TMI Blog2005 (8) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... in law, if it feels that its directions were not complied with. - CIVIL APPEAL NO. 12640 OF 1996 - - - Dated:- 9-8-2005 - S.N. VARIAVA AND DR. AR. LAKSHMANAN, JJ. C. Mukund, Ashok Jain, Pankaj Jain and Bijoy Kumar Jain for the Appellant. Ashok Desai, Bhaskar P. Gupta, Abhijit Chatterjee, S. Sukumaran, A. Deb Kumar, Ramesh Babu M.R., Ms. Radha Rangaswamy, Pradeep Kumar Malik for the Respondent. JUDGMENT S.N. Variava, J. - This appeal is against the judgment dated 23rd August, 1995 passed by the Calcutta High Court. 2. Briefly stated the facts are as follows : The respondents are an investment company. The Reserve Bank of India had issued certain directions to them. The Respondents had challenged the authority and power of the Reserve Bank of India to issue such directions. That challenge ultimately culminated in this Court. By the judgment reported in Peerless General Finance and Investment Co. Ltd. v. Reserve Bank of India [1992] 2 SCC 343 this Court held that the Reserve Bank of India had authority and power to issue direction in order to provide stable, identifiable and monitor able method of operation. This Court held that such directions w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to and amongst such members in proportion of 15 (Fifteen) Bonus Shares for every existing Equity Share held by them respectively as on the said date and that the Bonus shares so distributed shall, for all purposes be treated as an increase in the nominal amount of the Capital of the Company held by each such member and not as Income. ( b )That the Bonus Shares so allotted shall always be subject to the terms and conditions contained in the Memorandum and Articles of Association of the Company and the Guidelines for Bonus Shares issued by SEBI. ( c )That such allotment of Bonus Shares to non-resident shareholders of the Company shall be subject to the approval of the Reserve Bank of India under the Foreign Exchange Regulation Act, 1973, if any. ( d )That the Bonus Shares so allotted pursuant to this resolution shall rank in all respects pari passu with the existing fully paid Equity Shares of the Company and shall also be entitled for the dividend in respect of the financial year ending on 31st March, 1995. ****** 4. The Appellant, who is one of the shareholders of the Company, filed a Suit against the Respondents for a declaration that they are not entitled to issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant portion of Article 182 of the Articles of Association of the Company which has been strongly relied upon reads as follows: "182. (1) Any General Meeting may resolve that any amounts standing to the credit of the shares premium account or the Capital Redemption Reserve Account or any monies, investments or other assets forming part of the undivided profits including profits or surplus monies arising from the realization and (where permitted by law from the appreciation in value of any capital assets of the Company) standing to the credit of the General Reserve, Reserve or any Reserve Fund or any other Fund of the Company or in the hands of the Company and available for dividend by capitalized: ( i )by the issue and distribution as fully paid up of shares, debentures, debenture stock, bonds or other obligations of the Company, or ( ii )by crediting shares of the Company which may have been issued and not fully paid up, with the whole or any part of the sum remaining unpaid thereon. Provided that any amounts standing to the credit of the share premium account or the Capital Redemption Reserve Account shall be applied only in crediting the payment of capital on share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption Reserve Account and ( c )any monies, Investments of other assets forming part of the undivided profits including profit or surplus monies arising from ( i ) realization and ( ii ) where permitted by law, from the appreciation in value of any capital assets standing to the credit of General Reserve, Reserve or any Reserve Fund or any other Fund of the Company or in the hands of the Company and available for dividends." If read in this manner it is clear that the words "available for dividends" would be applicable to all categories. The High Court was thus wrong in concluding that these words only applied to the last category i.e., funds of the company or in the hands of the company. However, it must be seen that the word "Dividend" wherever it appears in the Articles also includes "Bonus". Thus the words "available for dividends" would necessarily mean "available for dividend/bonus". Article 182 itself provides that where the law permits issuing of bonus from appreciation of value in the capital assets the same could be done. If read in the manner suggested by the Appellants this portion of Article 182 i.e., issuing of bonus out of Revaluation Reserves would be rend ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
