(1.) THIS is a petition by Kettlewell Bullen and Company Limited (hereinafter called "the company") under Section 80A of the Companies Act, 1956 (hereinafter called "the Act"), filed on June 14, 1993, seeking the consent of the Company Law Board to the issue of further 20,000-12 per cent, redeemable first preference shares of Rs. 100 each and 10,000-12 per cent, redeemable second preference shares of Rs. 100 each as fully paid up, redeemable at par on or before March 31, 2003, in lieu of the existing 20,000-5.35 per cent, cumulative first preference shares of Rs. 100 each and 10,000--5.70 per cent, cumulative second preference shares of Rs. 100 each.
(2.) It is stated in the petition that the company issued 15,000--first preference shares of Rs. 100 each and 10,000--second preference shares of Rs. 100 each, some time in 1946 and presently 20,000-5.35 per cent cumulative first preference shares and 10,000--5.70 per cent, cumulative second preference shares are due for redemption. According to the explanatory statement to the extraordinary general meeting held on May 4, 1993, these preference shares had to be redeemed within June 14, 1993, being the last date for redemption of these preference shares under Section 80A of the Act. The company has pleaded in the petition that it is not in a position to redeem the existing preference shares. During the hearing of the case, held in October, 1994, the advocate appearing on behalf of the petitioner-company pleaded that though the company has substantial reserves, there is a liability of approximately Rs. 75 lakhs on account of the customary bonus as per the Supreme Court decision in January, 1994. It was further submitted that even though the company has investments of the book value of approximately Rs. 2.67 crores, it is not possible to disinvest these holdings as these are holdings in group companies as identified under the Monopolies and Restrictive Trade Practices Act. Subsequently, through a miscellaneous application dated February 13, 1995, the company stated that it was not in a position to redeem the preference shares as it did not have sufficient cash to make payment to its shareholders, but the company can now manage the funds to redeem the said preference shares. It had also expressed its willingness now to pay the dividend at the existing rate from June 15, 1993, till the date of actual redemption. It has, therefore, prayed for approval so as to reduce the time of redemption up to March 15, 1995.
At the time of filing of the petition, i.e., June, 1993, the dividend was in arrears for the years 1991-92 and 1992-93. Subsequently, from the balance-sheet as at March 31, 1994, it is noted that the dividend on both the categories of preference shares has been completely settled up to the date of redemption, viz., June 14, 1993. Hence, there is no dividend outstanding on the due date of redemption.
(3.) DURING the hearing of the case in October, 1994, and March, 1995, it was submitted on behalf of the company that due to the blocking of funds of the company in investments in group companies, it is not in a position to redeem the preference shares as required under Section 80A(1) of the Act. DURING the hearing as well as in written submissions, there is no concrete evidence of liability on account of bonus to the employees to the extent of Rs. 75 lakhs. Such a liability is also not evident in the three balance-sheets for the years 1991-92, 1992-93 and 1993-94. The only ground emphasised on behalf of the company is the liquidity crunch due to the blockage of funds in the investments in shares of group companies.;