TMI Blog1969 (11) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... of India for setting up a factory for the manufacture of textile goods. A number of financiers came forward to finance the company by purchase of the shares or by advancing loans. One of them was M/s. Pioneer Company, the present appellant. This firm consisted of four partners, one of them being Shri A.N. Madhok. On October 3, 1957, this firm entered into an underwriting agreement with the company by which it undertook to procure subscription for the shares of the company worth Rs. two lakhs within a period of two months from the date of the agreement failing which the firm was to be allotted the unsubscribed shares and was to be deemed to be the shareholder to that extent. The partners of the firm purchased some shares in their individua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the application money of Rs. 3,000 (three thousand rupees) received from Messrs. Pioneer Co. through Shri A.N. Madhok be allotted in the name of Messrs. Pioneer Co. Resolved unanimously that the following shares are hereby allotted to the allottees, i.e. , Messrs Pioneer Co.,.................. and they be directed to pay the allotment money @ 25% of the normal value of the shares by the 30th day of May, 1958, in the capital of the company." The intimation about the allotment of the shares was given to the appellant-firm and a demand of allotment money at the rate of 25% of the value of the shares was made which was not paid by the said firm. The position taken up by Shri A.N. Madhok is that he had given the amount of Rs. 3,000 by c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken to the allotment of shares of the value of Rs. 12,000 on the basis of Rs. 3,000 paid by Shri Madhok to the company by cheque dated December 6, 1957, being the application money at the rate of 25%, during the time the company continued to be a going concern. The objection to allotment of the shares has been taken after the winding-up order was passed. The underwriting agreement dated October 3, 1957, has to be treated not merely as a guarantee but as an application for allotment of so many shares as could not be applied for by the public to the extent of Rs. two lakhs through the firm, and this agreement entitled the company to allot the shares in terms of the underwriting agreement to the appellant-firm after the expiry of two months. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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