IN MATTER OF SECTION 80 Vs. STATE

JUDGEMENT

(1.) A short question of law that arises for consideration in this petition is : (1) Whether the preference shares can be redeemed otherwise than out of the profits of the company which would otherwise be available for dividends or out of the proceeds of the fresh issue of shares made for the purpose of redemption the relevant facts are stated below :

(2.) The petitioner was incorporated on 26/06/1986 under the provisions of the Companies Act, 1956 (for short, the Act) and the authorised share capital of the petitioner is Rupees One hundred and twenty five crores divided into Five crore equity shares of Rs. 10/- each and Seventy five lacs preference shares of Rs. 100/- each. As on the date of filing of the petitioner (i. e. on 10th february, 2003) the subscribed and paid up share capital of the petitioner was Rs. 43,25,04,390/- consisting of Rs. 1,57,50,439/- equity shares of Rs. 10/ each fully paid up and Rs. 27,50,000/- fully paid up preference shares of rs. 100- each.

(3.) The Balance sheet of the petitioner company as of 31st March, 2002 (annexed as Exhibit C-1 to the petition) shows that the petitioner has issued four types of preference shares as detailed below : type Nos. Total value (Rupees) 1) 10. 5% redeemable 2,50,000 2,50,00,000/- cumulative preference shares of Rs. 100/- (Series N Preference shares) 2) 10. 75% redeemable 25,00,000 25,00,00,000/- cumulative preference shares of Rs. 100/7 (Series M Preference shares) 3) 11.50% redeemable 1,38,000 1,38,00,000/- cumulative preference shares of Rs. 100/- 4) 12.5% redeemable 30,000 30,00,000/- cumulative preference shares of Rs. 100/-