Holding

Section 73(1A) requires permission from every stock exchange named in the prospectus; a refusal by any one of them makes the entire allotment void.

Summary

The appellant, Rishyashringa Jewellery Ltd., issued a prospectus stating that it had applied for listing its shares on the Coimbatore, Bombay and Madras Stock Exchanges. While Coimbatore granted permission within the ten‑week period prescribed under Section 73(1A) of the Companies Act, 1956, the Bombay Exchange rejected the application for non‑compliance and Madras granted permission after the deadline. The company sought to validate the allotment of shares despite the Bombay rejection. The Supreme Court examined the meaning of the word “each” in Section 73(1A) and held that it means every stock exchange named in the prospectus; consequently, failure to obtain permission from any one of them renders the entire allotment void, irrespective of permission from another exchange. The appeal was dismissed.

Issues considered

What 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’ in Section 73(1A) of the Companies Act, 1956?
Does the rejection of an application by one of the stock exchanges named in the prospectus make the whole allotment of shares void under Section 73(1A)?

Legislation cited

Companies Act, 1956s. 73(1), s. 73(1A)
Securities Contracts (Regulation) Act, 1956s. 22

Subjects

Companies ActSection 73stock exchange listingprospectusinterpretation of "each"allotment voidSecurities lawAllied International Products amendment

Judgment

M/S. RISHYASHRINGA JEWELLERY LTD. AND ANR. A
v.
THE STOCK EXCHANGE, BOMBAY AND ORS.

OCTOBER 31, 1995

f.1.S. VERMA AND K. VENKATASWAMI, .I.I.]
B

Companies Ac' 1956:

S.73( IA)-Company-En/istmcllt of share.1~Applic~tions for pennis-
sion made to three stock exchanges-One stock exchange rejecting applica- C
tion-Held, if pennission not granted by anyone of several stock exchanges
nanted in prospectus, entire allot111ent is rendered void and grant of pennis-
sion by one of them is inconsequential.

Words and Phrases :
D
Word "each" occuning in S.73(la) of Companies Act, 1956--Mean-
ing-Explained.

The appellant-company issued on 31.5.1994 a prospectus offering to
the public for subscription of certain equity shares intimating that appHca-
tions had been made to the Stock Exchanges at Coimbatore, Bombay and
E
Madras for permission to deal in and for an official quotation in respect
of the equity shares of the company offered in terms of prospectus. The
date of closing the subscription was 19.7.1994. The period prescribed
under S.73(1A) of the Companies Act, 1956 for grant of permission by the
Stock Exchange expired on 27.9.1994. Permission was granted by the F
Coimbatore Stock Exchange on 26.9.1994 and by the Madras Stock Ex-
change on 28.10.1994. But company's application was rejected by the
Bombay Stock Exchange on 28.9.1994, as the Company did not complete
the necessary formalities in this respect. Having failed before the High
Court, the company filed the appeal by special leave.
G
On the question: whether the entire allotment of shares was rendered
void by virtue of S.73(1A) of the Act, 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. H
579
580 SUPREME COUIU'REPORTS [1995] SUPP. 4 S.C.R.

A Dismissing the appeal, this Court

HELD : I. I. Where the prospectus of a Company held out that enlist-
1nenl of shares \\'ould be in n1orc than one stock exchange, the conset1uence
by virtue of sub-section (IA) of S.73 of the Companies Act, 1956 is to render
the entire allotnu!nt void if the pcr1nission has not been granted by anyone
B of the several stock exchanges na1ned in the prospel:tus and the grant of
per1nission by one of them is inconsequential. [586-G, H, 587-A]

1.2. Sub-section (IA) of S.73 of the Act requires that if the prospectus
states that application has been n1adc to more than one recognised stock
exchanges then it ·shall state the na1ne of each such stock exchange, i.e. eve1y
c such stock exchange or in other \Vords, all the stock exchanges to which the
application has been made. The second part of the sub- section (IA)
provides the consequences of refusal of the permission by saying that any
allotment made on an application in pursuance of such prospectus shall be
voidu if the permission has not be engranted by the stock exchange or each
D such stock exchange", as the case n1ay been before the expiry of ten \\'eek.Iii
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
E mean the same as in the earlier part of sub-section (lA) of S.73 i.e., each
and every or in other words, all such stock exchanges. The clear objeet of
insertion of sub-section (lA) in S.73 was to overcome the decision in Allied
Inte1national Products Ltd.* by amending the law in this Manner. (586-B-E)

*Union of India v.Al/ied Intonational Products Ltd. & Anr., (1970) 3
F
sec 594, referred t<i .
Collins Dictionmy of the English Language & Stroud'.< Judicial Diction-
a1y of Words and Phrases, referred to.

G CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9723 of
1995.

From the Judgment and Order dated 15.3.95 of the Bombay High
Court in W.P. No. 514 of 1995.

H F.S. Nariman, Navroj Sccrai, S. Merchant, Ramesh Singh and Ms.
RISHYASHRINGAJEWELLERYLTD. i·. STOCK EXCHANGE. BOMBAY [J.S. VERMA.J.J 581

Bina Gupta for the Appellants. A
Harish N. Salve, Pratap Venugopal, K. J. John, Mukul Mudgal, Sunil
Dogra, S.S. Shroff, Ms. Monica Sharma P. Dalar and V. Krishnamurthy,
for the Respondents.

The Judgment of the Court was delivered by B

J.S. VERMA, J. Leave granted.

The short but ticklish question which arises for decision in the
11
present case is the meaning of the \Vord 'each' in the expression if the
permission has not been granted by the stock exchange or each such stock C
exchange" used in sub-section (lA) 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 :
D
"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
exchanges for permission for the shares or debentures intending
to be so offered to be dealt with in the stock exchange or each E
such stock exchange.

(lA) 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 n1ore recognised stock exchanges, such pro~1JeclllS shall F
state the nanze of the stock e.tchange 01~ as the case niay be, each
such stock exchange, and any allotment made on an application in
pursuance of such prospectus shall, whenever made, be void, if
the pennission has not been granted by the stock e.rchange or each
such stock exchange, as the case may be, before the expiry of ten G
weeks from the date of the closing of the subscription lists :

Provided that where an appeal against the <lecision of any recap'
nised stock exchange refusing permission for the shares or deben-
tures to be dealt in on that stock exchange has been preferred
under section 22 of the Securities Contracts (Regulation) Act, 1956 H
582 SUPREME COURT REPORTS (1995] SUPP. 4 S.C.R.

A ( 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
B 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 Exchanges at Coimbatore, Bombay and Madras for permission to
deal in and for an official quotation in respect of the Equity shares of the
c 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.
D 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 Stock Exchange on 28.10.1994. However, inspite of
reminders issued on 18.8.1994 and 12.9.1994 by the Bombay Stock Ex-
change to the company to complete the required formalities, the necessary
E 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.

F In thi_. context, the effect of rejection of the application by the
Bombay Stock Exchange on the allotment of shares arises for consideration
under sub-section (IA) 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
G ineffective even the grant of permission by the Coimbatore Stock Exchange
within the special neriod?

In substance the contention of Shri F.S. Nariman is, that the conse-
quence of rendering void the allotment made under section 73(1A) en-
H visaged by the provision cannot render ineffective the permission granted
RISHYASHRINGA JEWELLERY LTD. i·. S1DCKEXCHANGE. B0:-.1BA Y(J.S. VER~1A . .l.J 583

by the Coimbatore Stock Exchange within the prescribed period. The reply A
of Shri Harish Salve is that lhc consequence of rendering Lhe entire
allotment void is clearly emisage<l where rejection of the application for
permission is by any such slack exchange .to which application has been
made. Shri Salve referred to Lhe legislative history which led to the insertion
of sub-section (IA) lo overcome the consequence of Lhe decision of this B
Court in Union of India v. Allied lntemational Products Ltd. & Anr., [1970]
3 sec 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
Intemational Products's case (supra).

In Allied Intemational Products' case (supra) a similar question arose c
for decision prior to insertion of sub-section (lA) in section 73 when
applications were made for permission to several stock exchanges 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 : D
"(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 E
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 Lhe said four \Vceks, be notified to the F
applicant for permission by or on behalf of the stock exchange."

It was held by this Court as follows :

11
............ If applications are made to several Exchanges, some within G
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 un-
reasonable to hold that because some of the applications made
beyond the tenth day after the first issue of Lhe prospectus, or are
defective, are liable to be rejected, the applications properly made H
584 SUPREME COURT REPORTS [1995] SUPP. 4 S.C.R.

A before some of the Exchanges are also ineffective and the allotment
made may be invalid.''

(al page 601)

This is precisely the effect of the argument of Shri Nariman even
B after the change has been made by insertion of sub-section (lA) in section
73. It has, therefore, to be seen whether inspite of this change in the law
subsequent lo the decision of this Court in Allied lntemational Products'.\'
case (supra) the position in law remains unaltered.

The Statement of Objects and Reasons for making the amendment
c 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 un-
desirable, are also sought to be checked. The provisions contained
in the Bill designed for this purpose deal with the following :
D
(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.
E
xxx xxx xxx xxx"

In the notes on clauses the portion relevant for this amendment is as
under:

F "Clause 7. - Sub-clauses (i) and (iii) section 73 prescribes certain
time limit for enlistment with the stock exchanges. It also con-
templates that enlistment has to be done in all the stock exchanges
mentioned in the prospectus and in 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. Jn the
G recent judgment in Union of India v. Allied lntemational Products
Limited, the Supreme Court has held that if the stock exchange
had intimated that it would give further consideration to an ap-
plication, the time limit contemplated by the section will not
operate. It has also held that if any one of the stock exchanges
H n1entioned in the prospectus O]Jproved the application for enlistnzent,
RJSHYASHRINGA.IEWELLERY Lill. v. STOCK EXCHANGE, BOMBAY {J.S. VERMA.J.J 585

it 1vould n1ean sufficient co1npliance with the provisfrJns of section A
73 and the allotn1ent n1ade in pursuance of that pro~JJectus 1vould
be valid.

It ha.1· been jell thar the decision of rhe Supreme Cow1 refen-ed
to above is likely to lead to con1plication ina.unuch ax the investing
public as well as under 1v1iting institutions are likely to lose the B
]Jrotection hithc1to enjoyed by theni. Hence section 73 is being
11
a111ended suitably.

(emphasis supplied)

It is, therefore, clear that the effect of the decision of this Court in
c
Allied JntC1national 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 lo complications 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 D
Allied Intemational 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 the
allotment made in pursuance of that prospectus would be valid was sought
to be overcome by amending section 73 to provide that enlistment has to E
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 lime.
Thus the consequence of rendering the entire allotment of shares void was
required to ensue if the cnlistn1cnt conte1nplated in all the stock exchanges
F
mentioned in the prospectus does not materialise. There can be no doubt
that the clear object of insertion of sub-section (lA) in section 73 was to
overcome the decision in Allied Intemational 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 (lA) of section 73.
G
The meaning and true purport of the word 'each' in the relevant
expression in section 73(1A) is not be determined for this pmpose. In
Collins Dictionary of the English Language, the meaning of 'each' is given
as ''every (one) of two or tnore considered individually", and 'every' means
"each one (of the class specified), without exception". In stroud's Judicial H
586 SUPREME COURT REPORTS [1995] SUPP. 4 S.C.R.

A Dictionary of Words and Phrases the true n1eaning of 'every' is 11 cach one
of all".

The meaning of the word 'each' in the expression "If the pe11nissio11
has not been granted by the stock exchange or each such stock exchange" in
sub-section (lA) of section 73 is now to be determined. Sub-section (lA)
B
of section 73 requires 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 nan1e of the stock exchange 01~ as
the case may be, each such stock exchange'. In other words, if the applica-
c tion is made only to one stock exchange then the name of that stock
exchange is to be mentioned and where the prospectus states that applica-
tion has been made to more than one recognised stock exchanges then it
shall state the name of each such stock exchange, i.e. cve1y such stock
exchange or in other words, all the stock exchanges to which the applica-
D tion has been made. The second part of sub-section (lA) 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
E 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 exchangc'1• The expression '1each such stock exchange'' here must
F mean the same as in the earlier part of sub-section (lA) of section 73, i.e.,
each and 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 (lA) of
section 73 ensues to render void the entire allotment of shares unless the
G 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 (lA) 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
H consequence is to render the.entire allotment void. Jn other words, if the
RISHYASHRINGAJEWELLERYLTD. '· STOCKEXCHANGE, BOMBAY jJ.S. VERMA,J.j 587

permission has not been granted by any one of the several stock exchange A
!lamed in the prospectus for listing of shares the consequences by virtue of
sub-section (lA) of section 73 is to render the entire allotment void and
the grant of permission by one of them is inconsequential. This construc-
tion also promotes the object of insertion of sub-section (lA) in section 73
by amendment of the law made to overcome the effect of the decision of B
this Court in Allied Intemational Products Ltd.. The contention of Shri
Nariman, learned counsel for the appellants is, therefore, untenable.

Consequently, the appeal fails and is dismissed. No costs.

R.P. Appeal dismissed.