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When you will use wall, you will have different issues to deal with; beam column capacity will no more be a issue.

can we control the B/C capacity limit by incorporating shear walls?

FEMA is a very good resource for evaluation and retrofitting of existing buildings. See the link below and some quick snaps from the document. http://www.fema.gov/media-library-data/20130726-1450-20490-3009/fema_172.pdf

It does according to the article 21.12.2.2 of ACI 318-11.

Dear waqar for your case I would suggest you to add an additional cage of reinforcement around columns and concrete them by shotcreting or conventional way. vertical bars must be chemically grouted in existing footing.Although increasing size of column will increase punching capacity but Punching shear must be checked. I would also suggest to ascertain the insitu strength of concrete and perform analysis on basis of actual strength.

Ratio of flexural capacity of Beam/column is computed to preclude the formation of plastic hinges in columns for obvious reasons, refer to section 21.6.2 of ACI 318-11. Sum of flexural capacities of column at a joint should be 1.2 times the capacities of beam framing into the joint in particular direction. Etabs alerts user when the ratio exceeds; if it does not alert, it means either you are ok, or you have not activated corresponding seismic category (I think it calculates for category D E & F) for which this capacity needs to be computed. When capacity is exceeded, we can increase the size of column, or reduce the size of beam, or play with reinforcement of members. It has nothing to do with redistribution of moments; If both end of column will yield, during a seismic event, in a particular story, structure will most probably collapse. In a frame, that is resisting lateral loads, you cannot take away the ability of beam to develop negative moment; if you do not provide top reinforcement, it will not be called a moment resisting frame, and will not resist lateral loads..