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Issues:
1. Direction to the company to allot rights share. 2. Direction to the 1st respondent to perform its statutory duty. Analysis: Issue 1: Direction to the company to allot rights share The petitioner, a shareholder of the 2nd respondent company, filed a petition under Article 226 of the Constitution seeking a direction for the company to allot rights shares. The petitioner had applied for 144 equity shares by paying Rs. 21,600, but the company rejected the application citing a violation of section 269SS of the Income-tax Act, 1961. The rejection was based on the company's general instructions that any application made in cash exceeding Rs. 20,000 would be refunded. The court referred to previous judgments emphasizing the regulation of business transactions to prevent the use of unaccounted money. It was highlighted that payments made for purchases, including stock-in-trade, could be disallowed if made in cash exceeding specified limits under the Act. However, the court found no statutory violation by the company in rejecting the application and stated that any remedy for the alleged breach of contract in share allotment should be sought under the Companies Act, 1956, through a civil suit. Issue 2: Direction to the 1st respondent to perform its statutory duty The court also addressed the issue of the 1st respondent's alleged failure to perform its statutory duty in reference to the share allotment. It was clarified that the 1st respondent's jurisdiction was limited to guidance, and any grievance against its decision could be appealed under section 20 of the Securities and Exchange Board of India Act, 1992. The court emphasized that the denial of rights shares did not constitute a consumer wrong under the Consumer Protection Act, 1986, or the MRTP Act, 1969. The judgment highlighted that the remedy for such issues lay within the framework of the Companies Act and through civil suits. Consequently, the court dismissed the original petition, directing the petitioner to seek redress through the appropriate civil court or appellate authority, unaffected by the observations made in the judgment. In conclusion, the court found no grounds to grant the relief sought by the petitioner, emphasizing the need to address alleged breaches of contract or statutory duties through the appropriate legal channels provided by the Companies Act and other relevant laws.
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