercially sound decision. It further held that the proposal merely aimed to return the excess paid up capital in line with the company's scaled down operations.

Accordingly, the NCLT allowed the petition allowing the reduction of the company's paid-up share capital from ₹1,13,58,450 to ₹25,83,450, divided into 2,58,345 equity shares of ₹10 each, with ₹87,75,000 to be returned to shareholders proportionately.

However, the NCLT held that the sanction does not absolve the company from any pending or future actions by the statutory authorities for violations of law.

Case Title: M/s. Cochin Aircraft Maintenance Company Limited v. Registrar of Companies, Kerala

Case Number: CP(C/Act)/18/KOB/2025

Order Date: 30/10/2025

For the Petitioner : Mr. Nebil Nizar, Adv.,

For the Respondent : Authorized representative of ROC.

For the Income Tax Department: Adv Cyriac Tom, Adv.,

For the Enforcement Directorate: Adv. Govindu P. Renukadevi, Adv.,

For the Directorate General of Civil Aviation : Adv. M.A. Shaji, Adv.

Click Here To Read/Download The Order