LexMORGAN STANLEY MUTUAL FUND versus KARTICK DAS
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
A B c MORGAN STANLEY MUTUAL FUND v. KARTICKDAS MAY 20, 1994 [M.N. VENKATACHALIAH, CJ., S. MOHAN AND DR. A.S. ANAND, JJ.] Consumer Protection Act 1986, Secs. 2(1}(i), 2(1}(d}(i); 2(J)(i); 2(J}(c), 2(1)(c)(i), 14: 26: Shares before allotment, held are not ''goods "-:f'rospective investor, held, not a "Consumer'-Forum under Act, held, has no power to grant interim or ad-interim relief Code of Civil Procedure, 1908-0rder 39 Rules, 1,2,3 & 5 Constitution D of India, A11icle 226-Factors for grant of injunction in public issues laid down-Need for venue restrictions specified. Securities and &change Board of India (Mutual Funds) Legislation, 1993-Regulation 27-Disclaimer clause, held, does not amount to non-ap- E proval-''First. come first served" under the Scheme of allotment, held, does not deceive investors. Practice and procedure-Costs-Vexatious litigation Penal Costs of Rs. 25,000 awarded-Constitution of India, Article 142. F The Appellant in C.A. No. 4384 of 1994 is a domestic mutual fund registered with the SEBI along with its investment management agency. The Memorandum and Articles of Association of the appellant along with the draft scheme were approved by SEBI after due scrutiny and examina- tion. SEBI also approved in writing all advertisements and publicity G material. While approving the scheme, SEBI also put in a disclaimer clause which Is a standard requirement in all issues. The appellant started advertising the public Issue on 13-12-1993. One P, filed a suit before the Sub-Judge at Delhi for injunction restraining the public issue from being floated. An interim order was H passed by, the Sub-Judge but the High Court on being moved by the 136 MORGAN STANLEY MUTUAL FUND v. K. DAS 137 appellant stayed the same on 4-1-1994. One A, filed a Writ Petition (W.P. A No. 14 of 1994) before the Delhi High Court against the SEBI, seeking inter a/ia a stay of the public issue, which was dismissed in limine. Civil Appeal 4587 of 1994 at the instance of the unsuccessful writ petitioner arises from this proceeding. Seeking the same relief as were sought in the writ petition, one K, moved the Calcutta District Consumer Disputes Redressal Forum B allei:ing inter alia that the Fund's Offering areolar was not approved by SEBI and that the basis of allotment was arbitrary and unfair. The Forum passed an exparte interim order dated 4-1-1994 restraining the Fund from proceeding with the fuctber issue against which the Fund appealed before the Supreme Court by Special Leave (Civil Appeal No. 4587 of 1994). The appellants contended that shares that are to be allotted In future are not goods under s.2(1)(i) of the Consumer Protection Act, 1986 and that even assuming that shares are goods, prospective shareholders are c not consumers and are therefore not entitled to file a complaint. The respondents on the other band submitted that when SEBI regulations (R.27) are violated, a prospective applicant would be entitled to seek an D injunction. Allowing C.A.No. 4587 of 1994 and dismissing C.A. No. 4548 of 1994, this Court Held : 1. As per the 4efinltlon under Section 2(l)(d)(i) of the Consumer Protection Act, 1986, 'Consumer' is the one who purchases goods for private use or consumption. In order to satisfy the requirement E of the definition, there must be a transaction of buying goods for con- sideration. The definition contemplates the pre existence of a completed transaction of a sale and purchase of goods. In view of Section 2(1)(i) of F the Consumer Protection Act, the meaning of 'goods' is the same as defined In Section 2(7) of the Sale of Goods Act, 1930. All actionable claims and money are thus excluded from the definition. Till the allotment of shares takes place 'the shares do not exist.' Therefore, till then they can never be called goods. At the stage of application, an applicant is onl:' a G prospective investor in future goods. If regard be had to the definition of "complaint' under the Act, it will be clear that no prospective Investor could fall under the Act. [153-E, 155E, 153-G, 155-E] 2. The expression "unfair trade practice' as per Section 2(1)(r) has the same meaning as defined under Section 36-A of Monopolies and H • 138 SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R. A Restrictive Trade Practices Act, 1969. That again cannot apply because the company is not trading in shares. "Share' means a share in the Capital. The object of issuing the sa
Excerpt shown. Read the full judgment & AI analysis in Lexace.