Consumer Protection Act 1986, Secs. 2(1)(i), 2(1)(d)(i); 2(1)(1); 2(1)(c), 2(1)(c)(i), 14: 26:

Shares before allotment, held are not "goods-Prospective investor, held, not a Consumer Forum under Act, held, has no power to grant interim or ad-interim relief.

Code of Civil Procedure, 1908-Order 39 Rules, 1,2,3 & 5 Constitution of India, Article 226-Factors for grant of injunction in public issues laid down-Need for venue restrictions specified.

Securities and Exchange Board of India (Mutual Funds) Legislation, 1993-Regulation 27-Disclaimer clause, held, does not amount to non-approval First come first served under the Scheme of allotment, held, does not deceive investors.

Practice and procedure Costs Vexatious litigation Penal Costs of Rs. 25,000 awarded-Constitution of India, Article 142.

The Appellant in C.A. No. 4384 of 1994 is a domestic mutual fund registered with the SEBI along with its investment management agency. The Memorandum and Articles of Association of the appellant along with the draft scheme were approved by SEBI after due scrutiny and examination. SEBI also approved in writing all advertisements and publicity material. While approving the scheme, SEBI also put in a disclaimer clause which is a standard requirement in all issues. The appellant started advertising the public issue on 13-12-1993.

One P, filed a suit before the Sub-Judge at Delhi for injunction restraining the public issue from being floated. An interim order was passed by the Sub-Judge but the High Court on being moved by the appellant stayed the same on 4-1-1994. One A, flled a Writ Petition (W.P. A No. 14 of 1994) before the Delhi High Court against the SEBI, seeking inter alia a stay of the public issue, which was dismissed in limine. Civil Appeal 4587 of 1994 at the instance of the unsuccessful writ petitioner arises from this proceeding. Seeking the same relief as were sought in the writ petition, one K, moved the Calcutta District Consumer Disputes Redressal Forum alleging inter alia that the Fund's Offering Circular was not approved by SEBI and that the basis of allotment was arbitrary and unfair. The Forum passed an exparte interim order dated 4-1-1994 restraining the Fund from proceeding with the further issue against which the Fund appealed before the Supreme Court by Special Leave (Civil Appeal No. 4587 of 1994).

The appellants contended that shares that are to be allotted in future are not goods under s.2(1) (i) of the Consumer Protection Act, 1986 and that even assuming that shares are goods, prospectiv shareholders are not consumers and are therefore not entitled to file a complaint. The respondents on the other hand submitted that when SEBI regulations (R.27) are violated, a prospective applicant would be entitled to seek an injunction.

Allowing C.A.No. 4587 of 1994 and dismissing C.A. No. 4548 of 1994, this Court.