9911796707
TMI Blog2020 (5) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... change Board of India ("SEBI" for convenience). 2. The facts leading to the filing of the present appeal is, that the appellant no. 1 company Zenith Highrise Infracon Ltd. raised its capital in the financial year 2012-2013 by allotment of 43,040 Redeemable Preferential Shares ("RPS") of Rs. 100 each through private placement, that is, to friends and relatives of the members/directors and raised an amount of Rs. 43,04,000 from 47 allottees. Since the allotments were made through friends and relatives of the members/directors no written invitation or offer was ever issued by the company. The auditor's report also stated that the company had not accepted any deposits from the public within the meaning of the Companies Act, 1956. A list of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the list contained clerical errors inasmuch as the names of the three allottees were not included by inadvertent mistake and the name of three allottees were repeated twice. The company vide their reply dated June 01, 2018 has stated these facts in detail which has been recorded by the WTM in paragraph 16 of its order. Paragraph 16(iii) and 16(vi) of the order of the WTM is extracted herein below: "(iii) The list of allottees, filed with RoC, contained clerical mistakes made inadvertently. The names of Krishna Chandra Das appeared thrice, Mr. Rajendra Prasad Boot appeared twice and Mr. Srikanta Gorai appeared thrice. (vi) Therefore, after removing the repetitions and adding the names of the three complainants, the total number of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall, subject as aforesaid, be construed as including a reference to invitations to subscribe for them extended to any section of the public, whether selected as members or debenture holders of the company concerned or as clients of the person issuing the prospectus or in any other manner. (3) No offer or invitation shall be treated as made to the public by virtue of sub-section (1) or sub- section (2), as the case may be, if the offer or invitation can properly be regarded, in all the circumstances- (a) as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation; or (b) otherwise as being a domest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption to sections 67(1) and (2). If the circumstances mentioned in clauses (1) and (b) of section 67(3) are satisfied, then the offer/invitation would not be treated as being made to the public. The first proviso to section 67(3) was inserted by the Companies (Amendment) Act, 2000 w.e.f. 13-12-2000, which clearly indicates, nothing contained in sub-section (3) of section 67 shall apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more. ... Resultantly, after 13-12-2000, any offer of securities by a public company to fifty persons or more will be treated as a public issue under the Companies Act, even if it is of domestic concern or it is proved that the shares or debentures are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly because three allottees had made the complaints indicates that the offer or invitation falls in the category of one which is calculated to result directly or indirectly in the shares, debentures becoming available to persons other than those receiving those offer or invitation is based on surmises and conjectures. No evidence has come forward by these complainants or otherwise to show that the company had made a public offer other than these 49 persons. 9. In the light of the aforesaid, on evidence we find that the allotment was made to less than fifty allottees. Once allotment is made to less than fifty allottees by way of private allotment the first proviso to section 67(3) clearly makes it a private issue and not a public issue. Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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