SAHU CYLINDERS AND UDYOG PVT LTD Vs. STATE

JUDGEMENT

(1.) SAHU Cylinders and Udyog Pvt. Ltd. (hereinafter referred to as "the company") has filed the above said petition before this Bench on March 15, 1995, under the proviso to Sub-section (1) of Section 80A of the Companies Act, 1956 (hereinafter referred to as "the Act"), praying for approval of this Bench in respect of already issued 20,700--12% redeemable non-cumulative preference shares of Rs. 100 each in lieu of 20,700--12% non-redeemable non-cumulative preference shares of Rs. 100 each. The company has also filed an application to condone the delay in approaching this Bench.

(2.) The company has stated in the petition that its authorised capital is Rs. 50,00,000 divided into 25,000 equity shares of Rs. 100 each and 25,000-12% non-cumulative preference shares of Rs. 100 each. The paid-up capital of the company is Rs. 30,81,700 comprising 10,117 equity shares of Rs. 100 each and 20,700--12% non-cumulative redeemable preference shares of Rs. 100 each. According to the company it had issued 20,700-12% non-cumulative non-redeemable preference shares of Rs. 100 each in the year 1983. In terms of Section 80A(1)(a), which came into force on June 15, 1988, the irredeemable preference shares should be redeemed by the company within the period of not exceeding five years from the date of commencement of the Act, i.e., June 15, 1988. Accordingly, the non-cumulative non-redeemable preference shares issued by the company should be redeemed on or before June 14,1993. The company was not in a position to redeem the said preference shares. Consequently, the board of directors of the company decided at their meeting held on 14th April, 1993, to obtain approval of the shareholders for issuing further redeemable preference shares equal to the amount outstanding in respect of the irredeemable preference shares subject to the consent of the Company Law Board. Accordingly, resolutions were passed at the meetings of equity shareholders and preference shareholders on 11th May, 1993, and 12th May, 1993, respectively. At the extraordinary general meeting of the equity shareholders and preference shareholders, it was resolved to issue 20,700--12% redeemable non-cumulative preference shares of Rs. 100 each in lieu of 20,700 non-redeemable non-cumulative preference shares of Rs. 100 each, redeemable in the 10th year from the date of the issue. The company took necessary steps to comply with the provisions of the Act, but due to an error and by oversight, omitted to apply for consent of this Bench for issue of fresh preference shares in lieu of the old preference shares.

(3.) THE question for consideration is whether the petition seeking approval of this Bench in respect of the already issued 20,700-12% redeemable non-cumulative preference shares of Rs. 100 each in lieu of 20,700--12% non-redeemable non-cumulative preference shares of Rs. 100 each without the consent of the Company Law Board is maintainable.