1995 (10) TMI 189 - SC - Companies Law

What is the meaning of the word each in the expression if the permission has not been granted by the stock exchange or each such stock exchange used in sub-section (1A) of section 73 of the Companies Act, 1956 ? Held that - Appeal dismissed. Sub-section (1A) of section 73 requires that where a prospectus states that an application under sub-section (1) has been made for permission for the shares or debentures offered thereby to be dealt in one or more recognised stock exchanges, such prospectus shall state the name of the stock exchange or, as the case may be, each such stock exchange . Thus unless permission is granted by each or everyone of all the stock exchanges named in the prospectus for listing of shares to which application is made by the company, the consequence is to render the entire allotment void.

Summary

Issues:
Interpretation of the word 'each' in section 73(1A) of the Companies Act, 1956 regarding permission for shares or debentures to be dealt with on stock exchanges.

Detailed Analysis:

Issue 1: Interpretation of the word 'each' in section 73(1A)
The judgment revolves around the interpretation of the word 'each' in the context of section 73(1A) of the Companies Act, 1956. The central question is whether the entire allotment of shares becomes void if permission is not granted by all stock exchanges mentioned in the prospectus. The case stemmed from a scenario where an appellant-company issued a prospectus offering shares, with applications made to multiple stock exchanges. The Bombay Stock Exchange rejected the application, while others granted permission within the prescribed period. The court analyzed the legislative intent behind the insertion of sub-section (1A) in section 73, aiming to address the consequences of the decision in a previous case. The court emphasized that the word 'each' in the provision signifies that if applications are made to multiple stock exchanges, permission must be granted by every stock exchange named in the prospectus for the allotment to be valid. The judgment clarifies that even if one stock exchange rejects the application, the entire allotment becomes void, aligning with the legislative objective of ensuring compliance with all stock exchanges mentioned in the prospectus.

Conclusion:
The Supreme Court dismissed the appeal, upholding that the allotment of shares would be void if permission is not granted by every stock exchange mentioned in the prospectus, as per the interpretation of the word 'each' in section 73(1A) of the Companies Act, 1956. The judgment reaffirmed the legislative intent behind the provision and the necessity to comply with all stock exchanges for valid allotment, thereby maintaining investor protection and regulatory adherence in the corporate sector.