9911796707
TMI Blog1934 (5) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... on the strength of this and of the prospectus Exhibit A he induced him to take shares to the value of Rs. 1,000. The share certificate, Exhibit B, has been signed by the President. It was found afterwards that the company was not working and that the representations with respect to it in Exhibit A were false. The plaintiff sued for the return of his money. The 2nd defendant, who is said to have become bankrupt, remained ex parte. The trial Court stated that the plaintiff was proceeding against the 1st defendant on two grounds: (i) for his having, along with the 2nd defendant, received the money and for having made misrepresentations as to the affairs of the company and (ii) for his liability on account of the misrepresentation contained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no sufficient evidence of misrepresentation or fraud of the 1st defendant." With regard to the 2nd point he held that Exhibit A did not purport to be the prospectus of the company, that the requirements of the prospectus are mentioned in Section 93 of the Indian Companies Act, that a copy of the prospectus is required to be filed for registration, that Exhibit A did not comply with the requirements of Section 93, and it was not proved that its copy had been filed for registration and therefore Section 100 was not applicable to the case. Against this decision the present Second Appeal has been filed. I do not think I need deal with the minor objection that the trial Court, having failed to discuss the evidence of the plaintiff with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular, advertisement or other invitation, offering to the public for subscription or purchase any shares or debentures of a company." There can be no question that Exhibit A falls under that definition. The evidence of the 1st defendant shows that the 2nd defendant was authorised to issue this prospectus. It is therefore immaterial whether the 1st defendant saw it or not because Section 100 (1) says "where a prospectus invites persons to subscribe for shares in or debentures of a company every person who is a director of the company at the time of the issue of the prospectus, and every person who has authorised the naming of himself and is named in the prospectus as a director or as having agreed to become a director either immediately or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectus is issued without a copy thereof being so filed, the company and every person who is knowingly a party to the issue of the prospectus, shall be liable to a fine not exceeding fifty rupees for every day from the date of the issue of the prospectus until a copy thereof is so filed." It is quite clear that for the definition of "prospectus' in every part of this section we must go back to Section 2(14). To hold as the lower appellate Court has done that a prospectus is a prospectus only if it conforms to the terms of Section 93 would mean that in regard to Section 92 the penalty for failure to file the prospectus could be avoided by allowing it to lack any of the requisites laid down in Section 93. Moreover, Section 93 itself contains a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 10 per share payable." It was urged in that case that as the prospectus of the company had already been filed with the Registrar, and as the advertisement referred to the prospectus and stated it had been so filed, it was not necessary under the law to file a copy of the advertisement as there would be no object in doing so and that even if it had been filed the Registrar would not have accepted it. But this contention was not accepted by the Court which remarked: "It is clear that an advertisement in the shape in which it has been published would not have been accepted by the Registrar as satisfying the requirements of Section 93; but that only means that it should not have been issued." This judgment shows that the liability under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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