UNION OF INDIA versus ALLIED INTERNATIONAL PRODUCTS LTD. & ANR.

Citation: [1971] 2 S.C.R. 661 · Decided: 19-10-1970 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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661 
UNION OF INDIA 
v. 
ALLIED INTERNATIONAL PRODUCTS LTD. & ANR. 
October 19, 1970 
rJ. C. SHAH, K. S. HEGDE AND A. N. GROVER, JJ.] 
Companies Act, 1956, s. 13-Stock Exchange extending tim!' fvr con-
,\·ideration of application for enlisting of sl1ares within four weeks of 
closing of subscription list-Further intimation given to company withill 
seven weeks that application was under consideration-Approval given 
after seven weeks-Whether approval valid-Approval hy one of .~everal 
exchrmzes to whlclr appficationr made whether valid and sufficteflt-
Shareholder whetiiC'r bound hy allotment of Jlwres if st.ock exchanRe con-
venient to him does not approve application. 
Code of Civil Procedure. 0 41, r. 33- Hicli Corm's disCI'elion under-
Principles for exercising. 
Interpretation of Statutes-S. 73(1) of Compf.nies Act, 1956 is a Pt11al 
provision and mu.~t be strictly construed. 
The first respondent-a limited company-issued a prospectus l1flering 
its shares to the public for subscription. lt was mentioned in the PrQS· 
pectus that the company was applying to the Bombay, Calcutta und Delhi 
Stock Exchanges (which were .recognised exchanges within the meaning 
of s. 2(39) of the Companies Act, 1956), for enlistmt.lnt of its shares. 
On Juoc 3, 1956 the Company submitted the applications. The subscrip· 
tion list was closed on June 21, 1965. 
On June 22, 1965 the Bombay 
Bxchnnge e"tendcd the time for consideration of the application till tbe 
expiry of seven weeks from the date of closing of the subac:ription 1ist, 
On August 6, 1965 'the Exchange informed the company that the applica· 
tion was receiving further consideration. 
On September 1.3, 1965 the 
Exchange informed the company that its application for enlisting its 
shares had been approved. 
The CalC'Utta und Delhi Exchanges · rejected 
the applications made to them. The company 
challenged 
the 
o!rders 
passed by the Calcutta and Delhi Exchanges in appeals to the Central 
Government under s. 22 of the Securitir-s Contracts (Regulation) Act, 
1956. 
The Central Government dismissed the appeals. 
The company 
fileJ writ petitions in tha High Court. 
The Single Judge held that the 
grant of permission by the Bombay Exchange was valid and that allot-
ment of shares did not become void merely because one out of the three 
exchanges alone, gave the permission to enlist the company's shares~ He 
quashed the order of the Central Government and directed the bsue of 
mandamus to the Calcutta and Delhi Exchanges requiring them to enlist 
the shares of the company. The Union of India appealed to the Division 
Bench. The Calcutta and DeLhi Exchanges acquiesced in the orders passed 
against them. The High Court confirmed the order of the Single ludge. 
With certificate, the Union of India appealed ~o this Court. 1be queations 
that fell for consideration were: (i) whether the permission granted by 
the Bombay Exchange after the expiry of seven weeks from the date of 
closing of the subscription list violated the provisions of s. 73 ( 1) of the 
Companie' Act, 1956 and was on ttat account invalid; (ii) whether the 
grant of permission by one out of three Exchanges was sufficient to pro-
tect the allotment of shares from being invalid under s. 73 ( 1) of the Oml· 
panies Act, 1956; (iii) whether a shareholder who buys shares on the 
15-L4l6$up.(P)/7l 
662 
SUPREME COURT REPORTS 
[1971] 2 S.C.R. 
representation that the shares would be en1isted in an Exchange conve-
nient to him is bound by the allotment even when the condition of secur-
ing quotation in an Exchange convenient to him has not been carried out; 
(iv) Whether in the circumstances of the case the Hi¢1 Court ought in 
exercise of its power under 0;41 r. 33 of the Code of Civil Procedure, 
to have vacated the writ of Mc.ndamus requiring the Calcutta & Delhi 
Exchange_s to grant permission fdr quotation of the Company's shares. 
HELD: (i) It was not possible to accept the argument that permis-
sion for enlistment of shares can be given within the initial period of 
four weeks, or if time be extended, within seven weeks from the date of 
closing of the subscription list, and if permission be not granted by the 
E~change within those seven weeks, the allotment becomes void, even if 
the Stock Exchanges intimates that it is giving further considelration to 
the application. (669 B] 
The intendment of sub-ss. ( 1) , ( 2) and ( 5) of s. 7 5 of the Com-
panies Act, 1956 is plain. If within four 

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