TMI Blog2020 (5) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is absolutely perverse. The reasoning given that merely because three allottees had made the complaints indicates that the offer or invitation falls in the category of one which is calculated to result directly or indirectly in the shares, debentures becoming available to persons other than those receiving those offer or invitation is based on surmises and conjectures. No evidence has come forward by these complainants or otherwise to show that the company had made a public offer other than these 49 persons. Allotment was made to less than fifty allottees. Once allotment is made to less than fifty allottees by way of private allotment the first proviso to section 67(3) clearly makes it a private issue and not a public issue. Conseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistrar of Companies ( RoC ). Three allottees made complaints to SEBI in respect of issue of RPS with regard to non-inclusion of their names in the list submitted before the RoC. On this complaint, SEBI undertook an enquiry to ascertain whether the company had made a public issue of securities without complying with the provisions of the Companies Act, 1956. On enquiry it was observed that the company had raised an amount of ₹ 43,04,000 from 52 allottees whereas the RoC record showed allotment of RPS to 49 persons. Based on this discrepancy, a show cause notice was issued and, after considering the reply, the WTM found that the RPS was made to 50 persons in violation of section 67(3) of the Companies Act, 1956 and consequently the WT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M considered this fact and accepted the contention of the appellants that there was a clerical error in the list supplied to the RoC and found that the company had allotted RPS to 47 investors but further went on to hold that this number of 47 does not include the name of the three complainants. This fact is erroneous and is against the evidence recorded by the WTM in paragraph 16(vi) wherein the company clearly stated that after removing the repetitions and adding the names of the three complainants, the total number of allottees is 47. Thus, from the material evidence on record we find that the total numbers of allotments made were 47. In the light of the aforesaid, we do not find any violation of section 67(3) of the Companies, Act, 1956 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsons making and receiving the offer or invitation Provided that nothing contained in this sub-section shall apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more: Provided further that nothing contained in the first proviso shall apply to non-banking financial companies or public financial institutions specified in section 4A of the Companies Act, 1956 (1 of 1956). 6. The Hon'ble Supreme Court in Sahara India Real Estate Corpn. Ltd. v. SEBI [2013] 1 SCC 1 while examining section 67 of the Companies Act held:- Section 67(1) deals with the offer of shares and debentures to the public and section 67(2) deals with invitation to the public to subscribe for shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subscription or purchase by persons other than those receiving the offer or invitation. 7. In the light of the aforesaid, the expression offer to the public is not a technical expression but has to be understood in its ordinary popular sense of indicating an approach to the general public by advertisement, circular etc. as distinguished from an offer made privately such as to friends and relatives or a selected set of customers. The objects and reasons for insertion of the first proviso to section 67(3) of the Companies Act was that in order to keep an issue outside the arena of public issue and make it a domestic concern of the issuer and the offeree, would not apply in cases where the offer or invitation is made to fifty persons o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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