Senior advocate Pradeep Sancheti representing petitioners stated that the Finance Bill could have never been passed as "Money Bill" under Article 110 of the Constitution. (File) The Bombay High Court has refused ad-interim relief to a few policyholders from Nashik seeking a stay on the proposed Initial Public Offering (IPO) of the Life Insurance Corporation of India.
The HC was recently hearing a plea seeking to quash amendments made to The Life Insurance Corporation Act, 1956 by way of Finance Act, 2021. The petitioners also sought an ad-interim relief to stay the Draft Red Herring Prospectus (DRHP) filed by the LIC for the issuance of shares in a public issue to investors.
The court said that while it did not find a sufficiently strong prima facie case for ad-interim relief at this stage, the same is not final determination of any of the issues which will be dealt with in June, this year. It also directed the respondents to file an affidavit in reply to the plea, if they wanted to, by June 9 and asked the petitioners to file rejoinder to the same, if any, by June 16.
The Securities and Exchange Board of India (SEBI) had last month approved the initial public offering of LIC, paving the way for the government to launch the issue through which it plans to raise nearly Rs 60,000 crore.
A division bench of Justice Gautam S Patel and Justice Madhav J Jamdar passed an order on a plea by three LIC policyholders Charudatt Pawar, Manohar Sonawane and Prakash Desale from Nashik.
The bench observed, “We are not entirely satisfied that persons like the petitioners can be said to have an enforceable estate in the surplus of the LIC fund. This is a matter that will require much deeper consideration. In other words, we do not see how this class of persons can say that the surplus or any part of the LIC fund is their ‘property’ within the meaning of Article 300 A of the Constitution of India.”
It added, “It may be one thing to say that a person has an entitlement to receive a dividend or a bonus or some form of payment. That might conceptually be very different from saying that the person has an in specific interest in the fund itself. It is possible perhaps to draw an analogy that when a person is given a cheque or a negotiable instrument, he, as the holder, has the right to receive the funds but he cannot be said to have property in the bank account on which the cheque is drawn.”
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