SUBASH CHUGH & CO. Vs. GIRNAR FIBRES LTD.

JUDGEMENT

(1.) PETITIONERS M/s. Subhash Chugh and Co. and 7 others, fully described in the head-note of this petition under Article 227 of the Constitution of India, have prayed for the quashment of order dated 20.3.1999 (Annexure P7) passed by respondent No. 2 i.e. Arbitration Committee, Ludhiana Stock Exchange Association Ltd., Feroze Gandhi Market, Ludhiana, and have further prayed for the issuance of any other order or direction which this Court deems proper in the facts and circumstances of this case.

(2.) FACTS are not much in dispute but the controversy involved in the present petition lies somewhere else. The facts can be gathered even from the impugned order Annexure P7. M/s. Girnar Fibres Limited, Ludhiana (hereinafter called 'the Company') came out with a public issue in October 1995 for 80,00,000 equity shares of Rs. 10/- each for cash at premium of Rs. 5/- per share aggregating to Rs. 1,200 lacs. The issue opened on 12th October, 1995 and closed on 24th October, 1995. In terms of the prospectus, on application a sum of Rs. 7.50 per share was to be paid. The claimant company entered into underwriting agreements with various underwriters including the Lead Managers, Bank of Baroda, New Delhi, Industrial Finance Corporation of India Ltd., New Delhi and the Merchant Banker, namely State Bank of Bikaner and Jaipur on 13th September, 1995. The underwriting commitments to subscribe and to underwrite varied with every underwriter.

(3.) A dispute arose between the parties to the underwriting agreement between the claimant Company and the underwriters and in terms of Clause 20 it was referred to the Ludhiana Stock Exchange, being the regional Stock Exchange, in which the equity shares were to be listed. The Ludhiana Stock Exchange constituted an Arbitration Committee as per terms of arbitration clause and the arbitration proceedings were commenced.