9911796707
TMI Blog1993 (1) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... ry general meeting on January 6, 1992, for increasing the authorised capital of the company and to consider and approve the rights offer of convertible/non-convertible debentures. On January 4, 1992, an interim order was passed by the Calcutta High Court in Suit No. 1 of 1992 instituted by Suparswa Investments Ltd. directing that while the proposed meeting can be held, the resolutions passed thereat should not be given effect to without the leave of the court. At the extraordinary general meeting held on January 6, 1992, special resolutions were passed by a three-fourths majority for increasing the share capital and also to offer on rights basis to the holders of equity shares of the company convertible and/or non-convertible debentures aggregating to a value of Rs. 15 crores. On January 6, 1992, the Company Law. Board passed certain orders with respect to the implementation of the said resolutions but the same were vacated on March 20, 1992. Hence, no reference to those orders is necessary. The interim order dated January 4, 1992, referred to above was vacated on May 12,1992. Suparswa Investments Limited preferred an appeal against the order dated May 12, 1992, being Appeal No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstantial chunk of equity in the appellant-company also voted in favour of the resolution, according to the appellant. The interim order dated July 23, 1992, passed by a learned single judge in the writ petition filed by Vinay Vij was vacated on July 27, 1992. On September 9, 1992, says the appellant, the Securities and Exchange Board of India permitted the appellant-company to file a letter of offer with the stock exchanges concerned subject to the conditions contained in its letter. The Calcutta Stock Exchange, says the appellant, received the letter of offer filed by the appellant-company accordingly. On November 17 and 18, 1992, the appellant-company sent by registered post, letters of offer and other necessary papers to all the members specifically stating that "this offer was subject to and will abide by the result of Appeal No. 377 of 1992, arising out of Suit No. 1 of 1992 of the Hon'ble High Court at Calcutta." The issue opened on November 23, 1992, and was to close on December 26, 1992. It is at this stage that fresh litigation started in addition to the ones already pending to which a brief reference would be in order. On December 15, 1992, one Krishen Kumar Kapoor f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia, Cap., (Capital Markets Ltd./Capital Issues), and this is said to be insisted upon by the said institution in all cases. The facts and law of the matter in regard hereto would require further and fuller consideration. Save as above there would, be .no other orders for the present, affidavit in opposition, if any, by January 11, 1993, reply by January 18, 1993, and the matter will stand adjourned till January 19, 1993. It is clarified that in case the board of directors is not intending to use its right of rejection as against any renouncees, it and the company would be free in that event to accept the debentures as from the renouncees and proceed with allotment, and that the order passed above shall not stand in their way in that regard in any manner whatsoever." Against the aforesaid order dated December 16, 1992, the plaintiff filed a Letters Patent appeal, wherein a Division Bench of the Calcutta High Court passed an order on December 21, 1992, appointing two advocates of the Calcutta High Court as special officers and directing that "all monies that may be received on the allotment of debentures by the company shall be held in the names of the special officers by the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Calcutta High Court, complaining that the proposed subscription to the debentures by the financial institutions was illegal and ill-advised and must be stopped. Thereupon, the learned single judge passed the following order : "Considering the urgency of the matter the requirements of rule 27 of the Original Side Rules relating to applications under article 226 of the Constitution of India are dispensed with. The petitioner is directed to serve a copy of this application on all the respondents and file affidavit of service. There will be an interim order in terms of the prayers (j) and (k) of the petition. Returnable before the appropriate Bench two weeks after the X'Mas/Vacation. Leave is granted to the petitioner to have the petition duly stamped and punched within January 11, 1993." Against the said order the appellant-company has preferred S.L.P. No. 148 of 1993. All the three matters came up before us on January 20, 1993, and we heard the several counsel appearing on both the sides at quite some length. The contesting respondents appeared as caveators. Learned counsel appearing for the appellant-company characterised the several legal proceedings referred to above as hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tand to lose by subscribing to the said offer. It is emphasised that even a single shareholder of the company is entitled to challenge any action of the company which is ultra vires the company (i.e., contrary to the memorandum and articles of association of the company) or is contrary to law or is vitiated by fraud. Learned counsel submitted that the several orders impugned in these appeals are only interlocutory orders subject to further and final orders of the Calcutta High Court and at this stage this court ought not to interfere under article 136 of the Constitution but must relegate the parties to the Calcutta High Court to seek appropriate orders according to law. In reply, counsel for the appellant-company submitted that the appellant-company is one of best managed companies and that for the last few years it has been declaring a dividend at 40 per cent, and more every year and that its shares are being quoted on the stock exchange at more than Rs. 100 per share even during the months of September and October, 1992 (i.e., even after the recent crash following revelation of certain irregularities in the matter of Government securities). It is argued that the offer is highly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the request of learned counsel for the appellant regarding extension of the date of closure of the offer is concerned, we are not inclined to pass any orders at this stage. Counsel for the appellant relies upon the guidelines issued by the Securities and Exchange Board of India which say that such offer cannot be extended beyond 60 days from the date of issue and that any violation of the said guidelines would expose the company to prosecution and other sanctions. The argument of the appellant's counsel is that inasmuch as the court had interdicted the operation of the said offer, the court itself, including this court, should rectify the same on the principle that "an act of court should prejudice no one". May be there is some justification in the said argument but that is a matter for the appropriate authorities, who are competent to extend the said date or who are empowered to take action for violation of the said guidelines, to consider. It may also be a matter for the High Court to consider in the matter pending before it in this behalf. Suffice it to say that at this juncture we do not wish to pass any orders on the said request. The appellants are free to move the court o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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