EDAC Engineering Ltd. Vs Registrar of Companies (NCLT Chennai)
The National Company Law Tribunal considered a petition filed under Section 55(3) of the Companies Act, 2013 seeking approval for reissuance of 9% redeemable cumulative preference shares amounting to Rs. 11.80 crore (including dividend) in favour of Sicagen India Limited for a further period of five years from January 1, 2024.
The petitioner company, incorporated under the Companies Act, 1956, had issued 1 crore 9% redeemable cumulative preference shares of face value Rs. 10 each to Sicagen India Limited. The total redemption amount was Rs. 10 crore, with accumulated dividend of Rs. 1.80 crore, aggregating to Rs. 11.80 crore as on March 31, 2023. These preference shares were originally due for redemption on December 31, 2018, but the redemption period had earlier been extended by five years pursuant to a Tribunal order dated October 25, 2019.
The company submitted that it was unable to redeem the preference shares due to financial constraints, including non-realisation of receivables and liquidity issues arising from a major debtor undergoing corporate insolvency resolution. Consequently, the board recommended reissuance of the preference shares for another five years on the same terms. Consent for such reissuance was obtained from Sicagen India Limited, the holder of the preference shares, and a special resolution was passed at an Extraordinary General Meeting held on April 25, 2024.
