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Issues:
1. Validity of the allotment of shares in a company. 2. Compliance with the provisions of Section 101 of the Companies Act. 3. Interpretation of the statutory restrictions on allotment. Analysis: The judgment revolves around the applicant seeking to avoid an allotment of 100 ordinary shares in a company due to non-payment of application money. The company's authorized share capital, minimum subscription, and application requirements are outlined. The applicant signed an application form for 100 shares but did not pay the application money. The company later informed the applicant of the allotment of 180 shares and requested payment. The applicant's petition did not allege fraud and did not invoke Section 38 of the Companies Act. The court examined Section 101 of the Companies Act, which governs allotment of shares. The section mandates that no allotment can be made unless the minimum subscription amount is met, and the sum payable on application has been received by the company. The judgment discusses the historical context and amendments to the Act, highlighting the requirement of at least five percent of the minimum subscription to be paid before the first allotment of shares. The court noted the absence of statutory restrictions on directors to allot shares to applicants who fail to pay application money post the first allotment. The judgment referenced a Lahore High Court decision but disagreed with its interpretation regarding the validity of allotment without payment of a minimum percentage of the nominal value of shares. The court concluded that the allotment in question did not contravene Section 101 and was not voidable under Section 102. Consequently, the application to avoid the allotment was dismissed, and costs were awarded to the respondent. The judgment underscores the statutory framework governing share allotments and the importance of compliance with prescribed requirements to uphold the validity of such transactions.
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