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 same

is for building up capital. To raise capital

means making arrangements for carrying

on the trade. It is not a practice

relating to

the carrying of any trade. Creaiion of share capital without

B

allotment of shares does not bring shares into existence. In view of the

above position the question of the appellant company trading in shares

does not arise. Therefore, a prospective investor is not a nconsumern under

the

Act. It follows that the

Consumer Disputes Redressal Forum has no

jurisdiction whatsoever.

(156-C, D, E, Fl

C 3. As principle,

ex pane injunction could be granted only under

D

exceptional circumstances. The factors which should weigh with the court

In the grant of ex pane injunction are -(156-Hl

(a) Whether irreparable

or serious mischief will ensue to the

plaintiff;

(b) whether the refusal of ex parte injunction would involve

greater injustice than the grant of

it would involve;

(c) the court will also consider the time at which the plaintiff first

bad notice of the act complained so

that the making of im-

E proper order against a party in his absence is prevented;

(

d) The court will consider whether the plaintiff had acquiesced

for sometime. In such circumstances

it will not grant ex parte

injunction;

F

(e) the court would expect a party applying for ex parte injunction

to show utmost good faith iu making the application;

(f) eveu

if granted, the ex parte injunction would be for a limited

period of time;

G (g) general principles like prima facie case, balance of convenience

and irreparable loss would also be considered by the court.

(157-A to El

In this case, the public advertisement

was given on 13-12-1993, the

petition

was filed on

4·1-1994 and the impugned order of Consumer Forum

H came to be passed on the following day. As to why the respondent chose to

MORGAN ST AN LEY MUTUAL FUND v. K. DAS 139

come at the eleventh hour and where was the need to pass an urgent order A

of injunction are matters which are not discernible. Besides, tested in the

light of the decreed cases the impugned order which is bereft of reason

and laconic cannot stand a moment's scrutiny. [159-G]

4. Today the Corporate sector is expanding. To prevent disgruntled

litigants from indulging in adventurism, it has become necessary to

evolve

certain venue restrictions. In India, the residence of the Company is where

the registered office of the Company is located. Normally cases should

be

tiled only where the registered office of the company is situate. Courts

outside the place where the registered office is located,

if approached, must

have regard to the fact that invariably suits are filed seeking to injunct

either the allotment of shares

or the meetings of the Board of Directors or

again the meeting of the general body. The Court is approached at the last

minute.

If injunction is granted even without notice to the respondent it

B

c

will cause immense hardship and administrative inconvenience. It may be

some times difficult

even to

undo the damage by snch an interim order. D

Therefore, the Court must ensure that the plaintiff comes to court well in

· time so that notice may be served on the defendant and he may have his

say before any interim order is passed. [160-A, 160-G, H; 161-A]

5. There is no power under the Act to grant any interim relief or even

an ad interim relief. Only a final relief could be granted. If jurisdiction of E

the Forum to grant relief is confined to the four clauses mentioned under

section 14, no interim injunction could never be granted disregarding even

the balance of convenience. [162-A)

6. The argument that SEBI should have acted in accordance with F

Section 11(2) (e) of the SEBI Act 1992 to prohibit "Fraudulent and unfair

trade practices" related to the securities market is without substance. The

disclaimer clause required to be incorporated

at the beginning of the

offering circular

by SEBI while approving the scheme is a standard

requirement and nothing peculiar to the present case. The object of

this G

is to bring to the notice of the investors that they should take the firm

decision on the basis of the disclosures made in the documents.

It

Is meant

for the investor's protection. In fact

by such a cour.se the SEBI informs

the investors that they have approved the scheme but they did

not

recom·

mend to the investors whether such investment is good or not and leave it

to their discretion. Therefore, the allegation that the SEBI has not ap· H

140 SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R.

A proved the other documents is totally baseless. (146-B, 150-F, G]

7. The challenge to the method or allotment is without force. The "first

come first served" scheme was an invitation to the subscribers lo apply

early so

that the scheme be closed quickly. The appellants had made

It very

clear

that those who applied during the opening period or the scheme would

B be given

full allotment. [152-E, FJ

8. There Is an increasing tendency on the part or some litigants to

Indulge In speculative and vexatious litigation and adventurism which the

· fora seem readily to oblige. Such a tendency should be curbed. Having

regard to the frivolous nature or the complaint, It Is a fit case for award or

C costs, more so, when the appellant has suffered heavily. Therefore, costs or

Rs. 25,000 are awarded In favour or the appellant. (162-EJ

Maneckji Pestonji Bharucha v. Wadi/a/ Sarabhai & Co., AIR (1926) PC

38-53 IA

92 = 28 Born L R 777; Madho/a/

Sindu of Bombay v. Official

D Assignee of Bombay, AIR (1950) FC 21 = 1959 FCR 441 and State of West

Bengal v.Swapan Kumar Guha and Sanchita Investments, (1982] 1SCC561,

referred to.

E

F

G

CIT v. Standard Vacuum Oil Co., AIR (1966) SC 1393 and United

Commercial Bank v. Bank of India, (1981] 2 SCC 766, relied on.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4584 of

1994.

From the Judgment and Order dated 4.1.94 of the Calcutta District

Consumer Disputes Redressal Forum in C.D.F. Case No. 35 of 1994.

WITH

Civil Appeal No. 4587 of 1994.

From the Judgment

and

Order dated 5.1.94 of the Delhi High Court

in W.P. No. 14 of 1994.

Ashok H. Desai, Aron Jaitley, R.Karanjawala, Ms. Dina Wadia, Ms.

Nandini

Gore and Mrs. M. Karanjawala for the Appellants.

In-person

in

Pertr. No. 321/94.

H K.V. Vishwanathan and L.P. Agrawala for the Respondents.

MORGAN STANLEY MUTIJALFUND v. K. DAS [MOHAN,J.] 141

The Judgment of the Court was delivered by A

MOHAN, J. Leave granted.

2. The appellant is a domestic mutual fund registered with Securities

and Exchange Board of India (hereinafter referred to as 'SEBI') under

Registration No. MF/005/93/1, dated 5.11.93. The appellant is managed by B

a Board of Trustees. Pursuant to the SEBI (Mutual Fund) Regulations, the

investment management company of the appellant, Morgan Stanley Asset

Management India Private Limited was registered with SEBI on 5.11.93.

Under such registration Morgan Stanley Asset Management India Private

Limited is constituted as the asset management company of the appellant.

C

Morgan Stanley Asset Management India Private Limited is a subsidiary

of Morgan Stanley Group Inc. which holds 75% of equity, the balance

being held by Indian shareholders such as Housing Development Finance

Corporation (HDFC), Stock Holding Corporation of India etc. Morgan

Stanley Asset Management India Private Limited was granted certificate

of incorporation on 18th October, 1993 by the Registrar of Companies,

D

Bombay. Its Memorandum and Article of Association have also been

approved by the SEBI as per the provisions of the said Regulations. ·

3. The draft scheme of the appellant was approved by the Board of

Trustees by Circular Resolution dated 8.11.93. This was forwarded to SEBI

E

. for its approval on 10.11.93. The scheme was duly scrutinised and examined

by the SEBI and SEBI gave its approval and certain amendments were

suggested.

Upon receipt of such approval for the scheme, the appellant and the

Investment Manager took necessary steps to begin marketing the scheme ·F

by issue of advertisements. All advertisements and publicity material were

approved by SEBI in writing before publication as required by the Regula­

tions. Pursuant to such approval the appellant commenced advertising the

public issue.

4. On 18th December, 1993 the advertisements and hoardings were

G

released. One Piyush Aggarwal filed a suit before the learned Sub-Judge,

Tees Hazari Courts, Delhi for injuction restraining the public issue from

being floated by the appellant. On 24th December, 1993 an interim order

was passed. Aggrieved by the same, the appellant moved the High Court

m C.M. (M) No. 543 of 1993. On 3rd January, 1994 the said order passed . H

142 SUPREMECOURTREPORTS (1994] SUPP. lS.C.R.

A . by the learned Sub Judge -was stayed. That was subsequently confirmed

on 4th January, 1994. One Dr. Arvind Gupta filed W!it Petition No. 14 of

1994 against SEBI. In effect, he sought to stay the public issue from being

floated. That writ petition was rejected.

5. On the same grounds, as were urged in the writ petition, the

B

respondent moved the Calcutta District Consumer Disputes Redressal

Forum seeking to restrain the public issue from being floated. The prin­

cipal grounds taken were that the appellant's Offering Circular was not

approved by the SEBI. There are several irregularities in the same. The

basis of allotment is arbitrary, unfair and unjust. The appellant was seeking.

C

to collect money by misleading the public.

The following order was passed on 4.1.1994 by the Calcutta District

Consumer Disputes Redressal Forum :

"Petitioner files the complaint today. Register. Issue notice of

D

show cause against OPs.

E

H

G

Considering the utmost urgency of the case as cited by the Ld. '

Lawyer for the petitioner we are inclined to pass an interim order

otherwise the application would be frustrated.

Accordingly we direct OP 1 and OP 2 and its men, agent,

•1i11" coitectihg Banks not to proceed any further with the issue of 30

., .. m •l't:rores Morgan Stanley Growth Fund units due to be opened on

6th January, 1994 till proper clarification is made in its prospectus

and with the leave of this Ld. Forum. OP 3 i.e. SEBI is also directed

· '0' bn"

riot to issue clearan�s until Regulation 28 of Schedule V of SEBI

�m�rf'.Ja ·d• .;,

"

.. Regulations is complied by the OP 1 and OP 2.

1 /,

I

OP4 & OPS i.e. The Bankers to the offer are specifically

restrained from accepting any application form of Morgan Stanley

Growth Fund from anybody until further orders from this Ld.

Forum.

'_.di" OPs are at liberty to apply for vacation/variation of this order.

'"·Next'date fixed on 19.1.94.'

Aggrieved by this order, civil appeal arising out of SLP(C) No. 272

H of 1994 has come to be preferred.

MORGAN STANLEY MUTUAL FUND v. K. DAS [MOHAN, J.] 143

Against the dismissal of Writ Petition No. 14 of 1994 by the High A

Court of Delhi civil appeal arising out of SLP No. 321 of 1994 has come

to be preferred.

6. Mr. Ashok Desai learned counsel for the appellant (Morgan

Stanley Mutual fund) urges the follol\'ing :

(a) A prospective investor

is not a consumer to prefer a complaint

under the Consumer

Protection Act, 1986 (hereinafter referred to as 'the

Act'). If that be so, a voluntary consumer association cannot complain

about the issue of shares. The shares are not goods as defined under

Section 2(i) of the Act. Even otherwise, there can be no consumer associa­

tion of prospective applicants for future properties. The issue of shares

was

to open on 27th April, 1993. The so called consumer has yet to apply for

allotment of final shares and make payments in respect thereof. Therefore,

it is submitted that no member of this association could be held to be a

consumer

of future shares within the meaning of the definition (supra).

(b)

In law, a prospective investor does not become a consumer as

denined under the Act. Even assuming that shares could

be goods before

allotment, the so-called consumer has neither purchased the goods for a

consideration nor hired the services of the company for consideration.

Hence, he is not entitled to make any complaint.

( c) There being no transaction

of buying goods for consideration the

requirement

of section 2(1)(d)(i) of the Act defining consumer is not

satisfied.

B

c

D

E

( d) No member of the public has a right or entitlement to a

share of F

the company making an issue of capital for the first time. A prospective

investor has no

say in the

val~ation of shares issued. That is determined by

the general body of share holders. Should a prospective investor have any .

legal right and if the issue of capital is not to his desire, he may not opt to

subscribe.

He cannot intentionally with the objection of which he is per- G

sonally aware, subscribe into the issue and challenge its very terms.

(c)

Under the scheme of the Consumer Protection Act, a consumer

forum

is competent to deal with the complaint if it relates to

goods bought

or services rendered. Thus the District Consumer Forum has no jurisdic-

· tion whatsoever to deal with this case. H

A

B

c

144 SUPREME COURT REPORTS [1994) SUPP.1 S.C.R.

(!) Section 2( c) of the Act defines a complaint and lists four cases

where investigation, inquiry and relief could be granted. The complaint in

relation to public issue of shares namely future goods does not fall within

any one of four categories of which a complaint can be filed under the

provisions of the Act.

(g) Section 14 of the Act deals with the nature of relief that can be

granted. This Section does not envisage grant of any interim relief of an

ad-interimielief. The Section contemplates only a final relief. In the instant

•

case, the grant of injunction against the public issue of the appellant

company is a relief not provided for under the statute.

(h) The principles relating to grant of injunction including the

balance of convenience have not been borne in mind. Even assuming that

the Forum is conferred with the power to grant injunction it has not

examined whether there were overwhelming reasons for urgency and why

the grievance could not have been made earlier. In this case, the party had

D gone to the Forum on the last date when the issue was about to open after

the issue had been advertised. The public advertisement was issued on

13.12.93; the petition was filed on 4.1.1994, the orders were passed on the

following day. The Calcutta District Consumer Disputes .Redressal Forum

was approached on the last day, obviously with unclean motives. There is

E

also suppression of material facts on the part of the respondent. In matters

of this kind there must be an undertaking as to the damages on the part

of the party seeking the injunction.

For these reasons, it is prayed that the impugned order may be

set-aside. In this case, since the appellant has suffered very much in that

F not even the copy of the injunction was served on the appellant which copy

came to be obtained only through the bankers, it is a fit case in which the

appellant should be Compensated with exemplary costs.

7. Mr. KG. Vishwanathan, learned counsel for the respondent urges

that there are well-known principles for the grant of ex-parte injunction.

G

Should the court he satisfied that there is a prima facie case, on balance of

convenience, it can always grant. Where the issue of public share is nothing

but an attempt to gain an undue advantage, the Court is not powerless.

This is-a case to which the Regulations would apply. Therefore, if those

Regulations are not conformed to, a prospective applicant would be en·

H tit\ed on to seek an injunction. There has been a violation of Regulation

MORGAN STANLEY MUTUAL FUND v. KDAS [MGHAN,J.] 145

27 and that the appellant did not have any approval as is clear from their A

own document Only a letter from SEBI seeking the clarification from the

appellant

is produced. This does not, it is urged, amount to an approval in

law.

It is further urged by Mr. Vishwanathan that the bankers to the issue

at Calcutta were really non-existent. The brochure indicates that the ap­

plication forms could be received

in Calcutta at the Bank of Broda,

Old

Court House Street and Corporation Bank. Cappling Street. Both these

branches, it

is urged, are non-existent while there is no branch of Bank of

Baroda at

Old Court House Street. There is no street called Cappling

Street at Calcutta.

The basis of allotment what

is styled 'first come, first served' was, it

B

c

is urged, intended to confuse and designed to deceive the innocent inves­

tors. The applications were received in 45 centres simultaneously. No

priority number

was given. Hence, the appellant would be in a position to

deny to each one of the investors on the ground that he had not come or

D

approached the appellant first. As a result, the appellant will be able to

amass enormous sums of money by way of interest and thereafter return

the amount to the respective investors.

The failure to stipulate the period before which the refund would be

E

effective is, it is further

urg~d, a serious irregularity violating Regulation

23.

The Calcutta District Forum has, it is claimed power to issued the

restraint order under the Act.· Such injunctions are not unknown to law as

seen from the Financial Services Act,

1986 of the

United Kingdom. There- F

fore, no interference is calfed for.

In S.L.P. (c) 321/94, the appellant would urge that the High Court

has dismissed the writ petition without a speaking order. There were

important points raised in the writ petition. The announcement of the

impugned scheme of public issue of units by the appellant

is, it is con-G

tended, without the approval of

SEBI and is illegal and that by proposing

the allotment of units based on first come first served basis, fair treatment

is not meted out to small investors. There is contravention

of Sections 55,

63 and 68 of the Indian Companies Act, 1956. To hold out, as the appellant

has done, that the allotment of units

will be based on firm allotment basis H

146 SUPREME COURT REPOR'fS [1994] SUPP. 1 S.C.R.

A and with a charged sponsor in the advertisement is, it is contended, illegal

in law, apart from it being violative of the norms and practices in the capital

market. In such a case, the impending disaster could be avoided only by a

quia-timet interference of the Court. It is also urged that by piercing the

corporate

veil, it could be easily seen that the real sponsor

is no other than

B

the Morgan Stanley Group, New York. Therefore, SEBI Should have acted

in accordance with Section 11(2)( e) of the SEBI Act, 1992 for prohibiting

fraudulent and unfair trade practices relating to securities market.

It is also

urged that the writ petition came to be filed and dismissed without

con­

sideration of these aspects. So, it requires interference of this Court.

C 8. We have already extracted the impugned order. The correctness

of the same can be determined with reference to the following questions :

(i) Whether the prospective investor could be a consumer within

the meaning of Consumer Protection Act,

1986?

D (ii) Whether the appellant company 'trades' in

shar~s?

E

F

G

(iii) Does the Consumer Protection Forum

have jurisdiction in ·

matters of this kind?

(iv) What are the guiding principles in relation. to the grant of an

ad-interim injunctions

in such areas of the functioning of the

capital-market and public issues of the corporate sectors and

whether certain 'venue restriction clauses' would require to be

. evolved judicially

as has been done in cases such as

State of West

Bengal & Ors. v. Swapan Kumar Guha and others and Sanchaita

Investments and others, [1982] 1 SCC 561 etc.?

(v) What is the scope of Section 14 of the Act?

The answers to these questions

will d.ecide not only the fate of this

civil appeal but also the appeal arising out of

SLP (C) No .. 321/94.

9. In order to decide these questions, it will be necessary to set out

the factual matrix. On 11.4.1988, Government of India by a.'l administrative

circular constituted the Securities and Exchange Board of India (SEBI) for

investors protection. On 30.1.1992, an Ordinance known as SEBI' Or­

dinance was promulgated. On 21.2.1992, a bill was introduced namely the

H SEBI Bill of 1992 which became the Act on 4th April, 1992. It came into

/

MORGAN STANLEY MUTUAL FUND v. K. DAS [MOHAN. J.] 147

force on 13.1.1992 as stated in Section l(iii) of the SEBI Act. A

On 29.5."1992, the Capital Issues Control Act, 1947 was repealed.

10. Mutual funds in India are regulated by SEBI pursuant to the

Securities

& Exchange Board of India (Mutual Funds) Regulations, 1993. Under the said Regulations, all mutual funds in India as also the asset B

management companies and the custodians of the mutual funds assets are

required to

be registered with the

SEBI. No mutual fund in India can

approach the market with a scheme unless scheme has been fully approved

by SEBI which is the sole authority for granting approval to such funds.

The SEBI examines the scheme and suggests modifications, if any, and C

allows the scheme to be advertised and published.

11. The appellant is a domestic mutual fund registered with SEBI.

Its registration number is MF/005/93/1 dated 5.11.1993. The certificate of

registration is as under :

'SECURITIES AND EXCHANGE BOARD OF INDIA

(MUTUAL FUND) REGULATIONS, 1993

(Regulation 9)

CERTIFICATE OF REGISTRATION

D

1. In exercise of the powers conferred by Section 30 of the E

Securities and Exchange Board of India Act, 1992 ( 15 of 1992)

read with Securities and Exchange Board of India (Mutual Fund)

Regulations, 1993 made thereunder the Board hereby grants a

certificate

of registration to

MORGAN STANLEY MUTUAL FUND

as a Mutual Fund.

ii) Registration code for the Mutual Fund is MF/005/93/1

By order.

11

The appellant company is managed by a board of Trustees. In

accordance with the said Regulations, the investment management com­

pany of the appellant Morgan Stanley Asset Management India Pvt. Ltd.

is also registered with SEBI. The certificate to this effect is as under :

F

G

H

148 SUPREME COURT REPORTS [1994] SUPP. I S.C.R.

A SECURITIES AND

EXCHANGE BOARD OF INDIA

Little

&

Co.

Central Bank Building

B Bombay 400 023

c

Dear Sir,

II MARP /22996/93

November

5, 1993.

RE: Morgan

Stanley Mutual Fund

This has reference to the application made by Morgan

&

Stanley

Grup, Inc., to sponsor a Mutual Fund.

D In terms of Regulation 20 of the Securities and Exchange Board

of India (Mutual Funds) Regulations

1993, we hereby grant our

approval to

"Morgan Stanley Asset Management India Pvt. Ltd.",

to act as the Asset Management Company for Morgan Stanley

Mutual Fund.

E We also grant registration to "Morgan Stanley Mutual Fund" in ,,

terms of Regulation 9 of the Regulations subject to the execution

, of the Custodian Agreement between the Board of Trustees and

Stock Holding Corporation of .India Ltd. The certificate of

Registration in form B

is enclosed. Please quote the Registration

F number in your future correspondence with us.

G

Your faithfully.,

Sd/­

J B Ram."

Morgan Stanley Asset Management India Pvt. Ltd. is a subsidiary

Morgan Stanley Group incorporated which holds 75% of the equity, the

balance being held

by Indian shares holders such as

HDFC, Stock Holding

Corporation of India etc. Morgan Stanley Asset Management India Pvt.

Ltd. was granted the certificate of incorporation on 12.10.1993 by the

H Registrar of Companies, Bombay and its Memorandum and Article of

MORGAN STANLEY MUTUAL FUND v. K. DAS [MOHAN,J.] 149

Association has also been approved by the SEBI as per the provisions of A

the said Regulations.

Regulation

27 of the said Regulations provides that no mutl!al fund

shall announce the scheme unless such scheme has been approved by the

Trustees of the Mutual Fund and

by SEBI. On 8.11.1993, the Board of

Trustees, by a circular Resolution approved the draft scheme, the same

was forwarded to SEBI on 10.11.1993. The scheme was duly scrutinised

B

and examined by the SEBI. By its letter dated 23.11.1993, addressed to

Eliarn Financial Consultants Pvt. Ltd., one of the join Lead Managers,

SEBI gave its approval. It is stated that the scheme has been examined by

them in terms of the provisions of the Regulations. It suggested certain C

amendments as detailed in enclosures thereto. SEBI also advised the said

Enam Financial Consultants Pvt. Ltd. to submit three copies of the printed

offering circular and the abridged offering circular of the scheme and the

new schemes return in the prescribed

format This requirement of

SEBI

was complied with. It is after this the appellant took the necessary steps D

and began marketing the scheme by issuing advertisements in the press,

holding presentations with brokers etc. All advertisements and publicity

material have been approved by SEBI as under :

"Securities and Exchange

Board

of India.

Enarn Financial Consultants

Pvt. Ltd.

24 BD Rajabahadur Compound,

Ambalal Doshi Marg,

Bombay-

400 001

Dear Sir,

II MARP /24655/93

November

25, 1993.

Re : Advertisement campaign

of Morgan Stanley

Group Inc.

E

F

G

With reference to your letter dated 22nd November,

1993, we

advise that the enclosed revised set of advertisement

of the

proposed advertising campaign of Morgan

St_anley Inc., are in H

150

A

B

c

SUPREME COURT REPORTS (1994] SUPP. 1 S.C.R.

order.

Yours faithfully,

K. Ravikanth''.

'December

20th, 1993.

Mr. Ronan Basu

Fortune Communication Ltd.

Bombay.

Sub : MORGAN STANLEY GROWTH FUND

Dear Sir,

I enclose a copy of letter received from SEBI in regard to the

changes suggested 'in the 'Scheme Campaign'. Please carry out the

D changes as required by SEBI and get the approval of Morgan

Stanley Assest Management before its release.

E

Thanking you,

'

Your faithfully,

for Enam Financial Consultant

Pvt. Ltd.

N.G.N.

~anik'.

It has to be carefully noted that the disclaimer clause required to be

incorporated at the beginning

of offering circular by

SEBI while approving

F the scheme is a standard requirement and nothing peculiar to the present

case. The object of this

is to bring to the notice of the investors that they

should take the firm decision on the basis

of the disclosures made in the

documents.

It is meant for the investors protection in fact by such a course

the

SEBI informs the investors that they have approved the scheme but

G they did not recommend to the investors whether such investment is good

or not and leave it to their discretion. In

view of this, it will be clear that

the allegations of respondents that the

SEBI has not approved the other

documents

is totally baseless.

12. There is also a challenge to the method of allotment. The relevant

H clause pertaining to the method of allotment is as under :

MORGAN STANLEY MUTUAL FUND v. K. DAS [MOHAN, J.] 151

"The offer : The targeted amount to be issued is Rs. 300 crores. A

Units are to be issued at a price of Rs. 10 per unit, payable in fuJJ

upon application. The offer will be open for subscription com­

mencing 6th January,

1994 and will remain open until one day

after notice of the date of closure is given through advertisement

in major national daily newspapers, with the latest date

of closure B

being twelve working days after the opening date. If subscriptions

for at least

18 crores units have not been received by the closure

date, the offering

will be terminated and all subscriptions will be

returned within

78 days from the closure date. In the event that

the issue is over subscribed, allotments will be made on a

"first

come first served" basis. However, MSMF reserves the right to C

accept or reject any subscriptions, including subscriptions in excess

of the targeted amount. See "Terms of the issue." Date of closure:

The issue

will be kept open for a minimum of three working days

and a maximum of twelve working days. The Board

will proceed

to close the issue by giving one day's notice of the date of closure D

through advertisements in the major national daily newspapers

when approximately 75% of the targeted amount is collected.

Only

those subscriptions which are received before the expiry of the

notice period

will be retained. If subscriptions for at least 18 crore

units have not been received by the closure date of the issue, the

offering

will terminate and the board will return the entire amount E

received within 78 days from such closure date. "Basis of Allotment

& Despatch of

Unit Certificate" The arrangements for closure of

the issue and allotment have been designed with the objective of

making allotments on a "first come first served" basis. It is hoped,

however, that all applicants will received their full allotment. Ac-

F

cordingly, MSMF reserves the right to accept or reject any sub­

scription, including accepting subscription in excess of the targeted

amount. Allotment of MSMF

Units and despatch of certificate will

be made within ten weeks after the closure of the date of the issue.

The above clauses indicate the following :

(i) the Petitioners clearly have a desire to retain over subscrip­

tion and the offering circular (and the SEBI Guidelines)

G

empower them to

ilo so. H

A

B

c

D

E

F

152

(ii)

(iii)

''

(iv)

\,

(v)

"

SUPREME COURT REPORTS (1994] SUPP. 1 S.C.R.

that there

is a minimum period for which the issue will be

kept open namely 3 days;

that those who apply for the units before the closure of the

issue would have the same priority and would

be allotted units

to the extent ,applied for;

that there is a provision for a closure notice, which provision

has been discussed with and examined

by SEBI. This par­

ticular method of closure of the scheme and allotment was

chosen to break

away from the system followed by other

mutual funds.

By encouraging prospective investors to apply early the

scheme can

be closed quickly, allotments can be finalised

earlier (thereby blocking the money of the first applicants for

a shorter period of time)

and most important of all the

proceeds can be invested quickly to benefit from the market

opportunities. This reduces the cost of collection that the

investor has to bear. In this manner

by adopting the

"First

come first served basis "the scheme becomes more investor

friendly.

13.' The respondent entertained a misconception -whether honestly

or confused the concept of the "First come first served" scheme. As stated,

it

is an invitation to the subscribers to apply early and the scheme be closed

quickly. The appellants have made it very clear that those who applied

during the opening period of scheme would

be given full allotment. This

was clarified by the appellant at a press conference held at Calcutta 16th

December,

1993. Regular clarifications were issued in this regard by the

appellant. The scheme came to be advertised by the appellant on 13th

December,

1993. The respondents chose to make an application to the

Consumer Forum on the eve of opening of the Scheme.

It was on that

G application, the impugned order came to be passed. In this factual back­

ground,

we will take up the questions set out for determination.

14. Q. 1. Whether a prospective investor could be a consumer within

the meaning

of Consumer Protection Act, 1986?

I

H The definition of consumer is contained under Section 2( d) of the

MORGANSTANLEYMUTUALFUND v.K.DAS(MOHAN,J.] 153

Act which read as under : A

"2( d)(i) buys any goods for a consideration which has been paid-

or promised or partly paid and partly promised, or under any

system of deferred payment and includes any user of such goods

other than the person who buys such goods for consideration paid

B

or promised or partly paid or partly promised, or under any

system of deferred payment when such use is made with the·

approval of such person, but does not include a person who obtains

such goods for resa.le or for any commercial purpose ; or

• . ' t . . ·.

(ii) hires any services for a consideration which has been paid C

1

or promised or partly paid and partly promised, or under any

system of deferred payment and includes any benefidary of such

services other than the person who hires the services for considera­

tion paid or promised, or partly paid and partly promised, or under

any system of deferred payment when such services are availed of

D

with the approval of the first mentioned person;".

The meaning of goods is same as defined under Sale of Goods Act,

1930. It is so stated in Section 2(i) of the said Act.

The consumer as the term implies is one who consumes. As per the E

definition, consumer is the orie who purchases goods for private use or

consumption. The meaning cifthe word 'consumer' is broadly stated in the

above definition so as 'to include anyone who consumes goods or services

at the end of the chain of production. The comprehensive defini\ion aims

at covering every man who pays money as the price or cost of goods and

p

services. The consumer deserves to get what he pays for in real quantity

and true quality. In every society, consumer remains the centre of gravity

of all business and industrial activity. He needs protection from the

manufacture, producer, supplier, wholeseller and retailer.

In the light°of this, w.e will have to examine whether the "shares" for

G

which an application is made for ·allotment would be "goods". Till the

' allotment of shares takes place, "the shares do 'not exist". The.refore, they

can never be called goods. Under the Sale of Goods Act, all actionable

claims and money are excluded from the definition of goods since Section

2(7) of the Sale of Goods Act, 1930 is as under : H

A

B

c

D

E

F

G

154

SUPREME COURT REPORTS [1994) SUPP. 1 S.C.R.

'"goods' means every kind of movable property other than

actionable claims and money; and includes stock and shares, grow­

ing crops, grass, and things attached to or forming part of the land

which are agreed to be served before sale or under the contract

of

sale".

It will be useful to refer to clause (6) of Section 2 of the Sale of

Goods Act, 1930. That reads :

"'further goods' means goods to be manufactured or produced

or acquired

by the seller after the making of the contract of

sale."

As to the scope of this clause, reference. may be made to Maneckji

Pestonji Bhamcha & Ors. v. Wadi Lal Sarabhai & Com., AIR (1926) PC 38

at page 40. It was observed thus :

"The Company is entitled to deal with the share-holder who is

on the register, and only a person who is on the register is in the

full sense of the word owner of the share. But the title to get on

the register consists in the possession of a certificate together with

a transfer signed by. the registered holder. This is what ilharucha

had. He had the certificates and blank transfers, signed

by the

registered holders.

It would be an upset of all

Stock Exchange

.transactions if it were suggested that a broker who sold shares by

general description did not implement his bargain by supplying the

buyer

with the certificate and blank transfers, signed by the

registered holders of the shares described. Bharucha

solcl what he

had got. He could sell no more. He sold what in England would

have been choses in action and he delivered choses

in action. But

in India, by the terms

'of the Contract Act, these choses in action

are goods.

By the definition of

goods as every kind of moveable

property it

is clear that, not only registered shares, but also this

class of choses in action, are goods. Hence equitable considera­

tions not applicable to goods do not apply to shares in India."

Again

in Madho Lal Sindhu of Bombay v. Official Assignee of Bom­

bay &

Ors, AIR (1950) FC 21 at page 26, it was held thus :

"A sale according to the Sale of Goods Act (and in India goods

H include shares of joint stock companies) takes place when the

MORGAN STANLEY MUTUAL FUND v. K. DAS [MOHAN;J.] 155

property passes from the seller to the buyer." A

Therefore, at the stage of application it will not be goods. After

allotment different considerations

may prevail.

A fortiori, an application

for allotment of shares cannot constitute

goods. In other words, before allotment of shares whether the applicant

B

for such shares could be called a consumer? In Commissioner of Income-

tax (Central) Calcutta v. Standard Vacuum

Oil Co., AIR (1966) SC 1393 at

1397 while defining shares, this Court observed :

nA share is not a sum of money; it represents an interest C

measured by a sum of money and made up of diverse rights

contained

in the contact evidenced by the articles of association

of the

company."

15. Therefore, it is after allotment, rights may arise as per the

contract (Article of Association of Company). But certainly not before

D

allotment. At that stage, he is only a prospective investor of future goods.

The issue

was yet to open on 27.4.1993. There is not purchase of goods for

a consideration nor again could he be called the hirer of the services of

the company for a consideration. In order to satisfy the requirement

of

above definition of consumer, it is clear that there must be a transaction

of buying goods for consideration under clause 2(i) of the said Act. The

E

definition contemplates the pre-existence of a completed transaction of a

sale and purchase.

If regard is had to the definition of complaint under the

Act, it

will be clear that no prospective investor could fall under the Act.

What is that he could complain of under the Act? This takes us to F

the definition of complaint under section 2( c) which reads as follows :

"2(c) "complaint" means any allegation in writing made by a

complainant that -

(i)

as a result of any unfair trade practice adopted by any trader, G

the complainant has suffered loss or damage;

(ii) the goods mentioned

in the complaint suffer from one or

more defects;

(iii) the services mentioned m the complaint suffer from

H

A

B

156 SUPREME COURT REPORTS (1994] SUPP. 1 S.C.R.

deficiency in any respect;

(iv) a trade has charged for the goods mentioned in the com­

plaint a price in excess of the price fixed by or under any law for

the time being in force or displayed on the goods or any package

containing such goods, with a view to obtaining any relief provided

by or under this Act.11

16. Certainly, clauses Z(iii) & (iv) of the Act do not arise in this case.

Therefore, what requries to be examined is, whether any unfair trade

practice has been adopted. The expression trade practice as per rules shall

C

have the same meaning as defined under Section 369(a) of Monoplies and

Restrictive Trade Practices Act of, 1969. That again cannot apply because

the company is not trading in shares. The share means a share in the

capital. The object of issuing the same is for building up capital. To r�se

capital, means making arrangements for carrying on the trade. It is not a

practice relating to the carrying of any trade. Creation of share capital without

D allotment of shares does not bring shares into existence. Therefore, our

answer is that a prospective investor like the respondent or the association

is not a consumer under the Act.

17. Q. No. 2 : Whether the appellant company trades in shares?

E For the above discussion, it is clear that the question of the appellant

company trading in shares does not arise.

18. Q. No. 3 : Does the Consumer Protection Forum has jurisdiction

in matters of this kind?

F

In view of our answers to questions No. 1 & 2, it follows that the

Consumer Protection Forum has no jurisdiction whatsoever.

19. Q. No. 4: What are the guiding principles in relation to the grant

of an ad-interim injunction in such areas of the functioning of the capital­

G market and public issues of the corporate sectors and whether certain

'venue restriction clauses' would require to be evolved judicially as has

been done in cases such as Sanchaita's case (supra) etc.?

As a principle, ex-parte injunction could be granted only under

exceptional circumstances. The factors which should weigh with the Court

H in the grant of ex·partc injunction are ;

•

l

MORGAN STANLEY MlITUALFUND v. K. DAS [MOHAN,J.J 157

"(a) where irreparable or serious mischief will ensure to the A

plaintiff;

(b) whether the refusal of ex-parte injunction would involve

greater injustice than the grant of it would involve;

B

(c) the court will also consider the time at which the plaintiff

first

had notice of the act complained so that the making of im?roper order against a party in his absence is prevented;

( d) the court

will consider whether the plaintiff had acquiesced

for some time and in such circumstances it will not grant ex parte

C

irijunction;

( e) the court would expect a party applying for ex parte injunction

to show utmost good faith in making the application.

(t) even if granted, the ex parte injunction would be for a limited D

period of time.

(g) General principles like

prima facie case, balance of convenience

and irreparable loss would also

be considered by the court.

In

United Commercial Bank v. Bank of India, [1981] 2

SCC 766, this

Court observed :

"No injunction could be granted under Order 39, Rules l & 2 of

the Code unless the plaintiffs establish that they

had a prima facie case, meaning thereby that there was a bona fide contention be­

tween the parties or a serious question to be tried. The question

that must necessarily arise

is whether in the facts and circumstan-

ces of the case there

is a prima facie case and, if so,

as between

whom? In view of the legal principles applicable, it js difficult for

E

F

us to say on the material on record that the plaintiffs have a prima G

facie case. It cannot be disputed that if the suit were to be brought

by the Bank of India, the High Court would not have gianted any

injunction as it was bound by the terms of the contract. What could

not be done directly cannot be achieved indirectly in a suit brought

by the plaintiffs.

H

A

B

c

158 SUPREME COURT REPORTS (1994] SUPP. 1 S.C.R.

Even if there was a serious question to be tried, the High Court

had to consider the balance of convenience. We have no doubt

that there

is no reason to prevent the appellant from recalling the

amount of Rs.

85,84,456. The fact remains that the payment of Rs.

36,52,960 against the first lot of

20 documents made by the appel­

lant to the Bank of India

was a payment under reserve while that

of

Rs. 49,31,496 was also made under reserve as well as against

the letter of guarantee or indemnity executed by it. A payment

'under reserve'

is understood in banking transactions to mean that

the recipient of money may not deem it as his

own but must be

. prepared to return it on demand. The balance of convenience

clearly lies in allowing the normal banking transactions to

go

forward. Furthermore, the plaintiffs have failed to establish that

they would be put to an irreparable loss unless an interim injunc­

tion

was granted.

D

20. This Court had occasion to emphasise the need to give reasons

E

F

G

H

before passing ex-parte orders of injunction. In Shiv Kumar Chadha v.

Municipal Corporation of Delhi, [1993] 3 SCC 161 at 176, it is stated as

under:

"The Court shall record the reasons why an ex-pane order

injunction

was being passed in the facts and circumstances of a

·

particular case. In this background, the requirement for recording

the reasons for grant of

ex parte injunction cannot be held to be

a mere formality. This requirement

is consistent_with the principle,

that a party to a suit, who

is being restrained from exercising a

right which such party claims to exercise either under a statute or

under the common

law, must be informed why instead of following

the requirement of Rule

3, the procedure prescribed under the

proviso has been followed. The party which invokes the jurisdiction

of the court for grant of an order of restrain against a party, without

affording an opportunity to him of being

heard, must satisfy the

court about the gravity of the situation and court has to consider

briefly these factors in the ex-parte order. We are quite conscious

of the fact that there are other statutes which contain similar

provisions requiring the court of the authority concerned to record

reasons before exercising power vested in them. In respect of some

of such provisions it has been held that they are required to be

-

MORGANSTANLEYMUTIJALFUND v.K.DAS[MOHAN,J.] 159

complied with but non-compliance therewith will not vitiate the A

order so pass~d. But same caonot be said in respect of the proviso

to Rule 3 of order

39. The

Parliament has prescribed a particular

procedure for passing of an order of injunction without notice to

the other side, under exception circumstaoces. Such ex-parte or-

ders have far-reaching effect, as such a condition has

been imposed

that court must record reasons before passing such order.

If it is

held that the compliaoce with the proviso aforesaid

is optional aod

not obligatory, then the introduction of the proviso by the

Parlia­

ment shall be a futile exercise aod that part of Rule 3 will be a

surplusage for all practical purposes. Proviso to Rule 3 of order

B

39 of the Codr., attracts the principle, that if a statue requires a C

thing to be done in a particular manner, it should be done in that

maoner or not all. This principle was approved

and accepted in

well-known cases of

Taylor v. Taylor, (1875) i CH D 426 and

Nazir

Ahmed v. Empror, AIR (1936) PC 253 (2). This Court has also

expressed the same view in respect of procedural requirement of

D

the Bombay Tenaocy aod Agricultural Laods Act in the case of

Ramchandra Keshav

Adke v. Govind Joli Chavare, [1975] 1 SCC

915.

As such whenever a court considers it necessary in the facts

aod circumstances of a particular case to pass ao order of injunc-E

tion without notice

to other side, it must

re.cord the reasons for

doing so

aod should take into consideration, while passing an order

of injnnction, all relevaot factors, including as

to how the object

of graoting injunction itself shall

be defeated .if an ex-parte order

is not

passed." F

21. In this case, the public advertisement was given as seen above, on

13.12.1993; the petition was filed

on 4.1.1994 aod the impugned order of

Consumer Forum came

to be passed on the following day. As to why the

respondent chose

to come at the eleventh hour aod where was the need to

pass ao urgent order of injunction, are matters which

are not discernible. G

Besides tested in the light of the case law set out above, the impugned

order which is bereft of reason and laconic cannot stand a moment's

scrutiny.

22. Today the corporate sector

is expaoding.

The disgruntled litigants H

160 SUPREME COURT REPORTS (1994] SUPP. l S.C.R.

A indulge in adventurism. ThOugh, in this case we have come to the coll·

clusion that the District Consumer Forum will have no power to grant

injunction yet in general cases it becomes necessary to evolve certain venue

restrictions.

B

c

D

E

F

As to the effect of incorporation it is stated in Halsbury's Law of

England (4th Edition, Volume 7,

Page 55, para 83) as under :

"When incorporated, the company is a legal entity or persona

distinct from its members, and its property is not the property of

the members. The nationality and domicile of a company is deter·

mined by its place of registration. A company incorporated in the

United Kingdom will normally have both British nationality and

English or Scottish domicile, depending upon its place of registra·

, lion, and it will be unable tci change that domicile .....

The residence of a company is of great importance in revenue

law, and the place of incorporation is not conclusive on this

question. In general, residence depends upon the place where the

central control and management of the company is located. It

follows that if such central control is divided, the company may

have more than one residence. The locality of the shares of a

company is that of the register of shares. The head office of ·a

company is not, however, necessarily the registered office of the

company, but is the place where the substantial business of the

company is carried on and its negotiations conducted. Like an

individual or a firm, a company can, for the purposes of the Rules

of the Supreme Court, carry on business in more places than one."

As far as India is concerned, the residence of the company is where

the registered office is located. Normally, cases should be filed only where

the registered office of the company is situate. Courts outside the place

where the registered office is located, if approached, must have regard to

G

the following :

Invariably, suits are filed seeking to injunct either the allotment of

shares

or the meetings of the Board of Directors or again the meeting of

general body. The court is approached at the last minute. Could injunction

be granted

even without notice to the respondent which will cause immense

H hardship and administrative inconvenience. It may be sometimes difficult

. MORGAN STANLEY MUTUAL FUND v. K. DAS [MOHAN, J.] 161

even to undo the damage by such an interim order. Therefore, the court A

must ensure that the plaintiff comes to Court well in time so that notice

may be served on the defendant and he may have his say before any interim

order

is passed. The reasons set out in the preceding paragraphs of our

judgment in relation to the fact

which should weigh with the court in the

grant of ex-parte injunction and

the rulings of this Court must be borne in

mind.

B

23. Q. No. 5: What is the scope of Section 14 of the Act?

The said Section reads

as under : "(1) If, after the proceeding conducted under Section 13, the

District Forum is satisfied that the goods complained against suffer

from any of the defects specified in the complaint or that any of

the allegations contained in the complaint about the services are

proved, it shall issue an order to the opposite party directing him

to take one or more of the following things, namely :

(a) to remove the defect pointed out

by the appropriate

laboratory from the goods in question ;

(b) to replace the goods with new goods of similar description

c

D.

which shall be free from any defect; E

(c) to return to the complainant the price, or, as the case may

be, the charges paid by the complainant;

( d) to pay such amount

as may be awarded by it as

compensa­

tion to the consumer for any loss or injury suffered by the consumer

due to the negligence of the opposite party.

(2) Every order made by the District Forum under sub-section

(1) shall be signed

by all the members constituting if and, if there

F

is any difference of opinion, the order of the majority of the G

members constituting it shall be the order of the District Forum.

(3) Subject to the foregoing provisions, the procedure relating

to the conduct of the meetings of the District Forum, its sittings

and other matters shall be such

as may be prescribed by the

State

Government.

11

H

A

B

c

162 SUPREME COURT REPORTS [1994] SUPP. l S.C.R.

24. A careful reading of the above discloses that there is no power

under the act to grant any interim relief of even an ad-interim relief. Only

a final relief could be granted. If the jurisdiction of the Forum to grant

relief

is confined to the four clauses mentioned under Section 14, it passes

our comprehension

as to how an interim injunction could ever be granted

disregarding even the balance of convenience.

25. We have dealt with in the preceding paragraphs as to the ap­

proval of SEBI and the compliance with the Regulation

27 of the Regula­

tions,

1993. We have also explained what exactly is a concept of 'first come

first served' basis.

On these two aspects, the respondent is suffering under

a labyrinth of confusion. Therefore,

we hold the grounds urged by the

respondent seeking to support the impugned order, are untenable.

The appellant has suffered immensely because it has not even been

served with copy of order of injunction. The application of the respondent

is clearly actuated by mala fides. The Forum should have examined whether

D ex-parte injunction without ·notice to the opposite side could ever be

granted at

all. The grounds urged in the injunction application were

insufficient for the grant of such a relief.

E

F

26. There is an increasing tendency on the part of litigants to indulge

in speculative and vexatious litigation and adventurism which the fora seem

readily to oblige.

We think such a tendancy should be curbed. Having

regard to the frivolous nature of the complaint,

we think it is a fit case for

·award of costs, more so, when the appellant has suffered heavily. There­

fore,

we award costs of Rs.

25,000 in favour of the appellant. It shall be

recovered from the first respondent. C.A 4584/94 arising out of SLP (C)

No.

272/94 is allowed accordingly.

CIVIL

APPEAL NO. 4587 OF 1994 (Arisi11g out of S.L.P. No. 321194) :-

27. Jn view of what we have observed above, the writ petition has

G rightly come to be rejected though in our view, it would have been better

had the High Court given reasons instead

of dismissing it summarily.

Hence,

CA. No. 4587/94 arising out of

S.L.P. (C) No. 321/94 is dismissed.

No costs.

R.R. CA

No. 4587 of 97 allowed.

CA

No. 4548 of 97 dismissed.

<:

I.