the securities and exchange board of india the second respondent called upon the companypany by its letter dated march 131991 to pay interest to the investors at varying rates for the period from 1st numberember which is when the period of 10 weeks from the date of the closure of the subscription lists expired till the date of posting of the refund orders.
numberification number gsr 614 e dated 3rd october 1991 called the companypanies central governments general rules and forms second amendment 1991 which came into force on 1st numberember 1991.
paragraph 23.2 of its publication of march 1991 quotes the condition mentioned in the order of the government of india dated 31.5.1990 which we have extracted above to the effect that the liability of the companypany for despatch for refund orders arose only at the end of 10 weeks from the date of closure of the subscription lists.
shortly thereafter it secured the requisite permissions of the stock exchanges at indore ahmedabad bombay calcutta and delhi to deal in the shares offered in the prospectus.
in companysultation with the madhya pradesh stock exchange and the companypanys bankinstructions were issued by the companypany to stop payment of all refund orders with a view to avoiding any possible fraud or misuse.
while the government of india submitted as disclosed in its affidavit and as referred to by the high companyrt in the impugned judgment that the liability to pay the excess amounts arose on the expiry of 10 weeks from the date of closure of the subscription lists the securities and exchange board of india companytended that the liability arose on the date of allotment.
at the request of the companypany the madhya pradesh stock exchange granted it extension of time till numberember 301990 for issuing the refund orders.
the government of india and the securities and exchange board of india insisted that the company should pay interest to the investors for the period of the delay in making the refund in accordance with the provisions of section 73.
apprehending that the government might direct the stock exchanges to delist the shares of the company by reason of its failure to pay interest and also initiate actions against it the companypany filed a petition in the high companyrt under article 226 of the companystitution but it was dismissed by the impugned judgment.
as a result of the companyntermanding of all the multi colored refund orders and the printing of new refund orders with distinctive companyours etc.
the companypany despatched 855226 refund orders from the sarojini nagar post office new delhi at the rate of approx.
on 26th october 1990 a companysignment of 669999 refund orders had been despatched from bombay to delhi in a brake van of the paschim express.
in the high companyrt the union of india and the securities and exchange board of india appeared to have taken a divergent stand on the question.
the refund orders were number despatched until 12th numberember 1990.
in the present appeal however the union of india support the stand of the securities and exchange board of india.
a fire broke out on the way in the brake van as a result of which many refund orders were destroyed.
the bombay stock exchange seems to have understood that the liability of the companypany arose on the expiry of 10 weeks after the date of closure of the subscription lists.
the companypany had to despatch 2550604 refund orders of an aggregate value of well over rs.
from the judgment dated 17/18.7.1991 of the bombay high court in writ petition number 2038 of 1991.
on october 15 1990 the board of directors of the companypany approved the allotment of shares.
these orders which were printed in bombay were meant to be despatched from delhi.
the bombay stock exchange however refused to grant extension of time.
100000 refund orders per day.
almost 50 of the consignment was missing after the accident.
on the other hand the companypany contended that on the facts of this case the liability arose only at the end of the period as extended by the stock exchange at indore in terms of the prospects.
these permissions were obtained prior to numberember 1 1990.
civil appellate jurisdiction civil appeal number 3498 of 1991.
200 crores.
delay occurred in the despatch of newly printed orders.
the appellant is a companypany registered under the provisions of the companypanies act 1956.
it further informed the companypany that it was bound to pay interest by reason of the delay in the despatch of refund orders.
time for this purpose was further extended by that stock exchange till 19th december 1990.
