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2018 (7) TMI 2105

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..... 1956 - the Company may refund the amount on account of the additional issue of shares to the 2nd, 4th, 5th, 6th, and 7th Respondents made on 07.04.2007 and 27.09.2010 and accordingly rectify the register of members after making the refund to the concerned Respondents. Petition disposed off. - TCP NO. 96/2016, OLD CP NO. 42/2012 - Dated:- 10-7-2018 - K. ANANTHA PADMANABHA SWAMY, JUDICIAL MEMBER AND S. VIJAYARAGHAVAN, TECHNICAL MEMBER For the Petitioner : A.G. Sathyanarayana, Adv. For the Respondent : Dr. K.S. Ravichandran, PCS and S. Manjula Devi, Adv. ORDER S. Vijayaraghavan, Technical Member:- The Petitioners have stated that the 1st Respondent ("the Company") was incorporated on 07.08.1970 as a private company and later converted as a public company. Late Mr.A.P.Madhavan was managing the affairs of the Company. Subsequent to the demise of Mr.A.P.Madhavan in 1985, his son Mr. Mahesh Madhavan took over the management of Company affairs. The Petitioners are residents of Singapore and Malaysia. The Petitioners had invested ₹ 1,40,00,000/- (Rupees one crore and forty lakhs only) in the Company in a single tranche. The Petitioners were in aggregate allotted, 4,00,000 eq .....

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..... Company's Articles of Association (AoA) in s.46(l)(a) states as follows: "(1) Where at any time it is proposed to increase the subscribed share capital of the company by allotment of further shares then, (a) Such further shares will be offered to the person who on the date of the offer, are holders of the equity shares of the Company, in proportion nearly as circumstances admit, to the Capital paid up of those shares at the date. " 6. The Petitioners have submitted that the above clause makes it clear that the Company, being a public limited company, the articles (Ref Petitioner's C.P typed set, Pg.No. 19) envisage that the future shares be offered first to the existing shareholder, and only if they don't subscribe, then the Company can offer the shares to other members. The Petitioners have stated that the s.81(1A) of the Companies Act, 1956, which deals with further issue of capitals, reads as follows: (1A) 4 Notwithstanding anything contained in sub-section (1), the further shares aforesaid maybe offered to any persons[ whether or not those persons include the persons referred to in clause (a) of sub-section(l)] in any manner whatsoever- (a) if a special r .....

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..... rrived at; (c) the object/s of the issue through preferential offer; (d) the class or classes of persons to whom the allotment is proposed to be made; (e) intention of promoters/directors/key management persons to subscribe to the offer; (f) (shareholding pattern of promoters and others classes of shares before and after the offer; (g) proposed time within which the allotment shall be completed; (h) whether a change in control is intended or expected. 7. Audit Certificate.- In case of every issue of shares/warrants/fully convertible debentures/partly convertible debentures or other financial instruments with conversion option, the statutory auditors of the issuing company/company secretary in practice shall certify that the issue of the said instruments is being made in accordance with these Rules. Such certificate shall be laid before the meeting of the shareholders convened to consider the proposed issue." Apart from the above, the Respondents have not obtained audit certificate as required by Rule 6. 10. The Petitioners have stated that the Company increased the authorized share capital, without giving Notice to the Petitioners, on 10.09.2010 to ₹ 4,25,00,000/- (Rupee .....

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..... ng of Stock Certificates (Annexure - P7). 14. It is submitted by the Respondents that the notice for the EGM dated 20.02.2006 was duly sent to all the Petitioners on 20.01.2006. The special resolution passed in the EGM dated 20.02.2006 was duly filed with the Ministry of Corporate Affairs (Annexure -P9). The Petitioner's aggregate holding in the Company is 26% prior to the impugned allotment in 2007. Petitioners were aware of the shares issue and they have not objected to the same at any time nor did they ever evince any interest to join in subscribing to the shares. On the contrary they wanted to exit the Company. Moreover the share application money was lying in the books of account of the Company for long. 15. It is further submitted that a copy of the Notice for the Annual General Meeting for the year 2009 along with the Annual Report of the Company for the year 2008-2009 sent to the Petitioners on 02.06.2009. In fact pursuant to a request through an email dated 19.03.2010, a soft copy of the audited financial statements for the Financial Year - 2008-09 was sent to the Petitioners on 20.03.2010. 16. It is further submitted that the averments in Para 6.12(d) of the petition .....

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..... sions of section 81 of the Companies Act, 1956. In view of the above directions the Company may refund the amount on account of the additional issue of shares to the 2nd, 4th, 5th, 6th, and 7th Respondents made on 07.04.2007 and 27.09.2010 and accordingly rectify the register of members after making the refund to the concerned Respondents. The Tribunal further directs for the valuation of shares to arrive at the market value of the shares of the Company. In this regard, the Petitioners and the Respondents are directed to suggest names of 3 valuers within 15 days from the date of receipt of this order. In case there is no common valuer in the names suggested by the Petitioners and the Respondents this Tribunal will appoint an independent valuer for valuation of shares. In this case as has already been discussed the Petitioners have sought to exit the Company. After the submission of the valuation report by the valuers the respondents/the majority shareholders herein will are to buy the shares of the minority shareholders/the petitioners herein. If they fail to do so, the minority shareholders/the Petitioners herein will be given the opportunity to buy the shares of the majority shar .....

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