The Supreme Court (SC) on Thursday refused to grant a stay on the share allotment and the government’s decision to trade 5 per cent of its shareholding in Life Insurance Corporation (LIC) through its initial public offering. The share allotment of LIC is scheduled for today, while the IPO opened on May 4.
While refusing to pass any order, a bench of Justices DY Chandrachud, Surya Kant and PS Narasimha issued notice to the central government. "We cannot grant any interim relief now. In matters of IPO, court will be reluctant in granting interim relief. It is about investments," the bench added, as mentioned in a report in Bar and Bench.
The bench added that the petitions raise the issue of enactment of the law as a money bill as the same is already pending before the court. It said that the case will be tagged along the pending matter.
The court passed an order refusing interim relief.
The order stated that 73 lakh applicants from India and globally subscribed to the IPO, which has been subscribed over 6 times.
“It is important to note percentage dilution of LIC has been 3.25 per cent, 22.13 crore equity shares of value of Rs 10 each is offered at Rs 939 and consolidated fund will receive Rs 22.5 k crore. IPO opened for anchor investors on May 2 and others on May 4 and closed on May 9. We are of the view that no case of interim relief has been made out. No interim relief granted," the order said, as mentioned in the report.
Nevertheless, the court added that the issue regarding the money bill requires examination. The court asked the government to reply within 8 weeks, and the petitioners 4 weeks after that.
An LIC policyholder had initially approached the Madras High Court challenging the Finance Act, 2021 and the Life Insurance Corporation (LIC) Act, 1956 provisions. The petitioner said these were introduced by way of a Money Bill even though the amendment did not fall in the same category. The court dismissed the petition stating that it had direct impact on the economic growth of the country and hence may have far-reaching consequences.
The Supreme Court appeal stated that the amendments that are being challenged effectively reduce the share of LIC’s surplus. The petitioner is entitled to the same. Which means that the petitioner and other policyholders will suffer losses of Rs 4,14,919 crore.
The Bombay High Court had also refused to stay the Draft Red Herring Prospectus (DRHP) filed by LIC last month. Senior Counsel Indira Jaising who appeared for a writ petitioner said that the money that belongs to the policyholders will now be diverted to shareholders.
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