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TMI Blog1995 (10) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... ial is as under: 73. (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 exchange 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 state the name of the stock exchange or, as the case may be, each such stock exchange , and any allotment made on an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.9.1994 and the trading commenced therein on 7.10.1994. Permission was granted by the Madras Stack Exchange on 20.10.1994. However, 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. In this context, the effect of rejection of the application by the Bombay Stock Exchange on the allotment of shares arises for consideration under subsecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 subscription lists or such longer period not exceeding seven weeks as may, within the said four w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pectus. In legislating on this point, it is proposed to make an incidental amendment to Securities Contracts (Regulation) Act, 1956. 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 i 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 Vs. Allied International Products Limited, the Supreme Court has held that if the stock exchange had intim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 overcome the decision in Allied International Products Ltd. by amending the law in this manner. The question is whether this object has been achieved by the language used in sub-section (1A) of Section 73. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides the consequence of refusal of the permission by saying that any allotment made on an application in pursuance of such prospectus 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 such stock exchange here must mean the same as in the earlier part of sub-section (1A) of Section 73, i.e., each every or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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