1996 (2) TMI 362 - Commission - Companies Law

Summary

Issues:
1. Maintainability of the compensation application under section 12B of the MRTP Act, 1969.

Detailed Analysis:
The judgment by the Monopolies and Restrictive Trade Practices Commission dealt with a preliminary issue regarding the maintainability of a compensation application under section 12B of the MRTP Act, 1969. The issue revolved around whether the application was maintainable based on objections raised by the Respondent in their reply. The Complainant alleged that the Respondent failed to allot rights shares as per the Complainant's entitlement, leading to monetary loss and mental anguish, and sought compensation of Rs. 1,75,400 with interest. The Respondent challenged the maintainability on several grounds, including that the Complainant was not a consumer as defined under the Act, and the shares before allotment could not be considered goods. The Respondent also argued that raising capital through a Right Issue did not constitute a trade practice under the MRTP Act.

The Commission considered the arguments presented by both parties, including references to legal precedents such as the Morgan Stanley case and observations made by the Supreme Court. The Respondent relied on the Morgan Stanley case to assert that a prospective investor applying for shares did not qualify as a consumer and that no deficiency in service arose in such transactions. The Commission also referred to its previous orders in similar cases, emphasizing that the act of offering shares for subscription to raise capital did not involve a trade or trade practice as defined under the MRTP Act. Additionally, it was noted that the act of raising capital through equity did not amount to carrying on a trade, as established in previous rulings.

Based on the legal precedents and interpretations provided, the Commission concluded that the compensation application was not maintainable in law. Citing the observations of the Supreme Court in the Morgan Stanley case and previous decisions by the Commission, the judgment held that the Commission lacked jurisdiction to proceed with the matter further. Consequently, the preliminary issue was decided in favor of the Respondent, and the compensation application was dismissed, with no order as to costs.