Supreme Court refuses to interfere with LIC IPO, declines interim relief

“On the aspect of interim relief, the court must be guided by well settled principle of prima facie case, balance of convenience and irreparable injury. The court has been apprised of the fact that 73 lakh applicants have subscribed to the IPO and it has been oversubscribed 6 times even in the category which has been reserved for policy holders. It is necessary to note that the dilution of LIC has been 3.5%. 22.13 crore equity shares of face value are being offered at premium of INR 939 and receipts in the Consolidated Fund of India is of Rs 20,500 crore; IPO opened for anchor investors on May 2, 2022, for general public on May 4 and closed on May 9. Having regard to the above facts, we are of the considered view that no case of grant of interim relief has been made out,” a bench presided by Justice D Y Chandrachud said, declining to grant any interim relief on petitions and appeals challenging the IPO.

The bench also comprising Justices Surya Kant and P S Narasimha, however, issued notice in the matter and directed that it be tagged with pending proceedings before a larger bench on the question of constitutional validity of bills being introduced as money bills.

The court was hearing petitions challenging the amendments to the LIC Act as well as some appeals against the Madras and Bombay High Court decisions refusing to interfere with the IPO.

Senior advocate Indira Jaising, who appeared for the petitioners, submitted that by way of amendment to Section 28 of the LIC Act, the character of the corporation is being sought to be changed from mutual benefit society to a joint stock company and that this amounted to expropriation of surplus from participating policy holders to shareholders to whom shares would be allotted.

“My money is being diverted to the shareholder. There was a statute which said I am entitled to 95 per cent. Such percentage of remaining surplus was to be allocated to members. Now, in 75 years, there is the first time definition of members as shareholders. Outsiders become owners,” she contended adding that it raised the question of violation of right to property under Article 300A of the Constitution.

As an interim measure, the senior counsel prayed that the money invested by subscribers be kept in the ‘Application Supported by Blocked Account (ASBA)’ or to say that their rights will be dependent on the outcome of the case so as to put them on notice.

Appearing for the Centre, Additional Solicitor General (ASG) N Venkataraman opposed this and said the plea was just an attempt “to scare investors and to play a spoilsport”. He said that “73 lakh bank accounts are blocked” and wondered “how can such important policy decisions be interfered with at the eleventh hour”.

The ASG pointed to the date of filing of the petitions to contend that there was delay in filing them. He added that only 2 shareholders out of 50,000 are before the court and asked, “Where is the balance of convenience or irreparable injury, who will compensate this?”

The law officer added that “any interim order will send a completely wrong signal to the markets and then any IPO can be interfered with”.

The court while refusing to grant any interim relief, however, said that the contentions on Section 28 of the LIC Act warrant further consideration.