MOHAN P WAG Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) THE petitioners are the directors of Larsen and Toubro Limited incorporated under the Indian Companies Act, 1913. They came out with a public issue of 2,06,66,664 - - 12.5 per cent, fully convertible secured debentures of Rs. 300 each and invited the general public to subscribe in their public issue, vide their prospectus dated September 5, 1989. The salient features of the issue are as under :

(2.) RESPONDENT No. 2 is a shareholder of Reliance Industries Ltd. On an invitation of offer being sent to her by the said company L and T, she in terms of the prospectus applied for allotment of ten debentures and a sum of Rs. 750 was paid to the accused petitioners. As she had a number of folios in Reliance Industries Ltd., she offered for allotment of debentures by filing two separate applications and thus she applied for allotment of twenty debentures and paid application money of Rs. 1,500. The company under the provisions of Companies Act, 1956, was duty bound to deliver her debenture certificates within three months from the date of allotment. But the company did not bother to send her the allotted debentures for reasons best known to the accused persons. She wrote more than twenty letters and requested the company to deliver her debenture certificates. As per the acknowledgment slip delivered by the post office, it is manifestly clear that her requests were received by the company but they did not choose to reply to her again for reasons best known to the accused persons. She had no choice but to file a consumer complaint before the learned District Forum, Jaipur. The forum served notice upon the company along with the copy of the complaint. The company, however, did not choose to reply before the forum. The forum had, under these circumstances, no option but to pass an ex parte order against the company for effecting refund of the application money to her.

(3.) IT was submitted by the petitioners that after allotment of shares the first call money was payable by April 30, 1990, and the final call money was payable by September 30, 1990. The fact that respondent No. 2 did not get her shares had already been within her knowledge because the aforesaid dates were already given in the prospectus and by that date the time had already passed away. When the company sent back the amount then the complainant -respondent No. 2 got the knowledge that she had not been allotted shares, is an incredible argument. If the said date is taken to be the date of knowledge, apparently the complaint is within limitation. In the memo of complaint, respondent No. 2 did not say anywhere as to when the company sent her money back and on that day she got the knowledge that the company had not allotted shares to her and hence from that date of getting such knowledge the complaint is within the period of limitation. The accused petitioners submitted that the stand taken by the complainant's lawyer that it was within her knowledge from the date she actually received the money, is clearly an afterthought. It was further submitted by the petitioners that it was clearly mentioned in the prospectus itself under the heading 'Debenture certificates' that 'in case the company issues letter of allotment, the relative debenture certificate will be delivered within three months from the date of allotment or within such period of time (not exceeding nine months) as may be allowed by the Company Law Board'. Further, under the heading 'Disposal of applications and application money' it was given out that the time when such applications were to be rejected or allotments were to be made was within ten weeks from the date of closing of the subscription list in accordance with the provisions of Section 73 of the Companies Act, 1956. It was further submitted by the accused petitioners that the complainant now submits that she got the knowledge of non -allotment when she received her amount back after the decision of her complaint by the District Forum. It is submitted that this argument cannot be accepted because the subscription closed on October 9, 1989, and the maximum period could be nine months after lapse of ten weeks from October 9, 1989, which comes approximately in the month of September 1990, but she filed her complaint in the year 1995. Hence, the limitation period had already been crossed and hence the order taking cognizance is barred by limitation. Referring to the provisions of Section 63 of the Companies Act, 1956, it was submitted by the accused petitioners that in the prospectus issued by the company on September 5, 1984, no untrue statement was given or published, Preferential debentures were allotted to the applicants but unfortunately the complainant could not get her debentures only either by mistake or because of huge number of applications or because of the reason that the processing of applications was done by the registrar to the issue, Reliance Consultancy Services Ltd., which later on ceased to be the company's registrars. However, it appears that at the time of processing the large volume of applications, the complainant's application seems to have been missing and, therefore, the allotment of debentures was not made to her. Since, the application was missing the company had to wait for the claim from the applicant for refund or allotment of debentures and as soon after words as the company received the copy of the judgment of the District Forum, the company complying with the same immediately sent the refund of application money as prayed for by the complainant. It was further submitted that if the complainant did not get her debentures only because of this reason, it could not be said that the company gave a false or untrue statement punishable under Section 63 of the Companies Act. The court below wrongly interpreted the provisions and passed the impugned order by way of taking cognizance and they prayed for quashing of the same.