Further issue of capital can reserve shares for collaborators when shareholder approval, regulatory sanction, and full disclosure are present.

A further issue of capital may lawfully reserve a larger block of shares and debentures for co-promoters and foreign collaborators where the arrangement is approved by shareholders, sanctioned by regulators, and supported by legitimate commercial and public-interest considerations. The reserved group may also be subject to stricter conditions such as advance contribution requirements and lock-in periods. A challenge based on unequal allocation fails where the prospectus fully discloses the scheme, conversion terms, and conditions, and no material suppression, deception, or other ingredient of an unfair trade practice is shown. On that basis, the complaints under the Monopolies and Restrictive Trade Practices Act were unsustainable.

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Issues: (i) Whether the reservation of a larger percentage of equity shares and debentures in favour of the co-promoters and foreign collaborators in a further issue of capital amounted to an unfair trade practice or impermissible discrimination. (ii) Whether the complaints under the Monopolies and Restrictive Trade Practices Act were maintainable on the allegations made.

Issue (i): Whether the reservation of a larger percentage of equity shares and debentures in favour of the co-promoters and foreign collaborators in a further issue of capital amounted to an unfair trade practice or impermissible discrimination.

Analysis: The offer was not a fresh issue but a further issue of capital governed by the statutory scheme permitting further shares to be offered to persons other than existing shareholders where a special resolution is passed. The reservation in favour of the reserved group was approved by the shareholders and also sanctioned by the regulatory authorities. The reserved group was subjected to stricter conditions, including advance contribution requirements and lock-in periods, and the reservation was supported by legitimate commercial considerations and the larger public interest in attracting foreign capital. The contention based on a hypothetical comparison of conversion outcomes rested on conjecture, since conversion of debentures was optional and not inevitable.

Conclusion: The reservation was held to be lawful and not unfair, unjust, or discriminatory, and the charge of unfair trade practice failed.

Issue (ii): Whether the complaints under the Monopolies and Restrictive Trade Practices Act were maintainable on the allegations made.

Analysis: The prospectus disclosed the entire scheme, including the reservation in favour of the reserved group, the conversion terms, and the relevant conditions. No material suppression or deception was shown, and the allegations did not establish the basic ingredients of an unfair trade practice under the Act.

Conclusion: The complaints were held to be unsustainable and were dismissed.

Final Conclusion: The impugned issue was upheld as a permissible and commercially justified allocation under the statutory framework, and the proceedings failed on merits with costs.

Ratio Decidendi: In a further issue of capital made with shareholder approval and regulatory sanction, a reservation of shares in favour of a specified group for legitimate commercial and public-interest reasons does not constitute an unfair trade practice merely because the allocation differs from that available to the public.

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