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PETITIONER: RISHYASHRINGA JEWELLERY LTD. & ANR.

       Vs.

RESPONDENT: THE STOCK EXCHANGE, BOMBAY & ORS.

DATE OF JUDGMENT31/10/1995

BENCH: VERMA, JAGDISH SARAN (J) BENCH: VERMA, JAGDISH SARAN (J) VENKATASWAMI K. (J)

CITATION:  1996 AIR  480            1995 SCC  (6) 714  JT 1995 (7)   602        1995 SCALE  (6)177

ACT:

HEADNOTE:

JUDGMENT:                           JUDGMENT J.S.VERMA, J. Leave granted.      The short but ticklish which arises for decision in the present case  is the  meaning of  the  word  ‘each’  in  the expression "if  the permission  has not  been granted by the stock exchange  or each  such stock  exchange" used  in sub- section (1A)  of Section 73 of the companies Act, 1956. This is the real question for decision in the present appeal.      Section 73  of the  Companies Act, 1956 in so far as it is material is as under:      "73. (1) Every company intending to      offer shares or debentures to the public      for subscription by the issue of a      prospectus shall, before such issue,      make an application to one or more      recognised stock exchange for permission      for the shares or debentures intending      to be so offered to be dealt with in the      stock exchange or each such stock      exchange.           (1A) Where a prospectus, whether      issued generally  or not, states that an      application under sub-section (1) has      been made  for permission for the 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 ,  and any allotment made on an      application in pursuance of such      prospectus shall, whenever made, be      void, if the permission has not been      granted by the stock exchange or each

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    such stock exchange , as the case may      be, before  the expiry of ten weeks from      the date of the closing of the      subscription lists:      Provided that where an appeal against      the decision of any recognised stock      exchange refusing permission for the      shares or debentures to be dealt in on      that stock exchange has been preferred      under section 22 of the Securities      Contracts (Regulation)  Act, 1956 (42 of      1956), such  allotment shall not be void      until the dismissal of the appeal."                          (emphasis supplied)      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, intimating  that "applications have 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."  The date of closing the subscription  mentioned in the prospectus was 19.7.1994. The period  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 company’s  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 in Madras.      In  this  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. The question is: Whether the entire allotment of shares is  rendered void by virtue of Section 73(1A) because of the  rejection of  the application  by the  Bombay  Stock Exchange to  render ineffective even the grant of permission by  the  Coimbatore  Stock  Exchange  within  the  specified period?      The substance  the contention  of Shri F.S. Nariman is, that the  consequence of  rendering void  the allotment made under Section  73(1A)  envisaged  by  the  provision  cannot render ineffective  the permission granted by the Coimbatore Stock Exchange  within the  prescribed period.  The reply of Shri Harish  Salve is  that the consequence of rendering the entire allotment  void is  clearly envisaged where rejection of the  application for  permission is  by  any  such  stock exchange to  which application  has been  made.  Shri  Salve referred  to  the  legislative  history  which  led  to  the insertion of sub-section (1A) to overcome the consequence of the decision  of this  court in  Union of  India Vs.  Allied International Products Ltd. & Anr., 1970 (3) SCC 594, by the amendment of law in this manner. It is, therefore, necessary at this  stage to  refer to  the decision  of this  Court in Allied International Products’s case (supra).      In  Allied   International  Product’s  case  (supra)  a

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similar question  arose for  decision prior  to insertion of sub-section (1A)  in Section  73 when applications were made for permission to several stock exchange but only one out of them granted  the permission  to enlist the company’s share. That question  arose in the context of Section 73 (1), as it then stood, which was as under:      "(1) Where a  prospectus, whether issued      generally or not, states that      application has been made or will be      made for permission for the share or      debentures offered thereby to be dealt      in on a recognised stock exchange, any      allotment made on " an application in      pursuance of the prospectus shall,      whenever made, be void, if the      permission has not been applied for      before the tenth day after the first      issue of the prospectus, or, if the      permission has not been granted before      the expiry of four weeks from the date      of the closing of the subscription lists      or such longer period not exceeding      seven weeks as may, within the said four      weeks, be  notified to the applicant for      permission by  or on behalf of the stock      exchange."      It was held by this Court as follows:      "........ 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."                     (at page 601)      This precisely  the effect  of  the  argument  of  Shri Narain even  after the  change has been made by insertion of sub-section (1A)  in section  73. It  has, therefore,  to be seen whether  in spite  of this change in the law subsequent to the  decision  of  this  Court  in  Allied  International Products’s  case   (supra)  the   position  in  law  remains unaltered.      The Statement  of objects  and Reasons  for making  the amendment in the Companies Act clearly states as under:      "6.  Under the present Bill some other      practices prevalent in the corporate      sector, in so far as they may prove      injurious or undesirable, are also      sought to be checked. The provisions      contained in  the Bill designed for this      purpose deal with the following:-      (1)  Failure to enlist shares with all      the Stock Exchanges mentioned in a      prospectus. In legislating on this      point, it is proposed to make an      incidental amendment to Securities      Contracts (Regulation) Act, 1956.

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    In the  notes  on  clauses  the  portion relevant for this amendment is as under:      "Clause 7 sub-clauses (i) and (iii)      section 73 prescribes certain time limit      for enlistment with the stock exchanges.      It also contemplates that enlistment has      to be done in all the stock exchanges      mentioned in the prospectus and i 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. In the      recent judgment in Union of India Vs.      Allied International Products Limited,      the Supreme Court has held that if the      stock exchange had intimated that it      would give further consideration to an      application, the time limit contemplated      by the  section will not operate. It has      also held that if any one 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 the      allotment made in pursuance of that      prospectus would be valid.           It has  been felt that the decision      of the Supreme Court referred to above      is likely to lead to complications      inasmch as  the investing public as well      as under-writing institutions are likely      to lose  the protection hitherto enjoyed      by them. Hence section 73 is being      amended suitably."                          (emphasis supplied)      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

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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 Stroud’s Judicial  Dictionary of  Words and Phrases the true meaning of ‘every’ is "each one of all".      The meaning  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  the 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 the 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  the   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 also  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.      Consequently, the  appeal fails  and is  dismissed.  No costs.