https://www.taxtmi.com/caselaws?id=102492 A proposed rights issue under the Companies Act, 1956 was treated as a bona fide exercise of the company's discretion where the issue was offered pro rata to existing shareholders and the record showed a genuine need for additional working capital. The Court accepted that directors have discretion in raising capital, subject to fiduciary standards, and will intervene only on proof of abuse or mala fides. Because the company demonstrated sharply increased raw material costs, a substantial interest burden, and the need to meet large orders, the material did not show any ulterior motive or intent to dilute the petitioners' shareholding. Interim restraint on the rights issue was therefore refused. en-us Tue, 17 May 1994 00:00:00 +0530 Wed, 15 Feb 2012 11:13:26 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=102492 A proposed rights issue under the Companies Act, 1956 was treated as a bona fide exercise of the company's discretion where the issue was offered pro rata to existing shareholders and the record showed a genuine need for additional working capital. The Court accepted that directors have discretion in raising capital, subject to fiduciary standards, and will intervene only on proof of abuse or mala fides. Because the company demonstrated sharply increased raw material costs, a substantial interest burden, and the need to meet large orders, the material did not show any ulterior motive or intent to dilute the petitioners' shareholding. Interim restraint on the rights issue was therefore refused. Case-Laws Companies Law Tue, 17 May 1994 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=102492