A corporate entity is legally holding Non-cumulative Redeemable Preference shares of a public limited company. The said company has defaulted in redeeming the preference shares and also defaulted in making payment of dividend. Therefore, on repeated request by the shareholder, the Company did not redeem the debentures and took shelter of Section 80 of the Companies Act. The shareholder does not desire to have fresh issue of preference shares and filed a winding up petition against the defaulter company under just and equitable grounds. The said winding up petition was dismissed. Now, the shareholder desire to proceed against the defaulter Company. Please advise which legal recourse shall be adopted from the following options: a) Institution of Summary Suit against the defaulter Company; b) Oppression and mis-management case; c) Any other legal recourse Also, please share any precedent/case laws on the aforesaid topic.
Where sec 80 obstructed you as no such shares shall be redeemed unless they are fully paid;
On what ground winding up refused.
Non cumulative - dividend is not paid, then it does not roll forward - the right to this particular dividend is lost forever.
when a company issues debentures, it takes money from its subscribers and the debtenture stands as a security
this issuance of a debenture is evidence of a debt as per definition of debenture given in the companies act
till the time the debenture is not redeemed, the company is also liable to pay dividends
since the company has defaulted in redeeming the debentures and has also not paid the dividends, this will constitute a commercial dispute under the commercial courts act for which you can file a summary suit in the court in its commercial division under order 37 of CPC
Another option would be to file an application under IBC against this company
since its a public limited company, there would be provision for issuing a pre suit notice to the company
also now it is compulsory that before one files a commercial case, he has to first apply to the competent authority under the commercial courts act for mediation between the lender and defaulter company
2) better option is to approach tribunal against company refusal to redeem preference shares
You can complaint the same to sebi. It will take action.
Yes you can also file a case under oppression and mismanagement
It would be better that the shareholder initiate steps for filing a summary suit against the defaulter company which may yield a better result than any other option
Dear
The share holders can file a complaint with SEBI for unfair practices by company for non redemption of preference shares.
