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2020 (10) TMI 826 - Tri - Companies LawPledge of property - existence of two subsisting status quo orders on the properties of the Company which is restricting the Company to pledge its properties to raise funds from Banks and other Financial Institutions - threat from the lenders to surge the interest rate and take coercive legal steps if the dues of corporate lenders are not cleared. HELD THAT:- CLB missed a most basic principle of Section 397, namely, that mere unfairness does not constitute oppression. When the petitioners were given the right to subscribe to the 'rights issue' along with all others in the same proportion, no prejudice, whatsoever, could have been caused to them. It is not in dispute even by the petitioners that the need for more funds was an admitted position - In fact, no unfair prejudice has been caused to the petitioners. The CLB failed to take note of all these vital aspects and relied on irrelevant materials. Apart from these, it is pointed out that the company having turned the corner and doing well, it would be fair exercise of discretion by this Court not to interfere with the High Court judgment. The impugned judgment of the High Court is fair to both sides and safeguards the interest of the directors and shareholders; hence there is no valid ground to interfere under Article 136 of the Constitution of India. It is true that there is status-quo order passed by the CLB as well as Civil Court with regard to the assets of the Company. Therefore, 1st Applicant Company cannot sell any of its assets to discharge the debt due to the lenders. The only way to discharge the debt of the Creditors is to raise additional capital by issuing shares to the existing shareholders and for which purpose the order dated 07.12.2006 passed by the CLB directing the company to maintain status-quo with regard to shareholding pattern, is to be relaxed by permitting the 1st Applicant Company to go for rights issue according to the provisions of Section 62 of the Companies Act, 2013 - We are making it very clear that relaxation of order dated 07.12.2006 is for the limited purpose of raising additional capital by issuing additional shares for discharging the debt due to the creditors and after completing the process, the order passed by the erstwhile CLB as regards to the status-quo of shareholding pattern will continue. However, the persons acquiring shares in pursuance of Rights Issue cannot exercise additional voting rights to the extent of shares accrued in the Rights Issue until further orders or till disposal of the main petition, whichever is earlier. Application disposed off.
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