The issuance of application forms for shares prior to the filing of a statement in lieu of prospectus, in contravention of S.96(2) of the Indian Companies Act, did not make the contracts void.

JUDGMENT :- This suit is filed by 16 plaintiffs as shareholders of the 1st defendant company on their own behalf as well as on behalf of all other shareholders of the 1st defendant company, except defendants 2 to 12. According to the plaint, the 1st defendant company was incorporated on July 13, 1946, for carrying on business of aerial transport, and by the companys memorandum dated July 12, 1946, the capital of the 1st defendant company was two crores of rupees divided into twenty lacs ordinary shares of Rs.10 each.

2. In para.2 of the plaint, it is stated that on June 15, 1946, the 1st defendant company issued forms of applications for shares of the 1st defendant company to certain share-brokers named in the paragraph "with the intention that

the forms may be used by members of the public for applying for shares." It is then stated that the same were issued without any prospectus and that the 1st company had not at that time even filed a statement in lieu of prospectus with the Registrar of Joint Stock Companies. The applicants for the shares forwarded Rs.2-8-0 per share with their applications as application moneys in respect of the shares.

3. It is stated thereafter that on July 20, 1946, the capital structure of the company was altered from two crores of rupees consisting of twenty lacs ordinary shares of Rs.10 each to two crores of rupees divided into four lacs preference shares and sixteen lacs ordinary shares of Rs.10 each; that a general meeting of the share-holders was purported to be held on July 20, 1946, where a special resolution was passed which altered the capital structure as stated above.

4. It is thereafter averred that on September 3, 1946, the 1st defendant company filed with the Registrar of Joint Stock Companies a statement in lieu of prospectus dated September 3, 1946, and the same was registered on or about September 7, 1946, and that the 1st defendant company thereafter filed with the Registrar another statement in lieu of prospectus dated September 14, 1946, and that the said statements in lieu of prospectus have not been properly filled up. In connection with this it may be pointed out straightway that these statements made are inaccurate as evidenced from the evidence of the Registrar who was examined on behalf of the plaintiffs, who deposed that as a matter of fact the first statement was filed on September 2 and in fact the office raised on objection which office objection was overruled by him on September 7, 1946, so that the statement in lieu of prospectus was in fact presented on September 3, 1946, as appearing on the face thereof, and the second statement in lieu of prospectus had to be filed, inasmuch as there was an omission in the first statement as regards the minimum subscription.

5. Thereafter the plaint states that between September 3 and September 5, 1946, the 1st defendant company made allotment of its shares to the applicants including the plaintiffs and intimations thereof were sent cut from September 10 to September 12, 1946, calling upon the applicants to pay a further sum of Rs.2-8-0 per share as allotment moneys.

6. Thereafter in para.7 it is stated that one M.H. Gandhi presented a liquidation petition on March 27, 1948, in this Court, being I.C. No.36/1948 praying for the winding up of the 1st defendant company on the ground set out in that paragraph. Thereafter in paras.9 and 10 they set out certain circumstances under which there was a change in the board of directors and allegations were made that the shareholders were defrauded as regards certain meetings held of the shareholders of the company, that, therefore, the directors named therein were not properly appointed. This allegation is made for the purpose of obtaining an injunction restraining the company from making any further call through the directors who had issued the notice dated August 18, 1948, to its shareholders who had not paid the allotment moneys on the first call, calling upon them to pay the amounts wi