Interpretation of proviso to sec 123(1) which is not applicable to government companies

Help me to interpret second proviso to section 123(1) which is not applicable to government companies.

" Provided further that where, owing to inadequacy or absence of profits in any financial year, any company proposes to declare dividend out of the accumulated profits earned by it in previous years and transferred by the company to the reserves, such declaration of dividend shall not be made except in accordance with such rules as may be prescribed in this behalf"

"In case of Government Company - Second proviso of Section 123(1) shall not apply  in which the entire paid up share capital is held by the Central Government, or by any Stale Government or Governments or by the Central Government and one or more State Governments. - Notification dated 5th june, 2015."

I have two possible interpretation on this. 1. The Government companies are not allowed to declare dividend out of General reserves. or 2. Government companies are allowed to declare dividend but are not required to follow companies (Declaration and Payment of Dividend) Rules, 2014.

Please help me with an example of a government co.