2019] 181
they did not have the right to vote at all. He submitted that a particular balance
had been struck between the differing groups of shareholders which created a
strong incentive for the company to declare dividends because when dividends
were not paid to the preference shareholders the ordinary shareholders were not
paid either and for a longer period. In drawing attention to the constitution’s use
of language he concluded that dividends could not be in arrears in any ordinary
use of English if they had never been payable and never would be payable.’
(Emphasis supplied)
(
f
)
Reliance
was
also
placed
by
Shri
v^ Misra on Indore Development Authority. Shailendra
[ 2018 ]
3
SCC
412
thus:
‘ 40.
In
J. Dalmiav. CIT
,
AIR
1964
SC
1866 ,
this
Court
has
observed
that
the^
expression
“paid”
does
not
contemplate
actual
receipt
of
the
dividend
by^
the
member.
The
dividend
may
be
said
to
be
paid
within
the
meaning
of^
Section
16 ( 2 )
when
the
company
discharges
its
liability
and
makes
amount^
unconditionally
available
the
members
entitled
thereto:
(AIR
p.
1869 ,^
para
10 )“10. ...The expression “paid” in Section 16( 2 ) it is true does not contemplate actual
receipt of the dividend by the member. In general, dividend may be said to be paid
within the meaning of Section 16( 2 ) when the company discharges its liability and
makes the amount of dividend unconditionally available to the member entitled
thereto.
(Emphasis supplied)”’
(
g)
In
CDS Financial Services(supra)
it
was
observed:
“ 48 .Regarding
plaintiff’s
right
to
vote
on
preference
shares:
Now
the
only
question
that
remains
to
be
considered
is
whether
the
plaintiff
is
entitled^
to
exercise
voting
rights
on
preference
shares
held
by
it.
The
case
of
the
plaintiff^
shares^ in^ short^ is^ that^ the^ dividend^ has^ not^ been^ paid^ in^ respect^ of^ the^ preference^
virtue^ for^ financial^ year^ ending^ March^31 ,^1998 ,^1999 ,^ and^2000 and,^ therefore,^ by^
share^ s.of^ section^87 (^2 )(b)(ii),^ the^ plaintiff^ is^ entitled^ to^ vote^ on^ the^ said^ preference^
ence^ The^ company^ has^ not^ disputed^ that^ the^ dividend^ in^ respect^ of^ the^ prefer-
acqu^ isrheadres^ has^ remained^ unpaid^ and,^ therefore,^ the^ plaintiff^ as^ shareholder^ has^
voting^ voting^ rights.^ However,^ it^ is^ the^ case^ of^ the^ company^ that^ exercising^ of^
submi^ srsiigohnt^ would^ violate^ conditions^ imposed^ by^ Reserve^ Bank^ of^ India.^ It^ is^ the^
order^ of^ the^ company^ that^ plaintiff^ cannot^ vote^ beyond^ the^ limit^ of^49 %.^ In^
When^ to^ appreciate^ this^ issue,^ it^ would^ be^ necessary^ to^ state^ few^ admitted^ facts.^
permi^ sstihoen^ plaintiff^ purchased^ preference^ shares,^ it^ had^ applied^ and^ obtained^
Exchange^ from^ the^ Reserve^ Bank^ of^ India^ under^ section^29 (^1 )(b)^ of^ the^ Foreign^
section^ Regulations^ Act,^1973 (“FERA”).^ While^ granting^ such^ permission^ under^
impose^ d^29 (^1 )(b)^ of^ the^ FERA,^ the^ Reserve^ Bank^ of^ India^ vide^ letter^ dated^12.^1.^1998
several
conditions.
Two
conditions
which
are
relevant
for
our
purpose
are^
as follows:(^1 ) tshearvt (^) eno shares be acquired by CDC without the prior permission of the Re-
Bank of India;
(^2 ) twhiatth (^) .the conditions contained in the letter dated 6 .l.l^998 shall be complied
Ram Parshotam Mittal
v.
Hotel Queen Road (P.) Ltd. (SC)