GEETA KAPOOR Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners through these petitions styled as public interest petitions are seeking to challenge the pricing of the preferential shares for purchase by the foreign companies in pursuance to the relaxed norms permitting such preferential shares to be so offered. The question essentially raised before the Court is that the determination of the share price was not in accordance with the policy of the Reserve Bank of India (for short 'RBI') or Securities and Exchange Board of India ( for short 'SEBI') or the guidelines under the provisions contained in Capital Issues Control Act, 1947 (for short 'CIC Act) (which has been repealed w.e.f. 29th May, 1992). In WP (C) No.2094/1996 the solitary petitioner is a shareholder of a company known as Castrol India Limited, respondent No.3 herein. This company by letter dated 27th July, 1993, a copy of which produced on record as Annexure 'C' at page 19, approached the Ministry of Industries, Govt. of India and made an application for foreign investment. In view of the new Industrial Policy for bringing foreign exchange, a decision was taken by the company that Castrol Limited, U.K., be offered additional equity of 35,37,862 equity shares of Rs. 10/- each with a view to enable them to increase their stake in the company from 40% to 51%. The terms and conditions of the offer were also indicated in the letter which are as under :

(2.) It is in view of this offer, the application was made to the Government of India. Ultimately after the correspondence with authorities, a decision was taken to permit the Castrol India Limited, (respondent No.3 herein) to issue fully paid additional equity shares of Rs.10/- each at a premium of Rs.100/- per share to foreign collaborator M/ s Castrol Limited, U.K. A copy of letter issued to respondent No.3 dated 30th September, 1993 is placed on record at page 40. It appears that the permission was granted under Section 19(l)(d) of the Foreign Exchange Regulation Act, 1973 (for short FERA). It is also required to be noted that as per the provisions contained in the Companies Act, 1956 (for short 'the said Act'), the procedure was also required to be followed as contemplated in Section 81(1)(A) of the said Act and a special resolution to that effect was passed by the company in a general meeting.

(3.) So far as petitioner in WP (C) 4662/1996 is concerned, the petitioner approached this Court raising various contentions but confined himself with regard to the fixation of the share price. Therefore, we are not required to refer to various prayers.