Thread by @barandbench

#SupremeCourt to hear a batch of appeals and a fresh plea against verdicts of the Madras and Bombay HCs which dismissed challenges to the decision of the Centre to trade 5 per cent of its shareholding in Life Insurance Corporation (LIC) through an IPO #LIC #IPOAlert

Read about the plea here: #LIC #IPOAlert

barandbench.com/news/litigatio…

Sr Adv Indira Jaising: please see the finance act of 2021. it is volume 2 milord @IJaising

Jaising: it makes amendments to the various acts including the LIC Act and I am concerned with amendments to LIC Act and Section 28 of the LIC Act. there has been extrapolation of surplus from the hands of shareholders to the policy holders. #LIC

Jaising: Earlier to this surplus was distributed among policy holders. There is participating and non participating policy holder. Prior to this amendment, law was 95 percent of entire surplus of LIC went to participating policy holders and 5 percent was with centre #LIC

Justice DY Chandrachud: when did the IPO open?

ASG Venkataraman: It opened on May 9, 2022

Jaising: who are you appearing for ?

ASG: The Union

Judges discuss #LIC

ASG: Please see two dates. Madras HC has decided the matter and Bombay HC rejected the interim application

DYC J: Issue regarding money bill has been referred to the Constitution bench and it has to go to 7 now. We will issue notice and tag it with that matter.

SC: We cannot grant any interim relief now. In matters of IPO court will be reluctant in grant interim relief. it is about investments.

Jaising: IPO opened on May 4. Allotment is due today

Jaising: If i have applied for share the money will be deposited in my own account, it is known as application supported by blocked account. the moment i submit money for application account is blocked and LIC has a lien on it #LIC

Jaising: my plea argues that there is a violation of Article 300A.

SC: Now shareholders will also come

Jaising: it is diverted to shareholders and not even to non participating policy holders. Prior to this amendment this money belonged to us

Jaising: the question that whether it is money bill or not is there but it also has to be seen if it violates 300A.

SC: You are entering merits of the case #LIC

Jaising: the word members here refer to shareholders. So my money is here being diverted to the shareholder

SC: But there is no guarantee that you will get 6 percent

Jaising: there was a statute which said I am entitled to 95 percent.

SC: That is why we are issuing notice

I am not on absolute quantum but on the percentage of it. Please let me complete my submissions. 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 !: Jaising

Jaising: In their own red herring prospectus valued the IPO at 0.95 lacs and after amendment it was valued at 520 lakhs. #LIC

Jaising: this represents the projected future screens of income. when there was no diversion from my account it was 95 lakhs and now it is 520 lakhs

SC: Its lakhs or crores? crores !

Jaising: I am trying to explain the magnitude of the loss here. Please see the figure in black and white

SC: we take your word for it

#LIC

SC: Para 105 is a parliament discussion?

Jaising: it did not got to Rajya Sabha and was passed as a money bill

SC: no we are asking about the paragraph

#LIC

Jaising: Between March and sept there was a jump of 540 crores, where did the valuation change. where did this jump come from? it came from section 28 which was about bifurcation of fund which is now being diverted to shareholders. This money was meant for me (policyholders)

Jaising: My question is what happens to the due process of law. Have I been robbed of this amount and what happens to Article 21. I understand this is a Q of final hearing but now rights of third parties will come into play as allotment of share is today

Jaising: Right of shareholders will also be involved now. #LIC

Jaising: Speculative and windfall profits will be made now. There should be some sort of interim relief without affecting the rights of those who have applied for IPO. The money invested by them can be kept in blocked account and LIC will not suffer as they have lien #LIC

Jaising: either allotment does not happen or listing will not happen. I am confident we will succeed then there will be a question of returning the money. The legal personality of the corporation is different than the legal personality of Union of India. Question is who owns #LIC

Jaising: This corp has a face of mutual benefit society and now it is being changed. But they have to go through a process of demutualisation. No such process was undertaken towards the policy holders. Let money remain in blocked account. hear us on interim relief #LIC

Jaising: In case you are not inclined SC should make it clear that those who are purchasing it today their rights are dependent on the outcome of the case. this way atleast they will be put on notice. #LIC

Sr Adv Shyam Divan: we have referred to Roger Mathew as well. This deserves to go to the Constitution Bench. #LIC

ASG: Madras HC is final order, Bombay HC is interim order and here there is a writ as well. I appeared in both the High Courts. It was argued full day in Bombay HC. This is one of the biggest #IPO in the history of India and today there are 73 lakh applicants. #LIC

ASG: Third party rights have been created. Diversion is of 3.25 percent share and consolidated fund of India will receive 22,500 crores. there was over subscription in all the categories. #LIC

ASG: Please see the article 32 plea was filed on May 9 when the issue was closed. Now on Madras HC order was passed on March 21 and SLP filed after 50 days. Bombay HC April 13 open court order was dictated. From March 28, 2021, this act came into being, they waited for 15 months

ASG: This petition is just to scare investors and to play a spoilsport ! 73 lakh bank accounts are blocked. How can such important policy decisions be interfered with at the eleventh hour ! #LIC

ASG: Here only 2 shareholders out of 50,000 is before you. what is the criteria of interim order, where is the balance convenience or irreparable injury, who will compensate this? #LIC

ASG: There was not a sentence in policy which shows a contractual right on the 95 percent claim. Now see we are in market like others. we amended and said share holders will have a right. there is no guarantee of 95 percent for forever #LIC

ASG: Finance act draws a distinction between participating and non participating policy holders. Any interim order will send complete wrong signal to the markets and then any IPO can be interfered with. This is suddenly during allotment time #LIC

Jaising: I have a statutory right which is higher than a constitutional right!
#LIC

Jaising: March 4 is the first date when they exercised powers under finance act 2021 so there is no delay. we certainly represent the policyholders of #LIC so there is no question of Locus. Policyholders are the owners of LIC and today the company is changing hands!

Jaising: issue here is what is the legal character of LIC. If they convert to joint stock company they have to compensate through mutual benefit society and demutualisation. when you change your legal status what is your obligation to your former owners? #lic #IPO

Jaising: this kind of frivolity is unbecoming of Union of India

#LIC #IPO #IPOUpdate

SC ORDER: This batch of cases consists a plea under article 32 and 2 slps arising from Bombay and Madras HC orders. the article 32 plea challenges the constitutional validity of provisions of sections 130, 131, 1441, and 144 of finance act 2021 & LIC Act

#LIC #IPO #IPOUpdate

SC: Amendment to LIC Act was made through the finance act. LICs IPO red herring was made to SEBI for IPO on February 2022 and steps were taken on april 2022 and Sebi made the red herring available on its site.

#LIC #IPO #IPOUpdate

SC: On April 27 a price band ad was published. Govt announced that LIC IPO will be open on may 2 for anchor investors and for others from May 4 to may 9, 2022. IPO has been closed for billing on May 9.
#LIC #IPO #IPOUpdate

SC: The share price has to be finalised on May 12 which will be followed by allotment to the bidders. There are applications supported by blocked accounts and will be released on may 13 to unsuccessful investors #LIC #IPO #IPOUpdate

successful investors will get share credited on May 16. two primary submissions have been urged on behalf of Ms Jaising for the article 32 plea that process which led to enactment of LIC Act was on the basis that it was a money bill: SC #LIC #IPO #IPOUpdate

It has been question of money bill is referred to a larger bench and secod question is on merits of challenge that as a result of amendment to section 28 of LIC act the character of LIC which is a mutual benefit society is to be converted into joint stock company: SC

SC: This has been argued that extrapolation of surplus will be there. earlier participating shareholders got 95 percent of surplus and centre got 5 percent and now it stands amended thus violated 300A. #LIC #IPO #IPOUpdate

SC: Though IPO closed on May 9 it has been urged that interim order will be needed. She submits that either monies submitted in ASBA accounts should be retained during pendency of this case or clairfy that investor rights will be dependent on outcome of this case #LIC #IPO

SC: Opposing the submission, ASG Venkataraman says while court may hear issues for further consideration, he has opposed grant of any interim relief #LIC #IPO #IPOUpdate

SC: in our view the issues raised would merit further consideration particularly regarding Q of money bill which is pending before a constitution bench reference to Roger Mathew.

#LIC #IPO #IPOUpdate

SC: Centre says Section 28 of LIC Act did not confer any contractual right on policy holders assuring 95 percent surplus and that it was for all material time dependent upon notification from centre and there was no statutory guarantee regarding distribution of quantum

SC: On the aspect on interim relief the court must be guided by well settled principle of prima facie case, balance of convenience and irreparable injury. on first aspect we issue notice on the issue of passing of money bill.

#LIC #IPO #IPOUpdate

SC: On section 28 submission by petitioner warrants further consideration. the court has been informed that 73 lakh applicants from India and globally have subscribed to the IPO and it has been over subscribed 6 times even by policy holders #LIC #IPO #IPOUpdate

SC: It is imp to note percentage dilution of LIC has been 3.25 percent, 22.13 crore equity shares of value of 10 each is offered at Rs 939 and consolidated fund will receive 22.5 k crores. IPO opened for anchor investors on MAY 2 and others on may 4 and closed on may 9

SC: we are of the view that no case of interim relief has been made out. No interim relief granted. Notice on the writ petition and the SLPs filed. Counsels to formulate brief note on submissions. Reply in 4 weeks and counter after that in 4 weeks

#LIC #IPO #IPOUpdate

SC: The pending proceedings will be tagged with the proceedings before the Constitution Bench on the aspect of money bill. #LIC #IPO #IPOUpdate

[BREAKING] Supreme Court refuses interim relief in challenge to LIC IPO; issues notice

report by @DebayonRoy

#LIC #LICIPO #SupremeCourtofIndia

barandbench.com/news/supreme-c…

"In matters of IPO, court will be reluctant in granting interim relief," Supreme Court

Read more here: bityl.co/CAze