Company petition dismissed for not meeting shareholding requirements under Companies Act; no costs awarded.

The company petition was dismissed as not maintainable under Section 399 of the Companies Act, 1956, as the petitioner did not hold 1/10th of the paid-up share capital required. The court found that the petitioner's claim to additional shares did not impact the current shareholding status, and the shares issued to another entity had not been redeemed. The petition did not challenge any dilution of the petitioner's shareholding, leading to the dismissal of the petition with no orders as to costs.

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Issues Involved:
1. Maintainability of the company petition under Section 399 of the Companies Act, 1956.

Detailed Analysis:

Issue 1: Maintainability of the Company Petition under Section 399 of the Companies Act, 1956

Arguments by the Applicants/Respondents:
- The company petition filed by the 1st respondent/petitioner is not maintainable as the petitioner does not fulfil the eligibility criteria under Section 399 of the Companies Act, 1956.
- The authorized share capital of the 1st Applicant Company is Rs. 32,00,00,000/- with a paid-up share capital of Rs. 12,07,87,000/- after excluding calls in arrears.
- The 1st respondent/petitioner holds 12,00,000 equity shares of Rs. 10/- each, aggregating to 9.9348% of the paid-up share capital, which is less than the required 10%.
- The 2,00,000 redeemable cumulative preference shares issued to PNB Capital Market Services Limited have not been redeemed and continue to be part of the share capital.
- The 1st respondent/petitioner has signed the audited balance sheets for the years 2008-09, 2009-10, and 2010-11, indicating awareness of the share capital status.
- The petition is an abuse of the process of law and should be dismissed.

Arguments by the Respondents/Petitioners:
- The issues surrounding the redemption of preference shares require detailed enquiry into the company's records.
- The petitioner became aware of the alleged fraud only recently and was denied access to crucial books of account.
- The petitioner has indefeasible rights to getting issued more than 71 lakh shares, which should be considered in determining eligibility under Section 399.
- The redemption of preference shares is itself an issue, and the petition should not be dismissed at the threshold.
- The petition seeks directions to implement a circular resolution for issuing and allotting 57,14,285 equity shares, which should be considered.

Court's Analysis and Judgment:
- The core issue is whether the petition is maintainable under Section 399 of the Companies Act, 1956, which requires a petitioner to hold not less than 1/10th of the issued share capital.
- The company has a paid-up share capital of Rs. 12,07,87,000/-, and the petitioner holds 12,00,000 equity shares, amounting to Rs. 1,20,00,000/-, which is less than the required 1/10th.
- The petitioner's claim of having rights to additional shares does not affect the current shareholding status for the purpose of Section 399.
- The Registrar of Companies, Tamil Nadu, confirmed the paid-up share capital as Rs. 12,07,87,000/-.
- The petitioner's signing of the balance sheets indicates awareness of the share capital, and the shares issued to PNB Capital Market Services Limited have not been redeemed.
- The petition does not challenge any allotment of shares that diluted the petitioner's shareholding.
- The court holds that the petition is not maintainable under Section 399 as the petitioner does not hold 1/10th of the paid-up share capital.

Conclusion:
- The company petition is dismissed as not maintainable under Section 399 of the Companies Act, 1956.
- No orders as to costs.

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