TaxTMI 
TaxTMI 
2010 (12) TMI 1060
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....e Company Law Board. 2. The briefly put, the case of the appellants is as follows : The appellants are the petitioners in C. P. No. 44 of 2010. They are the original promoters of the first respondent-company. The first respondent-company is incorporated under the Companies Act, 1956 and it is a public limited company. It is a listed public company and it is engaged in equity, commodity and insurance broking business. Appellants Nos. 1 to 3 are the original promoters of the company. Respondent No. 2 is a financial investor. The second respondent had agreed to subscribe 1,03,82,174 equity shares of Rs. 10 each at a premium of Rs. 38 per share. Annexure A2 is the agreement between appellants Nos. 1 to 3 and the second respondent. The appell....
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....on behalf of the appellants, Sri Pathrose Mathai, learned senior counsel for respondents Nos. 1, 6, 8 and 9. We have also heard Sri Rohit Choudhry also who appeared with Sri Pathrose Mathai for respondent No. 9. 6. Sri Karthik Seshadhri, learned counsel for the appellants submits that the second appellant who is referred in the articles of association has a legal right to insist that further issue of capital can be done only if he agrees to the proposal. There should be an affirmative vote on the part of the second appellant. According to him, there is no such affirmative vote, and, therefore, the decision of the company approving the rights issue is in contravention of the provisions of the articles of association. He would point out th....
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....e Companies Act, the board must decide to increase subscribed capital. This result inevitably follows from the words used in section 81 namely that "where it is proposed". According to him, "where it is proposed" means where it is decided by the board. Therefore, according to him, when it is in dispute that he did raise his objection to the raising of further capital the fact that he was outvoted would not make any difference. At a stage when the board decides to take a decision as to whether there must be an increase in subscribed capital in the light of article 157A he poses the question as to how the Company Law Board could come to the conclusion that the said article is repugnant to provision of section 81. According to him, once it is ....
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....at there is no merit at all in the appeal. He would point out that what is involved is a plain case of rights issue. He would submit that there can be no case at all for the appellants to complain about as the shares will be distributed among the existing shareholders as mandated in section 81(1)(a). There is no preferential allotment at all to Barings and in this regard he draws our attention to article 157A(e) and he would submit that the article is directed to prevent any issue to M/s. Barings or its associates. (It is not in dispute that Barings is the company controlled by the second respondent). He would submit that there is no preferential allotment in this case. He would submit that the question of allotment of shares other than to ....