LexRAYMOND SYNTHETICS LTD. AND ORS. versus UNION OF INDIA AND ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
j,
RAYMOND SYNTHETICS LTD. AND ORS.
v.
UNION OF INDIA AND ORS.
FEBRUARY 4, 1992
[DR. T.K. THOMMEN ANDS. MOHAN, JJ.]
Companies Act, 1956--Section 73--Public Limited company-Listing
shares on stock exchange-Procedure-When allotment of shares becomes
void-When liability to repay application money and interest arises-
Permission-When deemed to be refused or granted.
Securities Contracts (Regulation) Act, 1956--Section 22-Appeal-
When lies,-Pending appeal-Effect.
Co11ipanies Act. 1956--Section 73. (JA) (2), (2A), (2B}, 2 (31), 5-
Interest---Payment of--£.'ompany 's lia bi/ ities--D rcwnstances--Si fllation
A
B
c
in pre and pbst Companies (Amendment) Act, 1974-Liability of D
Directors~5cope of-"An Officer in default"~onstruction.
Companies Act, 1956--Section 73(2)-"Forthwith "~onstruction
o.f-Legislative intention.
Companies Act, 19-56--Section 73(1) (2) (3)-Application money-
E
Company's right or obligation to credit bank accounts-E{fect-Pwposes
for usages ~(such money.
Companies A ct, 195 6~S'ection 7 3 (2)--lnterest-Assessment period
~alculation~5tarting point~onstmction--J,egislative intention.
Companies Ac( /95~5ection 73-Ambigiw11s section~onst111cn·on
--Method.
Inte1pretation of Stat11te-A111big11011s section~onstmction (Sec-
tion 73, Companies Act, 1956)
Companies Act, 1956---.'iection 73 (2A)-When applicable,-
"Due"~onstruction-"Due" and "payable" not same-"Penal" not
penalty--Adn1inistrative inconveniences cannot be pleaded.
F
G
The appellant-company was registered under the Companies
Act, 1956. It obtained the consent of the Government of India to
H
481
482
SUPREME COURT REPORTS
[1992] 1 S.C.R.
A
issue 7,20,00,000 equity shares of Rs. 10 each at par and 33,90,000
fourteen per cent secured redeemable non-convertible debentures of
Rs. 100 each .at par.
One of the conditions attached to the consent order was "The
company shall scrupulously adhere to the time limit of 10 weeks
B
from the date of closure of the subscription list for allotment of all
securities and despatch of allotment lettcrs/ccrtific~tes and refund
orders."
On 12.7.1990 Jhe company issued prospectus for the issue of
the shares and debentures, stating therein that the company had
C
sought the permission of the stock exchanges at Indore, Ahmedabad,
Bombay, Calcutta and Delhi for dealing in equity shares and deben-
tures in terms of the prospectus; that interest at the rate of 15% per
annum on the excess application money would be paid to the appli-
cants as per the guidelines issued by the Ministry of Finance on July
21, 1983 and September 27, 1985; that the public issue would open
D
on August 20,1990 and close on August 23, 1990; and that it would
not be extended beyond August 31,1990.
E
F
The issue opened on August 20, 1990. The company received
.l ;
26,32,894 applications for equity shares together with an aggregate
sum of Rs. 225,25,51,247 in respect of a public issue of Rs. 25 crores.'
The share issue was closed on 23rd August 1990. On October
15, 1990 the Board of Directors of the company approved the ~llot
ment of shares. Prior to.1.11.1990, it secured the requisite permissions
of the stock exchanges at Indore, Ahmedabad, Bombay Caluctta and
Delhi to deal in the shares offered in the prospectus.
The company had to despatch 25,50,604 refund orders, which
were printed in Bombay and they were meant to be despatched
from Delhi. The company despatched K,55,226 refund orders from
New Delhi at the rate of approx. 1,00,000 refund orders per day.
G
On 26th bctober, 1990 a consignment of 6,69,999 refund or-
ders were despatched from Bombay to Delhi. As a result of a fire
that broke out on the way, many refund orders were destroyed and
about 50% of the consignment w~s missing after the accident.
In consultation with the Madhya Pradesh Stock Exchange and
H
the Company's Bank, instructions. were issued by the Company to
RAYMOND SYNTHETICS v. u.o.I.
483
•
_...
stop payment of all refund orders with a view to avoiding any possi-
A
hie fraud or misuse. As a result of the countermanding of all the
refund orders and the printing of new refund orders, delay oc-
curred in the despatch of newly printed orders.
For issuing the refund orders, at the request of the company,
the Madhya Pradesh Stock Exchange granted extension of time till
B
November 30,1990 and further extended till 19th December, 1990.
I
The Bombay Stock Exchange refusing to grant extension of
time informed thExcerpt shown. Read the full judgment & AI analysis in Lexace.