9911796707
TMI Blog2020 (4) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... ference shareholders and filing a petition in this behalf before the Tribunal and its consequent approval can issue further redeemable preference shares with regard to the unredeemed preference shares. The Section though requires prior consent of the shareholders, does not provide for any action that can be taken by the concerned preference shareholders prior to filing of such petition by the Company. Thus, remedies available to such preference shareholders are only by way of either consenting or dissenting with such further issue - However, intention of the legislature while promulgating Section 55 of the Companies Act, 2013 was clearly to compulsorily provide for redemption of preference shares by doing away with the issue of irredeemable preference shares. Therefore, even there being no specific provision stipulated under the Act 2013 through which relief can be sought by preference shareholders in case of non-redemption by the Company or consequent non-filing of petition under Section 55 of the Act, the intention of the legislature being clear and absolute, Tribunal s inherent power can be invoked to get an appropriate relief by an aggrieved preference shareholder(s). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce shares, and on the issue of such further redeemable preference shares, the unredeemable preference shares shall be deemed to have been redeemable. The procedure laid down under Section 55(3) of the Companies Act, 2013 clearly provides a mandate to the Company to file the Petition with the consent of the holders having 3/4th in value in relation to the preference shares. But the holder of the preference shares has no locus standi to file such application. Further Section 245 of the Companies Act, 2013 deals with class action for seeking different remedies against the Company and its Directors. The same is not dealing with the subject preference shares. Therefore, the Application is not maintainable, the same stands dismissed. 3. This Appellate Tribunal has passed an order dated 02.05.2019, that the substitution of Appellant i.e. Vijaya Bank, with Bank of Baroda is sought by the Appellant on account amalgamation of Vijaya Bank with Bank of Baroda w.e.f. 01.04.2019 vide notification of Ministry of Finance (Department of Financial Services) G.S.R. 2 (E) dated 2nd January, 2019 identifying the amalgamation of Vijaya Bank and Dena Bank with Bank of Baroda Scheme, 2019 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of redeeming its preference shares upon improvement in the financial situation and their business has gone drastically in rough weather. In view of uncertainty in crude oil prices and their cash flow position was under severe strain due to the non-realization of receivables from the Middle East rendering them unable to redeem their preference share (Dividend in 2014-15 was paid to both Equity and Preference shareholders as per the terms and conditions of the issues). 8. The Respondent has also submitted that due to poor financial condition of cash flow in the Financial Year 2015-16 to conserve cash resources, no dividend was recommended by the Board of Directors for equity or preference shareholders. They have convened meeting on 07.09.2016 with all preference shareholders to find a solution in the matter of redemption of shares. The Appellant s preference share will be redeemed as per financial situation and their intention is not to withhold redemption of preference shares and the same would be done in due course of time, once the financial position improves. 9. The Respondent has also cited a judgment, passed by this Appellate Tribunal, dated 06.11.2017 Company Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed: Provided also that premium, if any, payable on redemption of any preference shares issued on or before the commencement of this Act by any such company shall be provided for out of the profits of the company or out of the company s securities premium account, before such shares are redeemed. (ii) in a case not falling under sub-clause (i) above, the premium, if any, payable on redemption shall be provided for out of the profits of the company or out of the company s securities premium account, before such shares are redeemed. (3) Where a company is not in a position to redeem any preference shares or to pay dividend, if any, on such shares in accordance with the terms of issue (such shares hereinafter referred to as unredeemed preference shares), it may, with the consent of the holders of three-fourths in value of such preference shares and with the approval of the Tribunal on a petition made by it in this behalf, issue further redeemable preference shares equal to the amount due, including the dividend thereon, in respect of the unredeemed preference shares, and on the issue of such further redeemable preference shares, the unredeemed preference shares shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngful actor omission or conduct or any likely act or omission or conduct on its or their part; (ii) the auditor including audit firm of the company for any improper or misleading statement of particulars made in his audit report or for any fraudulent, unlawful or wrongful act or conduct; or (iii) any expert or advisor or consultant or any other person for any incorrect or misleading statement made to the company or for any fraudulent, unlawful or wrongful act or conduct or any likely act or conduct on his part; (h) to seek any other remedy as the Tribunal may deem fit. (2) Where the members or depositors seek any damages or compensation or demand any other suitable action from or against an audit firm, the liability shall be of the firm as well as of each partner who was involved in making any improper or misleading statement of particulars in the audit report or who acted in a fraudulent, unlawful or wrongful manner. (3) (i) The requisite number of members provided in sub-section (1) shall be as under:- (a) in the case of a company having a share capital, not less than one hundred members of the company or not less than such percentage of the total nu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingle application and the class members or depositors should be allowed to choose the lead applicant and in the event the members or depositors of the class are unable to come to a consensus, the Tribunal shall have the power to appoint a lead applicant, who shall be in charge of the proceedings from the applicant s side; (c) two class action applications for the same cause of action shall not be allowed; (d) the cost or expenses connected with the application for class action shall be defrayed by the company or any other person responsible for any oppressive act. (6) Any order passed by the Tribunal shall be binding on the company and all its members, depositors and auditor including audit firm or expert or consultant or advisor or any other person associated with the company. (7) Any company which fails to comply with an order passed by the Tribunal under this section shall be punishable with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years and with fine which shall not be less tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. However, intention of the legislature while promulgating Section 55 of the Companies Act, 2013 was clearly to compulsorily provide for redemption of preference shares by doing away with the issue of irredeemable preference shares. Therefore, even there being no specific provision stipulated under the Act 2013 through which relief can be sought by preference shareholders in case of non-redemption by the Company or consequent non-filing of petition under Section 55 of the Act, the intention of the legislature being clear and absolute, Tribunal s inherent power can be invoked to get an appropriate relief by an aggrieved preference shareholder(s). 15. Alternatively, preference shareholders coming within the definition of member(s) under Section 2(55) read with Section 88 of the Companies Act, 2013, may file a petition under Section 245 of the Act, as a class action suit being aggrieved by the conduct of affairs of the Company. 16. With the above discussions, we are of the view that the preference shareholders are not remediless and for redemption of preference share can file application under Section 55(3) of the Companies Act, 2013. They may also file application under S ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
