The Supreme Court Thursday refused to intervene with the Life Insurance Corporation (LIC) IPO however agreed to look at the modification made to the LIC Act, 1956 by means of the Finance Act, 2021, which was launched as a cash invoice.
“On the aspect of interim relief, the court must be guided by well settled principle of prima facie case, balance of convenience and irreparable injury. The court has been apprised of the fact that 73 lakh applicants have subscribed to the IPO and it has been oversubscribed 6 times even in the category which has been reserved for policy holders. It is necessary to note that the dilution of LIC has been 3.5%. 22.13 crore equity shares of face value are being offered at premium of INR 939 and receipts in the Consolidated Fund of India is of Rs 20,500 crore; IPO opened for anchor investors on May 2, 2022, for general public on May 4 and closed on May 9. Having regard to the above facts, we are of the considered view that no case of grant of interim relief has been made out,” a bench presided by Justice D Y Chandrachud stated, declining to grant any interim aid on petitions and appeals difficult the IPO.
The bench additionally comprising Justices Surya Kant and P S Narasimha, nonetheless, issued discover within the matter and directed that it’s tagged with pending proceedings earlier than a bigger bench on the query of constitutional validity of payments being launched as cash payments.
The courtroom was listening to petitions difficult the amendments to the LIC Act in addition to some appeals in opposition to the Madras and Bombay High Court choices refusing to intervene with the IPO.
Senior advocate Indira Jaising, who appeared for the petitioners, submitted that by means of modification to Section 28 of the LIC Act, the character of the company is being sought to be modified from mutual profit society to a joint inventory firm and that this amounted to expropriation of surplus from collaborating coverage holders to shareholders to whom shares can be allotted.
“My money is being diverted to the shareholder. There was a statute which said I am entitled to 95 per cent. Such percentage of remaining surplus was to be allocated to members. Now, in 75 years, there is the first time definition of members as shareholders. Outsiders become owners,” she contended including that it raised the query of violation of proper to property underneath Article 300A of the Constitution.
As an interim measure, the senior counsel prayed that the cash invested by subscribers be saved within the ‘Application Supported by Blocked Account (ASBA)’ or to say that their rights might be depending on the end result of the case in order to place them on discover.
Appearing for the Centre, Additional Solicitor General (ASG) N Venkataraman opposed this and stated the plea was simply an try “to scare investors and to play a spoilsport”. He stated that “73 lakh bank accounts are blocked” and puzzled “how can such important policy decisions be interfered with at the eleventh hour”.
The ASG pointed to the date of submitting of the petitions to contend that there was delay in submitting them. He added that solely 2 shareholders out of fifty,000 are earlier than the courtroom and requested, “Where is the balance of convenience or irreparable injury, who will compensate this?”
The regulation officer added that “any interim order will send a completely wrong signal to the markets and then any IPO can be interfered with”.
The courtroom whereas refusing to grant any interim aid, nonetheless, stated that the contentions on Section 28 of the LIC Act warrant additional consideration.