TaxTMI 
TaxTMI 
1995 (1) TMI 299
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....ntiff who had applied and subscribed for shares of and in the company pursuant to the prospectus issued by the company dated February 24, 1993, are entitled to immediate refund of their application moneys along with interest accrued thereon as prescribed under the provisions of the Companies Act, 1956. (c)Decree for delivery up of the allotment of shares sought to be made by the company on July 16, 1993, and all record relating thereto in respect of the public issue of shares made by the company pursuant to the prospectus dated February 24, 1993, and the same be cancelled and adjudged void. (d)Perpetual injunction restraining the company from making any allotment of share capital of the company offered to the public for subscription pursuant to the prospectus issued by the company and dated February 24, 1993. (e)Perpetual injunction restraining the company from giving any effect or further effect to the allotment of share capital of and in the company offered to the public for subscription pursuant to prospectus issued by the company dated February 24, 1993, alleged to have been made on July 16, 1993, in any manner whatsoever. (f)Perpetual injunction restraining the com....
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....ct that the same arises out of an interlocutory application, but since elaborate and detailed submissions have been made on questions of law and the issue involved is rather interesting, this court deems it expedient to deal with the matter on the merits as well. It will be convenient, however, at this juncture to recapitulate the factual aspect briefly, so as to appreciate the contentions raised on behalf of the parties before this court. Respondent No. 1 (hereinafter referred to as "the company") offered Rs. 21,70,000 equity shares of Rs. 10 each at a premium of Rs. 35 per share aggregating to Rs. 976.50 lakhs to the public for subscription pursuant to a prospectus dated February 24, 1993, under the terms and conditions contained in the said prospectus. It is the definite case of the appellant-petitioner that the company has not received a minimum subscription amount of 90% of the issue including development of underwriters within 120 days from the opening of the issue, and as such in terms of the provisions of sections 69, 70 and 71 read with section 73 of the Companies Act, it is the bounden obligation on the part of the company to refund the entire subscription money wit....
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....tions mentioned in the prospectus. While it is true that Mr. Mukherjee raised the points as above with force, the main thrust of challenge of Mr. Mukherjee is in regard to non-compliance with the requirement of section 73(1) of the Companies Act, read with the other provisions of the abovenoted section. Mr. Mukherjee contended that in the facts of the matter under consideration this public issue cannot but be ascribed to be void and as such the applicants ought to be paid back their money with interest, by reason of the expiry of the period of time as envisaged under the statute. It is on this factual background that the learned trial judge has dealt with the matter. For convenience sake, however, the observations of the learned trial judge pertaining to this aspect of the matter ought also to be noted. The learned trial judge observed as follows: "If I were satisfied almost beyond any manner of doubt or argument that an illegality would be perpetrated in allowing the company to utilise the capital or make calls for the balance half sums, I would have no hesitation in continuing the interim order even if it were at the instance of three parties whose financial stakes are h....
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....e instant case the entire issue would fail if instead of 2,170 applicants 2,169 applied and all other conditions were fulfilled? This question also requires a fuller trial at the hearing of the suit." Mr. Mukherjee in support of the appeal, however, contended that as a matter of fact, the learned trial judge erred in not deciding the issue as regards the illegality. It was the definite submission of Mr. Mukherjee that when a public issue is to be ascribed to be illegal, the question of further hearing of the matter does not and cannot arise and there cannot be two opinions. The transaction in question is void ab initio by reason of the long lapse of time and by reason of non-listing with the three stock exchanges within the time specified. It was contended that the defects abovenoted are not curable in nature and as such this court cannot but pass an order directing refund of the money to the applicants in terms of the provisions of the statute. Though submissions of Mr. Mukherjee, however, seem to be attractive at first blush, on a closer scrutiny, however, we do not find any merit thereon. The proviso to section 73 makes the position amply clear and for convenience sake the....