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Issues:
1. Jurisdiction of the trial court in passing the interim injunction. 2. Maintainability of the petition under Article 227 of the Constitution. 3. Compliance with SEBI regulations regarding the public issue. 4. Interpretation of "first come first served basis" in the context of the public issue. Jurisdiction of the trial court in passing the interim injunction: The respondents filed a suit seeking a permanent injunction against the petitioner, Morgan Stanley Mutual Fund (MSMF), alleging that the public issue was floated without SEBI's permission and the units offered were not approved by SEBI. The trial court issued an ad interim injunction restraining the public issue. The petitioner challenged this order under Article 227, arguing that the trial court improperly exercised jurisdiction by fixing the case beyond the public issue commencement date. The High Court found that the trial court's actions amounted to a miscarriage of justice as it virtually decreed the suit before the public issue began. The High Court held that the trial court's decision was improper, leading to the petition being allowed, and the restraining order set aside. Maintainability of the petition under Article 227 of the Constitution: The respondents argued against the maintainability of the petition under Article 227, contending that the order was appealable under Civil Procedure Code provisions. The High Court clarified that Article 227 can be invoked if the lower court acted without jurisdiction or improperly, causing a miscarriage of justice. The High Court found that in this case, the trial court's actions led to a potential miscarriage of justice by fixing a date beyond the public issue commencement, justifying the exercise of discretionary jurisdiction under Article 227. The High Court held that the petition was maintainable due to the peculiar facts of the case. Compliance with SEBI regulations regarding the public issue: The respondents alleged that the public issue was advertised without SEBI's permission and the units were not approved by SEBI. However, the petitioner presented evidence that SEBI had approved the scheme and amendments suggested by SEBI were incorporated. The High Court noted that the petitioner had followed SEBI's instructions, and the disclaimer issue raised by the respondents did not justify a restraint order. The High Court found that the petitioner had complied with SEBI regulations, and prima facie, no case for an interim injunction was made out. Interpretation of "first come first served basis" in the context of the public issue: The respondents objected to the "first come first served basis" for unit allotment, alleging it violated SEBI regulations. The petitioner clarified that all investors within three days of the public issue commencement would automatically become unitholders, aligning with SEBI's requirements. The High Court accepted this interpretation, noting that the format was approved by SEBI. The High Court found that the interpretation of "first come first served basis" did not warrant an interim injunction, and the balance of convenience favored the petitioner, leading to the setting aside of the restraining order. ---
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