Issued share capital for section 399 includes equity and preference shares, broadening the membership threshold calculation.

For section 399 of the Companies Act, 1956, "issued share capital" is a wide expression that includes both equity and preference share capital. The statutory scheme, including sections 86 and 87, recognises both forms of share capital and their distinct incidents, so the plain language of section 399 cannot be narrowed by noscitur a sociis. The word "issued" also cannot be read down to confine the calculation to equity shares alone or to exclude preference shareholders from the threshold computation. On that basis, the one-tenth membership requirement was not met.

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Issues: Whether, for the purpose of maintaining a petition under section 399 of the Companies Act, 1956, the expression "issued share capital" means only equity share capital or includes both equity and preference share capital.

Analysis: The qualification under section 399 requires a member to hold not less than one-tenth of the issued share capital of the company. The expression "issued share capital" is a wide expression and, in the statutory scheme of the Companies Act, 1956, share capital of a company limited by shares consists of two kinds, namely equity share capital and preference share capital. Sections 86 and 87 support that scheme by recognising both kinds of share capital and their respective incidents. The rule of noscitur a sociis was held inapplicable because the words used in section 399 are plain and unambiguous. The Court further held that the word "issued" could not be read down to mean only "issued equity share capital" or "legally valid issued share capital", as that would amount to adding words not found in the provision and would exclude preference shareholders from the statutory computation. The appellant's reliance on section 41(3) was rejected because that provision concerns dematerialised equity shareholders and does not confine the meaning of "member" or "issued share capital" for section 399.

Conclusion: "Issued share capital" under section 399 includes both equity and preference share capital, and the appellant did not satisfy the statutory threshold to maintain the petition. The appeal was therefore without merit and was dismissed.

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