NCLT Delhi Approves Powerlinks Transmission Scheme To Reclassify Reserves Into Retained Earnings

The National Company Law Tribunal (NCLT) at the New Delhi bench has recently sanctioned a scheme of arrangement of Powerlinks Transmission Limited involving the reclassification of Rs. 78.83 crore from its general reserves into retained earnings, holding that it is “not prejudicial to the interest of the equity shareholders and creditors.”

The order dated April 16, 2026 was passed by Acting President Bachu Venkat Balaram Das and Technical Member Ravindra Chaturvedi on a second motion petition filed under Sections 230–232 of the Companies Act, 2013.

Powerlinks Transmission Limited was incorporated in May 2001 as Tala-Delhi Transmission Limited and was renamed in August 2003. Its authorised share capital stands at Rs. 483.60 crore, while its paid-up capital is Rs. 468 crore.

The scheme provides for restructuring of the company's general reserves, including their reclassification into retained earnings. The Board of Directors approved the proposal on March 13, 2025, and the petition was filed through its CFO and authorised signatory, Avinash Chander Dhawan.

Material placed before the tribunal shows that as of March 31, 2025, the company held Rs. 78.83 crore in general reserves. Of this, Rs. 52.58 crore had been transferred under the erstwhile Companies (Transfer of Profits to Reserves) Rules, 1975, while Rs. 26.25 crore was transferred in FY 2020–21 from the debenture redemption reserve after full redemption of the debentures.

The company submitted that these amounts represented profits of earlier years after providing for depreciation and applicable taxes, which would otherwise have been available for distribution as dividends, and stated that the reserves were in excess of its anticipated operational requirements.

By an earlier order dated October 9, 2025, the tribunal dispensed with the requirement of convening meetings of shareholders and creditors. Notices were issued to the Regional Director (Northern Region), Registrar of Companies, Income Tax Department, and Official Liquidator, and compliance was recorded.

In its report, the Registrar of Companies flagged outstanding MSME dues of Rs. 283.03 lakh. The company responded that ₹279.68 lakh had been paid and that the remaining Rs. 3.35 lakh was retained subject to contractual obligations. A certificate from an independent chartered accountant was also placed on record.

On taxation, the company submitted that no tax liability would arise from the proposed reclassification and undertook to discharge any lawful liability if it arose in accordance with law.

The Income Tax Department did not oppose the scheme but made it clear that any dividends from these reserves must comply with the Income-tax Act, 1961.

The Official Liquidator also found no issue, stating the company's affairs were not prejudicial to its members or the public.

With no objections remaining, the tribunal approved the scheme, noting it does not involve any compromise with creditors or affect their interests.

April 1, 2025 has been set as the appointed date. The petition stands disposed of.