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2009 (8) TMI 710 - HC - Companies LawTemporary injunction application seeking a restraint upon the plaintiff’s going ahead with its proposed rights issue, whereby it intends to offer 1,50,30,003 shares of the face value of ₹ 10, at a premium of ₹ 30, thus, proposing to realise ₹ 60 crore. Held that:- The court discerns no infirmity in the plaintiff’s proposal of a rights offer, with the premium suggested. In respective of the final outcome of the suit, the amounts would enrich the company; the applicant-defendants being significant shareholders, would also benefit. It is ultimately their choice of either exercising whatever their rights are, in that issue. The proposals for upgrading the business, and purchase of various equipment, renovations, etc., may not fall within the description of section 78(2), i.e., (1) unissued securities, to be issued to its members as fully paid bonus shares ; (2) writing off its (the company’s) preliminary expenses ; (3) writing off the expenses of or the commission paid or discount allowed on any issue of securities or debentures of the company, or (4) the provision for the premium payable on the redemption of any redeemable preference securities or any debentures of the company. In the circumstances, the court is of opinion that the plaintiff would have to approach and seek approval under sections 100 and 101 of the Act. As a result of the above discussion, it is held that though the application is maintainable, the defendant cannot be granted the relief of injunction, as sought. However, in view of section 78, the plaintiff is directed to seek approval, in accordance with law, in respect of the expenditure proposed by it, for the purposes which do not fall within section 78(2). The plaintiff shall file an undertaking, and also cause an undertaking to be filed by the company (which is a party to the present suit, and of which the plaintiffs are in control at present), to comply with these directions, in the form of affidavits, within one week.
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