Judgment :- 1. This is an appeal by the petitioner in O. P. No. 1002 of 1962 The Malabar Iron and Steel Works Limited, by its Director: V. Krishnamurthy against the dismissal of that petition. The 1st respondent in the petition was the Registrar of Companies, Kerala, Ernakulam, and the 2nd, the Regional Director, Company Law Administration, Government of India, Madras. The petition sought "a writ of mandamus or any other appropriate writ ordering the Registrar of Companies, Kerala, to comply with the provisions of S.149 (3) of the Companies Act, 1956, in respect of the petitioner company and to issue the certificate of commencement"; and the quashing of "the order of the Respondent 2 according sanction for the presentation of a petition by the 1st respondent for the winding up of the company". 2. Sub-section (3) of S.149 of the Companies Act, 1956, reads as follows: The Registrar shall, on the filing of a duly verified declaration in accordance with the provisions of sub-section (1) or sub-section (2), as the case may be, and in the case of a company which is required by sub-Section (2) to file a statement in lieu of prospectus, of such statement, certify that the company is entitled to commence business, and that certificate shall be conclusive evidence that the company is so entitled." The main question for determination is whether the company comes under sub-section (1) of S.149 as contended by the Registrar or under sub-section (2) of S.149 as contended by the appellant. 3. The judgment under appeal held that the company came under sub-section (1) of S.149, and we entertain no doubt that the conclusion is correct. Sub-section (1) of S.149 says that "where a company having a share capital has issued a prospectus inviting the public to subscribe for its shares, the company shall not commence any business or exercise any borrowing power" unless the conditions specified in that sub-section have been fulfilled; and sub-section (2), that "where a company having a share capital has not issued a prospectus inviting the public to subscribe for its sharps, the company shall not commence any business or exercise any borrowing powers" unless the conditions specified in that sub-section have been fulfilled. It is clear from the opening words of sub-sections (1) and (2) quoted above that the former sub-section applies to a company which has issued a prospectus inviting the public to subscribe for its shares; and that the latter to a company which not issued a prospectus inviting the public to subscribe for its shares. 4. The appellant admits that what we are dealing with is a company which has issued a prospectus inviting the public to subscribe for its share and it must follow that as it is a company which has issued a prospers inviting the public to subscribe for its shares and not a company which has not issued a prospectus inviting the public to subscribe for its shares-: comes under sub-section (1) of S.149 & not; under sub-section (2) of that section, It is not contended that if the company does come under sub-section (1) of S.149, the conditions of that section have been fulfilled or that the Registrar was wrong in refusing to certify that.the company is entitled to comments business under sub-section (3) of S 149. 5. The only contention is that the company has delivered to the Registrar a statement in lieu of prospectus under S.70 of the Act and that of that the company should be treated as coming under sub-section (2) not under sub-section (1) of S.149. S.70 prohibits the allotment of the share or debentures of a company in certain cases unless a statement in lien prospectus has been delivered to the Registrar. S.70 prohibits the allotment of the share or debentures of a company in certain cases unless a statement in lien prospectus has been delivered to the Registrar. It applies both to a company which has not issued a prospectus on or with reference to its formation as well as to one which has issued such a prospectus but has proceeded to allot any of the shares offered to the public for subscript Sub-section (1) of that section, which shows clearly the purpose and on the provision, reads as follows: "A company having a share capital, which does not issue a prospectus on of with reference to its formation, or which has issued such a prospectus but has not proceeded to that any of the shares offered to the public for subscription, shall not allot any of its shares debentures unless at least three days before the first allotment of either shares or debtures there has been delivered to the Registrar for registration a statement in lieu of prospect signed by every person who is named therein as a director or proposed director of the company or by his agent authorised in writing, in the form and containing the particulars set out. Part 1 of Schedule III and, in the cases mentioned in Part II of that Schedule, setting out the reports specified therein, and the said Parts I and II shall have effect subject to the provisions contained in Part III of that Schedule." 6. A bare reading of S.70 shows that there is nothing in that section which transforms by means of a legal fiction a company which has issued a prospectus into a company which has not issued a prospectus. In other words, compliance with S.70 will not take a company which has issued a prospectus from the ambit of sub-section (1) of S.149 into the ambit of subsection (2) of that section. 7. S.70 and 149 deal with different matters. S.70 relates to the allotment of shares or debentures. The object of S.149 in the words of Palmer's commentary to the corresponding section of the England Companies Act, 1948, S.109 is "obviously to secure a certain degree of substantiality in a company before it enters into engagements with, outsiders or obtains money by borrowing" (Company Precedents, 17th Edition, Vol. I, Page 13). 8. The object of S.149 in the words of Palmer's commentary to the corresponding section of the England Companies Act, 1948, S.109 is "obviously to secure a certain degree of substantiality in a company before it enters into engagements with, outsiders or obtains money by borrowing" (Company Precedents, 17th Edition, Vol. I, Page 13). 8. The words "commence any business" in S.149 are very wide; but as pointed out by Palmer in the commentary mentioned above "They evidently do not include the issue of prospectuses, or the making of provisional contracts, or the allotment of shares, or the employment of experts, or that taking of other preliminary steps". In other words, compliance with S.70 is only the completion of a preliminary step; it will not in any way exonerate a company from the necessity of complying with the provisions of sub-section (1) of S.149, if it is a prospectus inviting the public to subscribe for its shares as has been done in this case. 9. The order of the Regional Director which is sought to be quashed is Ext. C dated 3131962 of the affidavit of the Registrar dated 25-7-1962. The prayer for quashing the said order is not pressed before us, and does not, therefore, arise for consideration. 10. According to the learned Advocate General who appeared on behalf of the Registrar the appellant is not entitled to a certificate under subsection (3) of S.149 even if the company comes under sub-section (2) of that section. In the view we have taken this contention does not arise for consideration and is not considered in this judgment. 11. In the light of what is stated above the appeal has to be dismissed and we do so with costs, advocate's fee Rs. 100/-.