9911796707
TMI Blog2002 (5) TMI 810X X X X Extracts X X X X X X X X Extracts X X X X ..... th December, 1997, and succeeded in getting a resolution passed for issuance of further 4 per cent cumulative redeemable preference shares in lieu of 10,891 existing 4 per cent cumulative redeemable preference shares. Thereafter, it submitted an application under section 80A of the Companies Act, 1956 (for short 'the Act'), before respondent No. 1 for grant of consent. Some of the preference shareholders (respondent Nos. 2 to 13) filed objections to contest the application of the appellant. They pleaded that the application was liable to be dismissed because the appellant's claim about unanimity in the meeting of the shareholders was incorrect. They also urged that the application of the appellant may be heard along with the complaints filed by them under sections 397 and 398 of the Act. In the end, they claimed that the rate of dividend be increased from 4 per cent of 15 per cent per annum. 3. Respondent No. 1 allowed the application of the appellant, vide order dated 30th October, 2000, and gave consent to its proposal subject to the following conditions : "(a)The company shall issue further preference shares to the extent of the amount due including the dividend up to the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e prayer of the objectors for hearing of the application along with the complaints filed by them under sections 397 and 398 of the Act was rejected by respondent No. 1 with the observation that pendency of complaints has no bearing on the decision of the application filed by the appellant. Respondent No. 1 also rejected the appellant's plea that nothing was payable to the holders of cumulative preference redeemable shares. While doing so, respondent No. 1 made reference to order dated 21st February, 2000, passed by this court in CA No. 27 of 1997 filed by the appellant and observed as under : "This Board has to satisfy that company is not in a position to redeem preference shares and pay the dividend, if any, due thereon before according its consent under section 80 of the Companies Act for issue of further shares for this purpose. As per the company's balance sheet as on 31st March, 1997, as against the paid up capital and reserves and surplus of the company of Rs. 337.46 lakhs its accumulated losses were of the order of Rs. 311.35 lakh. Further as per the company's latest audited balance sheet as on 31st March, 2000, accumulated losses have increased to the extent of Rs. 389.31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain restrictions on redemption of shares. Sub-section (5A) of section 80 which begins with a non obstante clause declares that no company limited by shares shall after the commencement of the Companies (Amendment) Act, 1996, issue any preference share which is irredeemable or is redeemable after 20 years from the date of its issue. Sub-section (6) contains punitive provisions to deal with the cases of non-compliance with the provisions contained in other sub-sections of section 80. Section 80A was inserted in the Act with effect from June 15, 1998, by the Companies (Amendment) Act, 1988. Sub-section (1) of section 80A also begins with a non obstante clause. Clause (a) thereof provides for redemption of the irredeemable preference shares issued before the commencement of the Companies (Amendment) Act, 1988, and clause (b) provides for redemption of those preference shares which were not redeemable before the expiry of ten years from the date of issue in accordance with the terms of the issue and which had not been redeemed before 15th June, 1988. The proviso to section 80A(1) also contains a non obstante clause. It provides for issuance of further redeemable preference shares by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sought to be made by learned counsel between the case in hand and the previous appeal is illusory because the consent given by the appellant's representative was not the factor which had weighed with the court for declining interference with the order passed by respondent No. 1. Rather, the ratio of this court's decision was based on the interpretation of sections 80 and 80A of the Act. 10. Therefore, by applying the ratio of order passed in Company Appeal No. 27 of 1997, we hold that the order under challenge does not suffer from any legal infirmity warranting modification by this Court. 11. The argument of learned counsel that the direction given by respondent No. 1 should be declared ultra vires article 3(a) of the articles of association of the company is merit less and deserves to be rejected because by virtue of the non obstante clause contained in proviso to section 80A(1)(b) of the Act, provision contained in that section will override the articles of association of the company. 12. The decision of the Supreme Court in Dr. A. Lakshmanaswami Mudaliar's case (supra) does not have any bearing on the issue raised in the present appeal. In that case, the trustees nominated u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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