Case: M/S .Rishyashringa Jewellery Ltd. &amp;Anr Vs. The Stock Exchange Bombay

The material facts which give rise to the above question are only a few. On 31.5.1994 the appellant company issued a prospectus offering to the public for subscription 27, 40, 000 equity shares of Rs.10/- each in terms of the prospectus, intimatinghave been made to the Stock Exchange at Coimbatore, Bombay and Madras for permission to deal in and for an official quotation in respect of the Equity Shares of the Company now being offered in terms of this prospectus."date of closing the subscription mentioned in the prospectus wasperiod of ten weeks from the date of closing of the subscription list prescribed in Section 73(1A) for grant of permission by the Stock Exchange expired on 27.9.1994. The allotment of shares was finalised on 16.9.1994. Permission was granted by the Coimbatore Stock Exchange on 26.9.1994 and the trading commenced therein on 7.10.1994. Permission was granted by the Madras Stack Exchange on 20.10.1994. However, in spite of reminders issued on 18.8.1994 and 12.9.1994 by the Bombay Stock Exchange to the company to complete the required formalities, the necessary compliance was not made by the company which resulted in rejection of the companys application by the Bombay Stock Exchange on 28.9.1994. The city-wise break up of allotment of the shares shows that the number of shares allotted were 17, 44, 600 in Bombay, 3, 45, 400 in Coimbatore and 2, 89, 900 inthis context, the effect of rejection of the application by the Bombay Stock Exchange on the allotment of shares arises for consideration under subsection (1A) of Section 73.

Reasoning: It is, therefore, clear that the effect of the decision of this Court in Allied International Products Ltd. in this behalf was sought to be overcome by making a suitable amendment in Section 73 since it was visualised that the said decision is likely to lead to complication inasmuch as the investing public as well as under-writing institutions were likely to lose the intended protection enjoyed by them. In other words the effect of the decision in Allied International Products Ltd that even if any of the stock exchanges mentioned in the prospectus approved the application for enlistment it would mean sufficient compliance with the provisions of Section 73 and allotment made in pursuances of that prospectus would be valid was sought to be overcome by amending Section 73 to provide that enlistment has to be done in all the stock exchanges mentioned in the prospectus and in the case of failure to do so the money received in respect of allotment of shares on the basis of the prospectus should be refunded within a specified time. Thus the consequence of rendering the entire allotment of shares void was required to ensue if the enlistment contemplated in all the stock exchanges mentioned in the prospectus does not materialise. There can be no doubt that the clear object of insertion of sub-section (1A) in Section 73 was overcome the decision in Allied International Products Ltd. by amending the law in this manner. The question is whether this object has been achieved by the language used in sub-section (1A) of Section 73.The meaning and true purport of the word `each in the relevant expression in Section 73(1A) is to be determined for this purpose. In Collins Dictionary of the English Language, the meaning of `each is given as "every (one) of two or more considered individually"; and `every means "each one (of the class specified), without exception". In Strouds Judicial Dictionary of Words and Phrases the true meaning of `every is "each one ofmeaning of the word `each in the expression "if the permission has not been granted by the stock exchange or each such stock exchange" in sub-section (1A) of Section 73 is now to be determined. Sub-section (1A) of Section 73 is now required that where a prospectus states that an application under sub-section (1) has been made for permission for t he shares or debentures offered thereby to be dealt in one or more recognised stock exchanges, `such prospectus shall state the name of the stock exchange or, as the case may be, each such stock exchange. In other words, if the application is made only to one stock exchange then the name of that stock exchange is to be mentioned and where the prospectus states that application has been made to more than one recognised stock exchanges then it shall state the name of each such stock exchange, i.e. , every such stock exchange or in other words, all the stock exchanges to which the application has been made. The second part of sub-section (1A) of Section 73 then provides the consequence of refusal of the permission by saying that any allotment made on an application in pursuance of such prospectus shall be void "if the permission has not been granted by the stock exchange or each such stock exchange", as the case may be, before the expiry of ten weeks from the date of the closing of t he subscription list. This means that any allotment made shall be void if the permission has not been granted by the stock exchange where the application is made only to one stock exchange or each such stock exchange "where the application is made to more than one stock exchange". The expression "each such stock exchange" here must mean the same as in the earlier part of sub-section (1A) of Section 73, i.e., each every or in other words, all such stock exchanges. Thus, where t he prospectus held out that enlistment of shares would be in more than one stock exchange the consequence envisaged in sub-section (1A) of Section 73 ensues to render void the entire allotment of shares unless the permission is granted by each and everyone or all of the stock exchanges named in the prospectus for enlisting the shares. This is the plain meaning of sub-section (1A) of Section 73. In short, unless permission is granted by each or everyone of all the stock exchanges named in the prospectus for listing of shares to which application is made by the company, the consequence is to render the entire allotment void. In other words, if the permission has not been granted by any one of the several stock exchanges named in the prospectus for listing of shares the consequence by virtue of sub-section (1A) of Section 73 is to render the entire allotment void and the grant of permission by one of them is inconsequential. This construction al so promotes the object of insertion of under section 73 by amendment of the law made to overcome the effect of the decision of this court in Allied International Products Ltd.The contention of Shri Nariman, learned counsel for the appellants is, therefore, untenable.