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2020 (4) TMI 386 - AT - Companies LawRedemption of preference shares - failure of the company to redeem or to pay dividend - NCLT has dismissed the application of Appellant solely on the ground that the Appellant being preferential shareholders has no locus standi to file application for redemption of shares under Section 55(3) of the Companies Act, 2013 or even under Section 245 of the Companies Act, 2013 - HELD THAT:- Section 55(3) of the Companies Act, 2013 clearly states that the Company, when not in a position of redeem its preference shares, ‘may’ with the consent of 3/4th in value of such preference shares and the approval of the Tribunal ( on a petition filed in this behalf), issue further redeemable preference shares equal to the amount due (including dividend, if any) in respect of such unredeemed shares. However, there is a proviso - In ordering such further issue, the Tribunal shall forthwith order redemption of preference shares held by such persons who do not consent to such further issue. The Section stipulates that the Company only with the requisite consent of preference shareholders and filing a petition in this behalf before the Tribunal and its consequent approval – can issue further redeemable preference shares with regard to the unredeemed preference shares. The Section though requires prior consent of the shareholders, does not provide for any action that can be taken by the concerned preference shareholders prior to filing of such petition by the Company. Thus, remedies available to such preference shareholders are only by way of either consenting or dissenting with such further issue - However, intention of the legislature while promulgating Section 55 of the Companies Act, 2013 was clearly to compulsorily provide for redemption of preference shares by doing away with the issue of irredeemable preference shares. Therefore, even there being no specific provision stipulated under the Act 2013 through which relief can be sought by preference shareholders in case of non-redemption by the Company or consequent non-filing of petition under Section 55 of the Act, the intention of the legislature being clear and absolute, Tribunal’s inherent power can be invoked to get an appropriate relief by an aggrieved preference shareholder(s). The preference shareholders are not remediless and for redemption of preference share can file application under Section 55(3) of the Companies Act, 2013. They may also file application under Section 245 of the Companies Act, 2013 as a class action suit and the NCLT while exercising the inherent power viz. Rule 11 of NCLT Rules, 2016 can pass appropriate order - The matter is remitted back to NCLT, Chennai Bench to decide the application as per law.
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