TaxTMI 
TaxTMI 
2020 (4) TMI 386
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....739/- as on 19.03.2018 with future interest @ 18.25 ( Base Rate 10.25% + plus 8%) till repayment being the outstanding amount for the non-payment of cumulative redeemable non-convertible preference shares held by the Applicant and also pass appropriate orders for violation of the provisions of the Companies Act, etc. 2. The Tribunal by order dated 19.12.2018 passed the following orders: "Counsels for both the parties are present. Heard. It has submitted by Counsel for Respondent that as per Section 55(3) of the Companies Act, 2013, the Company if not in a position to redeem any preference shares or to pay dividend, if any, on such shares in accordance with the terms of the issue, it may, with the consent of the holders of 3/4th in value of such preference shares and with the approval of the Tribunal on a Petition made by the Company in this behalf, issue further redeemable preference shares equal to the amount due, including the dividend thereon, in respect of the unredeemable preference shares, and on the issue of such further redeemable preference shares, the unredeemable preference shares shall be deemed to have been redeemable. The procedure laid down under....
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....considering the issue of redemption of preference shares either under Section 55 or Section 245 of the Companies Act, 2013. 7. The Respondent has submitted that the Appellant is only representing in these proceedings and none others representatives from the class of shareholders i.e. Preference shareholders class are representing. They are not eligible to file application under Section 245 of the Companies Act, 2013 because Section 245 clearly reflects that an application must be filed by a minimum requisite members of the Company. They cannot unilaterally decide that they are empowered to represent a class of shareholders. They have also submitted that they cannot invoke Section 55 of the Companies Act, 2013 and the same cannot be approached by shareholders/members of the Company and as per them, only the Application can be made by the Company. The Respondent has every intention of redeeming its preference shares upon improvement in the financial situation and their business has gone drastically in rough weather. In view of uncertainty in crude oil prices and their cash flow position was under severe strain due to the non-realization of receivables from the Middle East renderin....
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....e purposes of such redemption; (b) no such shares shall be redeemed unless they are fully paid; (c) where such shares are proposed to be redeemed out of the profits of the company, there shall, out of such profits, be transferred, a sum equal to the nominal amount of the shares to be redeemed, to a reserve, to be called the Capital Redemption Reserve Account, and the provisions of this Act relating to reduction of share capital of a company shall, except as provided in this section, apply as if the Capital Redemption Reserve Account were paid-up share capital of the company; and (d) (i) in case of such class of companies, as may be prescribed and whose financial statement comply with the accounting standards prescribed for such class of companies under section 133, the premium, if any, payable on redemption shall be provided for out of the profits of the company, before the shares are redeemed: Provided also that premium, if any, payable on redemption of any preference shares issued on or before the commencement of this Act by any such company shall be provided for out of the profits of the company or out of the company's securities premium accou....
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....wing orders, namely:- (a) to restrain the company from committing an act which is ultra vires the articles or memorandum of the company; (b) to restrain the company from committing breach of any provision of the company's memorandum or articles; (c) to declare a resolution altering the memorandum or articles of the company as void if the resolution was passed by suppression of material facts or obtained by mis-statement to the members or depositors; (d) to restrain the company and its directors from acting on such resolution; (e) to restrain the company from doing an act which is contrary to the provisions of this Act or any other law for the time being in force; (f) to restrain the company from taking action contrary to any resolution passed by the members; (g) to claim damages or compensation or demand any other suitable action from or against- (i) the company or its directors for any fraudulent, unlawful or wrongful actor omission or conduct or any likely act or omission or conduct on its or their part; (ii) the auditor including audit firm of the company for any improper or misleading statement of ....
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....ction; (d) any evidence before it as to the views of the members or depositors of the company who have no personal interest, direct or indirect, in the matter being proceeded under this section; (e) where the cause of action is an act or omission that is yet to occur, whether the act or omission could be, and in the circumstances would be likely to be- (i) authorised by the company before it occurs; or (ii) ratified by the company after it occurs; (f) where the cause of action is an act or omission that has already occurred, whether the act or omission could be, and in the circumstances would be likely to be, ratified by the company. (5) If an application filed under sub-section (1) is admitted, then the Tribunal shall have regard to the following, namely:- (a) public notice shall be served on admission of the application to all the members or depositors of the class in such manner as may be prescribed; (b) all similar applications prevalent in any jurisdiction should be consolidated into a single application and the class members or depositors should be allowed to choose the lead applicant and in the event the....
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....ce shares, 'may' with the consent of 3/4th in value of such preference shares and the approval of the Tribunal ( on a petition filed in this behalf), issue further redeemable preference shares equal to the amount due (including dividend, if any) in respect of such unredeemed shares. However, there is a proviso. In ordering such further issue, the Tribunal shall forthwith order redemption of preference shares held by such persons who do not consent to such further issue. 13. The Section stipulates that the Company only with the requisite consent of preference shareholders and filing a petition in this behalf before the Tribunal and its consequent approval - can issue further redeemable preference shares with regard to the unredeemed preference shares. The Section though requires prior consent of the shareholders, does not provide for any action that can be taken by the concerned preference shareholders prior to filing of such petition by the Company. Thus, remedies available to such preference shareholders are only by way of either consenting or dissenting with such further issue. 14. However, intention of the legislature while promulgating Section 55 of the Companies Act, ....