Share allotment not voidable for unpaid application money where minimum subscription requirements were satisfied.

An allotment of shares is not voidable merely because an applicant did not pay the application money stated in the prospectus, where the statutory minimum subscription requirements for the first allotment were satisfied. The court held that Sections 101 and 102 of the Companies Act, 1913 did not impose an additional prohibition against such allotment once the first allotment had been regularly made. As no fraud was alleged and the matter was not brought under Section 38, the challenge to avoid the allotment failed and no relief was granted.

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Issues: Whether the allotment of shares was voidable for contravention of Section 101 of the Companies Act, 1913 because the applicant had not paid the application money stated in the prospectus.

Analysis: The statutory scheme required, before the first allotment, that the minimum subscription fixed in the prospectus be subscribed and that at least five per cent of that amount be paid to and received in cash by the company. The Section did not create an additional prohibition against allotting shares to an applicant who failed to pay the application money stipulated in the prospectus once the first allotment had been regularly made. The application was not brought under Section 38, and no fraud was alleged. On the true construction of Sections 101 and 102, the allotment could not be treated as being in contravention of the Act merely for non-payment of the application money by the applicant.

Conclusion: The allotment was not voidable at the instance of the applicant and the challenge failed.

Final Conclusion: The application to avoid the share allotment was rejected and the applicant received no relief.

Ratio Decidendi: An allotment is not invalid merely because the applicant has not paid the application money mentioned in the prospectus, so long as the statutory minimum subscription conditions for the first allotment have been satisfied.

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