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2013 (4) TMI 162 - Board - Companies LawApplication u/s 44 Company Law Board Regulations, 1991 - application challenging the maintainability of the above company petition eligibility criteria is not fulfilled u/s 399 of the Act Held that - In the present case, The petition has been filed by a single shareholder and therefore the above criteria are not fulfilled by the petitioner on the ground that to meet the requirements of the above criteria there must be not less than 100 members and not less than 1/10 of its members. I hold the same is not applicable in the present case. The next criterion to meet the requirement to maintain a petition, in the very same provision, is that any member or members holding not less than 1/10th of the issued share capital of the company provided that the applicant or applicants have paid all calls and other sums due on their shares. There is no dispute in respect of all calls having been paid by the respondent/petitioner. respondent/petitioner is holding 12,00,000 equity shares of Rs. 10/- each constituting less than 1/10 of the issued, paid-up share capital of the Company. Therefore, the petition is not maintainable.
Issues Involved:
1. Maintainability of the company petition under Section 399 of the Companies Act, 1956. Detailed Analysis: Issue 1: Maintainability of the Company Petition under Section 399 of the Companies Act, 1956 Arguments by the Applicants/Respondents: - The company petition filed by the 1st respondent/petitioner is not maintainable as the petitioner does not fulfil the eligibility criteria under Section 399 of the Companies Act, 1956. - The authorized share capital of the 1st Applicant Company is Rs. 32,00,00,000/- with a paid-up share capital of Rs. 12,07,87,000/- after excluding calls in arrears. - The 1st respondent/petitioner holds 12,00,000 equity shares of Rs. 10/- each, aggregating to 9.9348% of the paid-up share capital, which is less than the required 10%. - The 2,00,000 redeemable cumulative preference shares issued to PNB Capital Market Services Limited have not been redeemed and continue to be part of the share capital. - The 1st respondent/petitioner has signed the audited balance sheets for the years 2008-09, 2009-10, and 2010-11, indicating awareness of the share capital status. - The petition is an abuse of the process of law and should be dismissed. Arguments by the Respondents/Petitioners: - The issues surrounding the redemption of preference shares require detailed enquiry into the company's records. - The petitioner became aware of the alleged fraud only recently and was denied access to crucial books of account. - The petitioner has indefeasible rights to getting issued more than 71 lakh shares, which should be considered in determining eligibility under Section 399. - The redemption of preference shares is itself an issue, and the petition should not be dismissed at the threshold. - The petition seeks directions to implement a circular resolution for issuing and allotting 57,14,285 equity shares, which should be considered. Court's Analysis and Judgment: - The core issue is whether the petition is maintainable under Section 399 of the Companies Act, 1956, which requires a petitioner to hold not less than 1/10th of the issued share capital. - The company has a paid-up share capital of Rs. 12,07,87,000/-, and the petitioner holds 12,00,000 equity shares, amounting to Rs. 1,20,00,000/-, which is less than the required 1/10th. - The petitioner's claim of having rights to additional shares does not affect the current shareholding status for the purpose of Section 399. - The Registrar of Companies, Tamil Nadu, confirmed the paid-up share capital as Rs. 12,07,87,000/-. - The petitioner's signing of the balance sheets indicates awareness of the share capital, and the shares issued to PNB Capital Market Services Limited have not been redeemed. - The petition does not challenge any allotment of shares that diluted the petitioner's shareholding. - The court holds that the petition is not maintainable under Section 399 as the petitioner does not hold 1/10th of the paid-up share capital. Conclusion: - The company petition is dismissed as not maintainable under Section 399 of the Companies Act, 1956. - No orders as to costs.
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