1. This is a petition by the Ganges Mfg. Co. Ltd. under section 80A of the Companies Act, 1956, seeking consent of the Company Law Board to the issue of further 1,86,056 redeemable cumulative preference shares of Rs. 10 each in lieu of the existing 60,000 cumulative preference shares and the arrears of dividend accumulated thereon till 14-6-1993, for Rs. 12,60,560, carrying dividend at the rate of 10.4 per cent per annum at par to the holders of the preference shares in proportion to the shares held by them subject to payment of fraction amount of Rs. 259 being the amount less than Rs. 10 each in some case in respect of the accumulated dividend in cash resulting from conversion of the arrears of dividend to the shareholders concerned and redeemable after the expiry of 5 years, but not later than 10 years from the date of issue.

2. It is stated that the petitioner-company was incorporated on 20-8-1916, under the Indian Companies Act, 1913, and is a public company limited by shares. The company is engaged in the business mainly of manufac-turing and dealing in jute, jute goods and jute products. The company issued 6,000 cumulative irredeemable preference shares of Rs. 100 each before the commencement of the Companies (Amendment) Act, 1988. By virtue of the provisions of section 80A of the Companies Act, 1956, introduced with effect from 15-6-1988, the said cumulative irredeemable preference shares have to be redeemed on or before 14-6-1993. It is also stated that due to business loss and inadequacy of profits, the petitioner-company could not pay dividend on the said preference shares at the rate of 10.4 per cent per annum after the year ended on 31-3-1973, and the accumulated dividends are in arrear till 14-6-1993. The financial position of the company is such that it is not possible for it to redeem the aforesaid cumulative irredeemable preference shares and to pay the dividend remaining in arrear thereon till 14-6-1993. The shareholders of the company, at the extraordinary general meeting held on 26-4-1993, resolved, inter alia, that each of existing 6,000 preference shares of Rs. 100 each issued by the company be sub-divided into preference shares of the nominal value of Rs. 10 each credited as fully paid-up and that the authorised share capital of the company be increased to Rs. 1,75,00,000 by creation of further cumulative redeemable preference shares of Rs. 10 each and that the directors shall have the authority to issue further redeemable preference shares equal to the amounts of the existing preference shares including arrears of dividend payable thereon. The Board of directors of the company at their meeting held on 14-5-1993, resolved that subject to the approval of the Company Law Board, Shri S.K. Osatwal, Shri R.K. Poddar and Shri Tarun Aich, directors of the company, be authorised to issue further 1,86,056 redeemable cumulative preference shares of Rs. 10 each fully paid-up, in lieu of the existing preference shares of Rs. 6 lakhs and arrears of dividend accumulated thereon till 14-6-1993, being the record date, for Rs. 12,60,560, carrying dividend at the rate of 10.4 per cent per annum at par to the holders of the preference shares in proportion to the shares held by them subject to payment of fraction amount of Rs. 259 being amount less than Rs. 10 in some cases in respect of accumulated dividend in cash resulting from conversion of the arrears of dividend, to the shareholders concerned and redeemable at any time after the expiry of 5 years, but not later than 10 years from the date of issue in full redemption of the existing issued preference shares of the company and in full settlement of the liabilities of the arrears of dividend accumulated thereon till 14-6-1993. The further preference shares shall carry dividend at the rate of 10.4 per cent per annum with effect from 15-6-1993 irrespective of the date of issue/ allotment.

3. The petition was first heard on 17-8-1993. Shri S.D. Basu, practising Company Se