MANGALORE CHEMICALS AND FERTILIZERS LTD Vs. STATE

JUDGEMENT

(1.) IN this petition filed under the proviso to Section 80A(1) of the Companies Act, 1956, on October 30, 1992, the petitioner seeks consent of this Bench to issue further redeemable preference shares in lieu of the unredeemed preference shares.

(2.) The facts leading to the filing of this petition are that the petitioner issued two lots of preference shares on October 6, 1972, and January 8, 1973, consisting of 1,50,000 and 1,49,825 preference shares of Rs. 100 each respectively. The period of redemption was fifteen years and the shares carried a dividend of 9.5%. 52.70% of the total issue was held by the Karnataka State Co-operative Marketing Federation Limited (1,28,025 shares) and the Karnataka State Agro Industries Corporation Limited (30,000 shares), both Karnataka Government State Corporations. While other bodies corporate and financial institutions held 32%, the remaining 16% was held by the public as on September 16, 1992. These preference shares in accordance with the terms of issue should have been redeemed on or before October 5, 1987, and January 7, 1988, respectively. The petitioner-company extended the date of redemption by five years with the permission of the Controller of Capital Issues with an increased rate of dividend at 13%. Therefore, the preference shares in question were to be redeemed on or before October 5, 1992, and January 7, 1993, respectively.

(3.) THE petitioner avers that the petitioner having got into difficult days made a reference to the Board for Industrial and Financial Reconstruction (BIFR) to declare the petitioner-company as a potentially sick company.