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TMI Blog1995 (10) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... al. 3. Section 73 of the Act, insofar as it is material is as under : "Allotment of shares and debentures to be dealt in on stock exchange.- (1) Every company intending to offer shares or debentures to the public for subscription by the issue of a prospectus shall, before such issue, make an application to one or more recognised stock exchanges for permission for the shares or debentures intending to be so offered to be dealt with in the stock exchange or each such stock exchange. (1A) Where a prospectus, whether issued generally or not, 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 sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment of shares was finalised on 16-9-1994. Permission was granted by the Coimbatore Stock Exchange on 26-9-1994 and the trading commenced therein on 7-10-1994. Permis-sion was granted by the Madras Stock Exchange on 28-10-1994. How- ever, in spite of reminders issued on 18-8-1994 and 12-9-1994 by the Bombay Stock Exchange to the company to complete the required formalities, the necessary compliance was not made by the company which resulted in rejection of the company's application by the Bombay Stock Exchange on 28-9-1994. The city-wise break up of allotment of the shares shows that the number of shares allotted were 17,44,600 in Bombay, 3,45,400 in Coimbatore and 2,89,900 in Madras. 5. In this context, the effect of rejection of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade for permission to several stock exchanges but only one out of them granted the permission to enlist the company's share. That question arose in the context of section 73(1), as it then stood, which was as under: "(1) Where a prospectus, whether issued generally or not, states that application has been made or will be made for permission for the share or debentures offered thereby to be dealt in on a recognised stock exchange, any allotment made on an application in pursuance of the prospectus shall, whenever made, be void, if the permission has not been applied for before the tenth day after the first issue of the prospectus, or, if the permission has not been granted before the expiry of four weeks from the date of the closing of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the following :- (1)Failure to enlist shares with all the stock exchanges mentioned in a prospectus. In legislating on this point, it is proposed to make an incidental amendment to Securities Contracts (Regulation) Act, 1956." 11. In the notes on clauses the portion relevant for this amendment is as under: "Clause 7.- Sub-clauses (i) and (iii),- Section 73 prescribes certain time-limit for enlistment with the stock exchanges. It also contemplates that enlistment has to be done in all the stock exchanges mentioned in the prospectus and in case of failure to do so, the money received in respect of allotment of shares on the basis of the prospectus should be refunded within a specified time. In the recent judgment in Union of India v. All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the allotment made in pursuance of that prospectus would be valid was sought to be overcome by amending section 73 to provide that enlistment has to be done in all the stock exchanges mentioned in the prospectus and in the case of failure to do so the money received in respect of allotment of shares on the basis of the prospectus should be refunded within a specified time. Thus, the consequence of rendering the entire allotment of shares void was required to ensue if the enlistment contemplated in all the stock exchanges mentioned in the prospectus does not materialise. There can be no doubt that the clear object of insertion of sub-section (1A) in section 73 was to overcome the decision in Allied International Products Ltd.'s case (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the stock exchanges to which the application has been made. The second part of sub-section (1A) of section 73 then provides the consequence of refusal of the permission by saying that any allotment made on an application in pursuance of such prospec- tus shall be void "if the permission has not been granted by the stock-exchange or each such stock exchange", as the case may be, before the expiry of ten weeks from the date of the closing of the subscription list. This means that any allotment made shall be void if the permission has not been granted by the stock exchange where the application is made only to one stock exchange or each such stock exchange "where the application is made to more than one stock exchange". The expression "each ..... X X X X Extracts X X X X X X X X Extracts X X X X
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