Public issue of equity shares is not trade or trade practice under the MRTP Act, defeating unfair trade practice proceedings.

Raising capital through a public issue of equity shares does not amount to trade or trade practice under the MRTP Act, 1969. A brochure circulated in preparation for the issue, and the receipt of subscriptions to shares, were not sufficient to characterise the activity as carrying on trade or engaging in a trade practice. On that basis, proceedings alleging unfair trade practice could not be sustained under the Act, and the notice of enquiry was discharged.

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Issues: Whether the floating of a public issue and receipt of subscriptions to equity shares could be treated as a trade or trade practice so as to sustain proceedings for alleged unfair trade practices under the MRTP Act, 1969.

Analysis: The complaint and the notice of enquiry were founded on a brochure circulated in preparation for a public issue of shares. The decisive question was whether the activity of raising capital by issuing equity shares fell within the statutory concepts of trade and trade practice under sections 2(s) and 2(u) of the MRTP Act, 1969. Relying on the view that raising capital by way of equity does not amount to carrying on trade, and on the principle that inviting investors to participate in share capital does not by itself partake the character of trade or trade practice, the proceedings were held to be outside the Act.

Conclusion: The notice of enquiry could not be entertained under the MRTP Act, 1969 and stood discharged.

Ratio Decidendi: Raising capital by means of a public issue of shares does not constitute trade or trade practice within the meaning of the MRTP Act, 1969 and therefore cannot sustain proceedings for unfair trade practice under that Act.

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