The prospectus issued by a company contained a false statement that B a very well-known successful businessman was on its Board of directors. C acting upon this statement applied to the company for its shares. D who did

Section 35 of the Companies Act, 2013 dealing with civil liability for misstatement in prospectus. In the present case the prospectus containing a statement that B a very well-known successful businessman was on the board of directors of the company. The fact is "he was not a director of the company". Obviously the statement in the prospectus is untrue statement. The burden of proof in a suit by an allottee that he has been misled by the mis-statement in the prospectus lies on the allottee. He must prove the following:- The misrepresentation was of a fact It was in respect of a material fact He acted on the misrepresentation and He suffered damages in consequence. In the present case only C will have remedies because he satisfies all the four conditions mentioned above. D cannot seek any relief because his consent was not caused by misrepresentation as he did not rely on the statement. E was a subscriber obviously he has not become a member on the basis of prospectus. F has not bought the shares from the company on the basis of the prospectus. Therefore he cannot claim that his consent was caused by the company by misrepresentation. C may apply to the court to have the contract set a side and striking off his name from the register of members and claim his money back. However he must act within a reasonable time. The allottee here C may recover the damages from the company for any loss he may have suffered because of the misrepresentation of the prospectus.