TaxTMI 
TaxTMI 
1994 (5) TMI 168
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....dia Private Limited is constituted as the asset management company of the appellant. Morgan Stanley Asset Management India Private Limited is a subsidiary of the Morgan Stanley Group Inc. which holds 75 per cent, of the 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 a certificate of incorporation on October 18, 1993, by the Registrar of Companies, Bombay. Its memorandum and articles of association have also been approved by the SEBI as per the provisions of the said Regulations. The draft scheme of the appellant was approved by the Board of Trustees by circular resolution dated November 8,1993. This was forwarded to the SEBI for its approval on November 10, 1993. The scheme was duly scrutinised and examined by the SEBI and the 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 by issue of advertisements. All advertisements and publicity material were approved by ....
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....th Fund from anybody until further orders from this learned forum. OPs are at liberty to apply for vacation/variation of this order. Next date fixed on January 19, 1994". Aggrieved by this order, civil appeal arising out of SLP(C) No. 272 of 1994 has come to be preferred. Against the dismissal of Writ Petition No. 14 of 1994 by the High Court of Delhi, civil appeal arising out of SLP No. 321 of 1994 has come to be preferred. Mr. Ashok Desai, learned counsel for the appellant (Morgan Stanley Mutual Fund), urges the following: (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 association of prospective applicants for future properties. The issue of shares was to open on April 27, 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 consu....
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....to open after the issue had been advertised. The public advertisement was issued on December 13, 1993, the petition was filed on January 4, 1994, and 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 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 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. Mr. K.G. Vishwanathan, learned counsel for the respondent, urges that there are well-known principles for the grant of ex parte injunction. Should the court be satisfied that there is a prima facie case, on balance of convenience, it can always grant an injunction. Where the issue of public shares is nothing but an attempt to gain an u....
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....on 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 and with a changed sponsor in the advertisement is, it is contended, illegal in law, apart from its 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 none other than the Morgan Stanley Group, New York. Therefore, the 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 the securities market. It is also urged that the writ petition came to be filed and dismissed without consideration of these aspects. So, it requires interference of this court. 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 the Consumer Protection Act, 1986? (ii)Whe....
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....93 (regulation 9) Certificate of registration (i) In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), read with the Securities and Exchange Board of India (Mutual Funds) 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". The appellant-company is managed by a board of trustees. In accordance with the said Regulations, the investment management company of the appellant, Morgan Stanley Asset Management India Pvt. Ltd., is also registered with the SEBI. The certificate to this effect is as under: "Securities and Exchange Board of India Little and Co., Central Bank Building, Bombay 400 023. II MARP/22996/93, November 5, 1993. Dear Sir, Re: Morgan Stanley Mutual Fund This has reference to the application made by Morgan and Stanley Group, Inc., to sponsor a mutual fund. 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 ....
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....Doshi Marg, Bombay-400 001. II MARP/24655/93, November 25, 1993. Dear Sir, Ref: Advertisement campaign of Morgan Stanley Group Inc. With reference to your letter dated November 22, 1993, we advise that the enclosed revised set of advertisements of the proposed advertising campaign of Morgan Stanley Inc., are in order. Yours faithfully, K. Ravikanth". "Mr. Ronan Basu, Fortune Communication Ltd.,December 20, 1993. Bombay. Sub: Morgan Stanley Growth Fund Dear Sir, I enclose a copy of letter received from the SEBI, in regard to the changes suggested in the 'Scheme Campaign'. Please carry out the changes as required by the SEBI and get the approval of Morgan Stanley Asset Management before its release. Thanking you, Yours faithfully, for Enam Financial Consultants Pvt. Ltd. N.G.N. Puranik". It has to be carefully noted that the disclaimer clause required to be incorporated at the beginning of the offering circular by the SEBI while approving 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 a firm decision on the basis ....
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....e their full allotment. Accordingly, MSMF reserves the right to accept or reject any subscription, including accepting subscription in excess of the targeted amount. Allotment of MSGF 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 subscription and the offering circular (and the SEBI guidelines) empower them to do so; (ii) there is a minimum period for which the issue will be kept open, namely, three days; (iii)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; (iv)that there is a provision for a closure notice, which provision has been discussed with and examined by the SEBI. This particular method of closure of the scheme and allotment was chosen to break away from the system followed by other mutual funds. (v)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....
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....i) of the said Act. The consumer as the term implies is one who consumes. As per the definition, a consumer is one who purchases goods for private use or consumption. The meaning of the 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 definition aims at covering every man who pays money as the price or cost of goods and services. The consumer deserves to get what he pays for in real quantity and true quality. In every society, the consumer remains the centre of gravity of all business and industrial activity. He needs protection from the manufacturer, producer, supplier, wholesaler and retailer. In the light of this, we will have to examine whether the "shares" for which an application is made for allotment would be "goods". Till the allotment of shares takes place, "the shares do not exist". Therefore, 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: "'goods' means every kind of movable property other than....
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....andard Vacuum Oil Co., AIR 1966 SC 1393, at page 1397; [1966] 59 ITR 685, 691 while defining shares, this court observed: "A share is not a sum of money it represents an interest measured by a sum of money and made up of diverse rights contained in the contract evidenced by the articles of association of the company". Therefore, it is after allotment, rights may arise as per the contract (articles of association of company). But certainly not before allotment. At that stage, he is only a prospective investor of future goods. The issue was yet to open on April 27, 1993. There is no 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 the 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 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 it that he could complain of under the Consume....
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....83] 53 Comp. Cas. 114 (SC), etc.? As a principle, ex parte injunction could be granted only under exceptional circumstances. The factors which should weigh with the court in the grant of ex parte injunction are: "(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 had notice of the act complained of so that the making of improper 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 injunction; (e)the court would expect a party applying for ex parte injunction to show utmost good faith in making the application; (f)even if granted, the ex parte injunction would be for a limited period of time; and (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; [1982] 52 Comp. Cas. 186, 210 this court obser....
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....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 restraint against a party, without affording an opportunity to him of being heard, must satisfy the court about the gravity of the situation and the 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 or 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 complied with but non-compliance therewith will not vitiate the order so passed. But same cannot be said in respect of the proviso to rule 3 of Order 39. Parliament has prescribed a particular procedure for the passing of an order of injunction without notice to the other side, under exceptional circumstances. Such ex parte orders have a far-reaching effect, as such a condition has been impose....
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....rs. The nationality and domicile of a company is determined 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 registration, and it will be unable to 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....