The correct answer is: C. Sale of fixed assets of company
A company can redeem its preference shares by issuing equity shares, debentures, or by selling its fixed assets. However, the sale of fixed assets is the most legally accepted method of redemption of preference shares. This is because it is a more secure method for the company, as it ensures that the company will have the funds to redeem the preference shares.
The other options are not as legally accepted methods of redemption of preference shares. Issue of equity shares is not a secure method, as the company may not be able to sell the shares at a price that is high enough to cover the cost of redemption. Issue of debentures is also not a secure method, as the company may not be able to repay the debentures on time. Public deposit is not a secure method, as the company may not be able to raise the required funds from the public.
Therefore, the sale of fixed assets is the most legally accepted method of redemption of preference shares.