9911796707
TMI Blog2006 (1) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... and allotted 18,000 irredeemable preference shares to one shareholder other than redeemable preference shares as on 6-8-1983. Subsequently, another 2,700 irredeemable preference shares other than redeemable preference shares came to be allotted to five shareholders on 14-12-1985. Section 80A came to be introduced by the Companies (Amendment) Act, 1988, with effect from 15-6-1988. The said section stipulated that all irredeemable preference shares should be redeemed by the company within a period not exceeding five years from the date of commencement of the Companies (Amendment) Act, 1988, and if such irredeemable shares which are not redeemable before the expiry of ten years from the date of issue thereon in accordance with the terms of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been filed with the Registrar of Companies. It is stated that when the annual reports for the year ended on 31-3-1993 and 31-3-1994, came to be finalised, the appellant was advised about the implication of the proviso to section 80A of the Companies Act and in view of the same, an application came to be filed in March, 1995, before the Company Law Board seeking permission for the issuance of preference shares along with an application for condonation of delay in filing the application for permission belatedly. By the impugned order in this appeal, the Company Law Board rejected the petition for permission as well as the application for condonation of delay, which has necessitated the appellant to file the present appeal. 3. Mr. R. Venk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant s application for post-facto permission. 4. We also heard Mr. M.T. Arunan, learned Additional Central Government Standing Counsel appearing for the respondent. The learned standing counsel would, on the other hand, contend that when the proviso to section 80A specifically stipulates that issuance of redeemable preference shares should be with the consent of the Company Law Board, the said provision will have to be strictly construed and the act of the appellant in not having applied for the prior consent cannot be condoned. 5. Having heard learned counsel for the respective parties, we are of the view that proviso to section 80A cannot be construed in such a strict manner as has been construed by the Company Law Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion made by it in this behalf and notwithstanding anything contained in this Act, issue further redeemable preference shares equal to the amounts due (including the dividend thereon), in respect of the unredeemed preference shares, and on the issue of such further redeemable preference shares, the unredeemed shares shall be deemed to have been redeemed." 6. Similarly, section 204A can also be extracted for making a comparison: " Restrictions on the appointment of former managing agents or secretaries and treasurers of any office. (1) Except with the previous approval of the ( a )company in general meeting, and ( b )Central Government, no company shall, during a period of five years from the commencement of the Companies (Amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "17.13 . . . At the same time, it was unanimously urged that the existence of irredeemable preference shares, was an anomaly as the shareholders are compelled to be satisfied with the amount of return which is totally unrealistic and unrelated to the prevailing circumstances. We find there is sufficient justification for such a complaint. There are also instances where the companies, even though the time for redemption had ripened, have not gone in for redemption but have extended the time by a further period. We are of the view that the continuance of irredeemable preference shares is not helpful to the investing class. We, therefore, suggest that all irredeemable preference shares will become redeemable at the end of five years from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Law Board. That apart, as rightly contended by learned counsel for the appellant, when the expression used in the proviso to section 80A merely states "may with the consent of the Company Law Board", it cannot be construed to mean that such stipulation should be construed as prior consent alone. In this context, the decision of the Division Bench in State Bank of India v. Official Liquidator, Straps (India) (P.) Ltd. [1979] 49 Comp. Cas. 514 (Mad.) fully supports the contention of learned counsel for the appellant. The Division Bench dealt with section 446(1)( a ) wherein it is stipulated to the effect that "when a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, ... no suit or ot ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
