1995 (2) TMI 327 - HC - Companies Law

Issues Involved:
1. Violation of Sections 69 and 73 of the Companies Act.
2. Compliance with Rule 19(2)(b) of the Securities Contracts (Regulation) Rules.
3. Validity of the public issue.
4. Proper application to stock exchanges.
5. Timeliness and propriety of the appeal.
6. Principles of natural justice.

Issue-wise Detailed Analysis:

1. Violation of Sections 69 and 73 of the Companies Act:
The petitioner contended that there was a "flagrant violation of the provisions as contained in sections 69 and 73 of the Companies Act." The petitioner argued that since only 5.75% of the issue had been subscribed, the company was obligated to refund all monies received from the applicants. The court noted that the company had obtained relaxation under Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, allowing it to offer 41.33% of the shares to the public instead of the required 60%.

2. Compliance with Rule 19(2)(b) of the Securities Contracts (Regulation) Rules:
The petitioner argued that the company had not complied with the provisions of Rule 19(2)(b). The court observed that the company had indeed obtained relaxation under this rule, which allowed it to offer a lesser percentage of shares to the public.

3. Validity of the Public Issue:
The petitioner questioned the validity of the public issue, citing discrepancies in the number of applications and shares applied for at different points in time. The court noted that the company had provided different figures at various stages, but these discrepancies did not invalidate the public issue.

4. Proper Application to Stock Exchanges:
The petitioner argued that no proper application for listing of shares was filed with the stock exchanges. The court found that an initial listing application was filed before the issuance of the prospectus, and a second application was filed before the closure of the issue. Therefore, the company's application for listing was deemed proper.

5. Timeliness and Propriety of the Appeal:
The petitioner contended that the appeal filed by the company was barred by limitation. The court noted that the application for listing was filed on February 3, 1993, and the date of closure of the issue was April 10, 1993. The appeal was filed on June 21, 1993, which was within the permissible time frame. The court also noted that the Central Government had the authority to condone the delay in filing the appeal.

6. Principles of Natural Justice:
The petitioner argued that there was a gross violation of the principles of natural justice, as she was not given a fair hearing. The court observed that the petitioner was given an opportunity to be heard on January 27, 1994, and had filed detailed notes of submission. The court concluded that there was substantial compliance with the principles of natural justice, and the petitioner was not prejudiced by the proceedings.

Conclusion:
The court dismissed the petition, stating that there was substantial compliance with the principles of natural justice and that the appeal was filed within the permissible time frame. The court also noted that the petitioner had already filed a suit on the same cause of action, and her involvement in the matter was minimal. Therefore, the court declined to exercise its extraordinary writ jurisdiction in favor of the petitioner.

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