Supreme Court Refuses To Interfere With Calcutta HC Order On IIBI's ₹221 Crore Preference Share Redemption

The Supreme Court on Monday dismissed special leave petitions filed by investor Persis A. Khambatta, refusing to interfere with the Calcutta High Court's judgment upholding a resolution of Industrial Investment Bank of India Ltd (IIBI), which is in voluntary liquidation.

The resolution provides for redemption of ₹221.08 crore worth of redeemable cumulative preference shares at 20% of their principal paid-up capital in full and final settlement.

A Bench of Justices Vikram Nath and Sandeep Mehta held that it was not inclined to interfere with the impugned judgment and dismissed the special leave petitions.

"We are not inclined to interfere with the impugned judgment and order passed by the High Court. The Special Leave Petitions are, accordingly, dismissed. Pending application(s), if any, shall stand disposed of.", the Court said.

The dispute concerned a resolution passed at the bank's 13th Annual General Meeting held on September 20, 2010. The resolution approved redemption of redeemable cumulative preference shares amounting to Rs 221.08 crore, across multiple series, at 20% of the principal amount as full and final settlement.

Persis A. Khambatta and others were holders of C series redeemable cumulative preference shares worth Rs. 1 crore purchased in December 1998. They challenged the resolution, claiming that their rights as a specific class of shareholders were altered without following the procedure prescribed under Section 106 of the Companies Act, 1956.

Allowing IIBI's appeal, the Calcutta High Court held that the resolution complied with Section 106. It found that the notice of the AGM contained the requisite explanatory statement, more than 75% of the preference shareholders had given prior written consent, and over 99% of the paid-up preference share capital had supported the proposal.

The Court further held that where identical terms are offered to an entire class of preference shareholders, a separate meeting for each sub-class is unnecessary.

The High Court also held that the interim injunction sought by the shareholders was not in aid of the final relief claimed in the suit and therefore could not be sustained.

For Petitioner: Pawan Bhushan, Advocate, Tushar Bhushan, AOR, Sushant Rao Bontha, Advocate

For Respondent: Neeraj Kishan Kaul, Sr. Advocate, Piyush Kumar, AOR, Rajesh Kumar Singh, Ira Mahajan, Abhishek Verma, Raghwendra Tiwari, Ranjeet K Ranjan, Advocates