2013 (9) TMI 1185

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....er the Act in March, 1983. It acquired 3,15,000 equity shares and 6,55,000 equity shares of respondent no.1 on 24.2.2004 and 5.3.2004 respectively. After some time, the petitioner filed an application under Section 397 and 398 read with Sections 402, 405 and 406 of the Act impleading the respondents as parties and made the following substantive prayers: "(a) Pass an order declaring the allotment of 4150000 10% redeemable cumulative preference shares of ₹ 100/- each aggregating ₹ 41,50,00,000/- during the financial year 2002-03 to the promoters/promoters group is illegal, null and void and be set aside and struck down. (b) Pass an order declaring the allotment of further 40,00,000 1% redeemable cumulative preference shar....

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....ent & reputed firm of Chartered Accountants at the cost of the Respondent Company and immediate authentication of all the books and records of Respondent No.1 by any persons appointed by this Board so that the same may not be further falsified by the Respondents and provide immediate inspection of all records and books to the Petitioner." The Company Law Board dismissed the application on the ground that the petitioner was not holding 1/10th of the issued share capital of respondent No.1. The appeal filed by the petitioner was dismissed by the learned Single Judge by recording the following observations: "26. The appellant's contention that only persons holding equity shares can be members of the Company in terms of Sectio....

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....efore only in addition to section 41(1) and Section 41(2) and not in derogation or substitution of the first two sub- sections. it appears that the word 'shareholder' and 'member' is used in the same connotation under the Act, as rightly submitted on behalf of the Company. 27. From the aforesaid discussion, and from whatever angle one looks at the expression "issued share capital" of the Company it is very clear that the expression "issued share capital" can only refer to the preference share capital as well as equity share capital of the Company and the appellant was required to hold one-tenth of the total of this issued share capital before he became eligible to maintain a petition under Section 397/3....