Case: Union Of India Vs. Allied International Products Ltd. &amp; Anr

of the shares of the Company. It is not contended and it cannot reasonably be contended, that only one application for permission to secure quotation of the shares in an approved Exchange may be made. The expression "a recognised stock exchange" means "any recognised exchange". More applications than one for quotation of shares may therefore be made. In the present case, three applications were submitted on June 3, 1965. Two of these applications were rejected and one was granted. We are unable to hold that unless all the applications were granted, the allotment of shares must, by virtue of sub-s. (1) of Section 73, be invalid. The object of Section 73 (1) is that the subscribers to the shares must have facility to approach an Exchange for having their holdings converted whenever they desire. Even if out of several Exchanges approached, one or more, but not all, have granted the application for "enlistment" the facility of ensuring quick conversion is still available. If after representing in the prospectus that an application has been made to a recognised exchange for "enlistment" or will be made within the prescribed period, the Company is unable to obtain permission for "enlistment" from any exchange, the allotment will be invalid. But subs. (1) is not intended to mean that it will be invalid, even if permission is obtained, but not from all the Exchanges to which applications have been made.17. Section 73 (1) is enacted with the object that the subscribers will be ensured the facility of easy convertibility of their holdings when they have subscribed to the shares on the representation in the prospectus that an application for quotation of shares has been or will be made. The allotment of shares will be invalid only when permission for enlistment is not obtained. When permission from one or more of the Exchanges is obtained, it carries out the object of the Act. It will be a mechanical interpretation wholly divorced from the true object and intendment of the Act to hold that even if permission is secured for quotation of shares in an Exchange, that the allotment will be invalid because another exchange has not granted the permission. That this is the true meaning of S. 73 (1) is clear from the fact that the penalty of avoidance of allotment of shares is attracted not only where the permission applied for has not been granted, but where no application has been made within the prescribed period. If applications are made to several Exchanges, some within the period of ten days after the first issue of the prospectus, and some beyond. or that one or more applications, but not all, is or are defective, and the error is not rectified, it would be unreasonable to hold that because some of the applications made beyond the tenth day after the first issue of the prospectus, or are defective, are liable to be rejected, the applications properly made before some of the Exchanges are also ineffective and the allotment made may be invalid.18. Counsel for the Calcutta Stock Exchange urged that where a person is induced to subscribe for shares relying upon a representation that an application is made or intended to be made for quotation of the shares in an Exchange near his home-town, and it is found that the application is not made, or if made it is rejected by the Exchange, it would be a great hardship to the shareholder if he is bound by the allotment, even if the condition of securing quotation in the Exchange convenient to him is not carried out. But Section 73 (1) declares the entire allotment void: it does not take into consideration the right or convenience of individual shareholders. An enquiry whether a shareholder or a class of shareholders was or were induced to subscribe for shares on the representation is irrelevant in determining whether the allotment is rendered invalid for failure to secure compliance with a statutory condition. We need not consider whether the individual shareholder who finds that an Exchange convenient to him has not listed the shares furnishes a cause of action to him for avoiding the contract.19. We are in the view we have taken not called upon to decide whether the provisions of S. 73 of the Companies Act, 1956, are ultra vires, nor do we consider it necessary to decide whether S. 22 of the Securities Contracts (Regulation) Act, 1956, is ultra vires.20. It was urged on behalf of the Delhi and Calcutta Stock Exchanges that the High Court ought, in exercise of the power under O. 41 R. 33 of the Code of Civil Procedure, to have vacated the writ of mandamus issued requiring them to grant permission for quotation of the Companys shares. An Appellate Court may in appropriate case pass any decree and make any order appropriate to the ends of justice, even if a party has not appealed against an adverse decision. That power may be exercised by the Court notwithstanding that the appeal is as to part only of the decree and may be exercised in favour of all or any of the parties, even though they may not have filed any appeal or objection. But the jurisdiction is discretionary and the High Court has not exercised it apparently for good reasons. The orders passed against the Union and the two Exchanges were in substance distinct. Against the Union the order was made quashing its order in appeal against the orders of the Exchanges; and against the Exchanges the order was made directing inclusion of the shares in the list of quoted shares. The Exchanges acquiesced in the direction.21. We need, however, not express any final opinion on this question. We are informed at the Bar that the Calcutta Stock Exchange has applied for certificate to the High Court of Delhi and that application is pending. We need not pre-judge the result of that application or the appeal, if any, which may be filed in this Court.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]19. We are in the view we have taken not called upon to decide whether the provisions of S. 73 ofthe Companies Act, 1956, are ultra vires, nor do we consider it necessary to decide whether S. 22 ofthe Securities Contracts (Regulation) Act, 1956, is ultra vires.It was urged on behalf of the Delhi and Calcutta Stock Exchanges that the High Court ought, in exercise of the power under O. 41 R. 33 of theCode of Civil Procedure, to have vacated the writ of mandamus issued requiring them to grant permission for quotation of the Companys shares.An Appellate Court may in appropriate case pass any decree and make any order appropriate to the ends of justice, even if a party has not appealed against an adverse decision. That power may be exercised by the Court notwithstanding that the appeal is as to part only of the decree and may be exercised in favour of all or any of the parties, even though they may not have filed any appeal or objection. But the jurisdiction is discretionary and the High Court has not exercised it apparently for good reasons. The orders passed against the Union and the two Exchanges were in substance distinct. Against the Union the order was made quashing its order in appeal against the orders of the Exchanges; and against the Exchanges the order was made directing inclusion of the shares in the list of quoted shares. The Exchanges acquiesced in the direction.21. We need, however, not express any final opinion on this question. We are informed at the Bar that the Calcutta Stock Exchange has applied for certificate to the High Court of Delhi and that application is pending. We need not pre-judge the result of that application or the appeal, if any, which may be filed in this Court.