MORGAN STANTEY MUTUAL FUND Vs. PIYUSH AGGARWAL

JUDGEMENT

(1.) Morgan Stanley Mutual Fund (hereinafter called MSMF) published advertisements on 13th December,1993 for public issue commencing on 6.1.94. The responden No.1, a practicising Chartered Accountant and respondent No.2, a practising Advocate felt aggrieved by the said advertisement regarding public issue hence filed a suit for permanent injunction on 23.12.93. With the said suit an application under Order 39 Rules 1 & 2 read with Section 151 Civil Procedure Code was filed seeking ad-interim injunction thereby restraining the petitioner from floating its public issue of 30 crores units of RS.10.00 per unit on 6.1.94. The main grievance of the respondents 'as per the plaint can be summarised thus, namely, that the public issue has been floated without the permission of the Securities and Exchange Board of India (hereinafter called the SEBI) and further that the units being offered for public subscription have not been approved or disapproved by the SEBI and that SEBI has neither certified on the accuracy nor on adequacy of the offering circulars. According to respondents on account of these facts presumption can be drawn that there was no approval by the SEBI and that the public issue is without any authority of the Board. The second grievance pointed out in the plaint is with regard to the allotment of units. It would be made on "first come first served basis". This according to the respondents is against the SEBI (Mutual Funds) Regulation, 1993. The "first come first served basis" shows that the MSMF will not refuse to accept the application money on achieving the target amount, but will allot the units on "first come first served basis" without disclosing or making arrangements for ascertaining the fact who came first. Moreover, it has not been mentioned in the public issue whether it was authorised by the board of directors/ trustees by a Resolution nor any declaration has been mentioned in the circular regarding the compliance of the Indian Trust Act and the guidelines issued by the Govt. of India. Thus the sole object of the petitioner/ MSMF, in advertising the public issue is to collect money from the public at large including the respondents by misleading and misinformation. It is in this background that the suit was filed alongwith the Interlocutory Application.

(2.) The learned trial court on the basis of these allegations issued notice to the present petitioner for 14.1.94 and in the meanwhile passed the ad-interim order thereby restraining the petitioner from floating the public issue of 30 crores units of RS.10.00 per unit on the stipulated date i.e. 6.1.94.

(3.) Aggrieved by this order of interim injunction the petitioner invoked the jurisdiction of this Court under Article 227 of the Constitution of India. The petitioner by the present petition has assailed the impugned order on the ground that the learned subordinate Court has not exercised the jurisdiction properly. He having <PG>262</PG> restrained the petitioner from floating the public issue on 6.1.94 ought not have adjourned the case to 14.1.94. This tantamounts to decreeing the suit. Even otherwise no reason has been assigned for granting the ex-parte ad-interim order. The learned trial court has not exercised the jurisdiction properly. Since the impugned order was passed on the last working day in the lower court hence the petitioner had no opportunity to invoke the provision of Order 39 Rule 4, CPC, or file the appeal as the courts were closed. Even the Additional District Judge on vacation could not have heard the appeal. Hence in the compelling facts and circumstances of this case present recourse has been adopted under Article 227 of the Constitution of India.