Where company failed to redeem preference shares due to absence of distributable profits

CL : Where company failed to redeem preference shares due to absence of distributable profits and it had proposed to reissue further redeemable preference shares against existing preference shares, company was directed to first settle down claims of preference shareholders who were objectors to such issue
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[2014] 49 taxmann.com 337 (CLB - New Delhi)
COMPANY LAW BOARD, NEW DELHI BENCH
K. K. Jindal
v.
Rajaram Corn Products (PB) (P.) Ltd.
DHAN RAJ, MEMBER
CP NO. 3/80A OF 2008
MAY  29, 2013
Section 55, read with section 465 of the Companies Act, 2013/Section 80, read with sections 80A and 634A of the Companies Act, 1956 - Preference shares - Power to issue redeemable - When on earlier occasion respondent company could not redeem preference shares on due-maturity date, CLB allowed it to issue further redeemable shares against existing redeemable preference shares - Again respondent company was unable to redeem preference shares due to absence of distributable profit in company - Petition under sections 80/80A and 634A was filed by preference shareholders for enforcement of order passed by CLB earlier which tantamounted to objection to reissue of preference shares in lieu of preference shares and dividend thereon - Whether in view of facts, petitioner-preference shareholders were objectors to re issue of fresh issue of preference shares and, hence, respondent company was to be directed to settle down claims of petitioners - Held, yes [Para 10]