Subhash is a debtor as well as a member of JUMBO Ltd., a listed company. The company declares a dividend of ₹2500 on the shares owned by Subhash and proposes to adjust the said amount against the debt of ₹5000 due from h

Provisions of the Companies Act, 2013: In terms of the proviso to Section 127 of the Companies Act, 2013 , where dividend has been lawfully adjusted by the company against any sum due to it from the shareholder, there is no contravention of the said Section. Regulation 84 of Table F of Schedule I to the Companies Act, 2013 provides that the Board may deduct from any dividend payable to any member all sums of money, if any, presently payable by him to the company on account of calls or otherwise in relation to the shares of the company. Application to the given case (JUMBO Ltd. - Listed Company): Subhash is a debtor of JUMBO Ltd. for ₹5,000. JUMBO Ltd. declares a dividend of ₹2,500 on shares owned by Subhash. The company proposes to adjust the dividend against the debt. The key here is the nature of the debt. Regulation 84 specifies that adjustment can be made for sums due on account of calls or otherwise **in relation to the shares of the company**. A general debt (e.g., trade debt) does not fall under this category. Conclusion for Listed Company: In the given case, JUMBO Ltd. may adjust the amount of dividend only on account of calls or otherwise in relation to the shares of the company, if any, due from Subhash in the capacity of a Member and not otherwise. Therefore, the amount due from Subhash in the capacity of a trade debtor will not be adjusted, and the company needs to pay the dividend amount to Subhash. Answer if JUMBO is a Private Limited Company: If JUMBO is a private limited company, Section 127 as well as Regulation 84 of Table F of Schedule I to the Companies Act, 2013 (in view of Section 5(6) and 6 of the Companies Act, 2013, which make Table F applicable to private companies unless excluded by their AOA) are applicable to it. Therefore, the Board of JUMBO Ltd. can adjust the amount due from Subhash only on account of calls or otherwise in relation to the shares of the company, if any, and not otherwise. Overall Conclusion: The answer would not differ if JUMBO is a Private Limited Company; the same principle regarding the nature of the debt would apply.