Case: Morgan Stanley Mutual Fund Vs. Kartick Das

case we have come to the conclusion that the District Consumer Forum will have no power to grant injunction yet in general cases it becomes necessary to evolve certain venue restrictions. 41. As to the effect of incorporation it is stated in Halsburys Laws of England (4th Edn., Vol. 7, p. 55, para 83) as under: "When incorporated, the company is a legal entity or persona distinct from its members, and its property is not the property of the members. The nationality and domicile of a company is determined by its place of registration. A company incorporated in the United Kingdom will normally have both British nationality and English or Scottish domicile, depending upon its place of registration, and it will be unable to change that domicile.... The residence of a company is of great importance in revenue law, and the place of incorporation is not conclusive on this question. In general, residence depends upon the place where the central control and management of the company i s located. It follows that if such central control is divided, the company may have more than one residence. The locality of the shares of a company is that of the register of sha res. The head office of a company is not, however, necessarily the registered office of the company, but is the place where the substantial business of the company is carried on and its negotiations conducted. Like an individual or a firm, a company can, for the purposes of the Rules of the Supreme Court, carry on business in more places than one." 42. As far as India is concerned, the residence of the company is where the registered office is located. Normally, cases should be filed only where the registered office of the company is situate. Courts outside the place where the registered office is located, if approached, must have regard to the following. Invariably, suits are filed seeking to injured either the allotment of shares or the meetings of the Board of Directors or again the meeting of general body. The Court is approached at the last minute. Could injunction be granted even without notice to the respondent which will cause immense hardship and administrative inconvenience. It may be sometimes difficult even to undo the damage by such an interim order.Therefore, the court must ensure that the plaintiff comes to court well in time so that notice may be served on the defendant and he may have his say before any interim order is passed. The reasons set out in the preceding paragraphs of our judgment in relation to the fact which should weigh with the court in the grant of ex parte injunction and the rulings of this Court must be borne in mind. 5: What is the scope of Section 14 of the Act? 43. The said section reads as under: "(1) If, after the proceeding conducted under Section 13, the District Forum is satisfied that the goods complained against suffer from any of the defects specified in the complaint or that any of the allegations contained in the complaint about the services are proved, it shall issue an order to the opposite party directing him to take one or more of the following things, namely: (a) to remove the defect pointed out by the appropriate laboratory from the goods in question; (b) to replace the goods with new goods of similar description which shall be free from any defect; (c) to return to the complainant the price, or, as the case may be, the charges paid by the complainant; (d) to pay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of the opposite party. (2) Every order made by the District Forum under sub-section (1) shall be signed by all the members constituting it and, if there is any difference of opinion, the order of the majority of the members constituting it shall be the order of the District Forum. (3) Subject to the foregoing provisions, the procedure relating to the conduct of the meetings of the District Forum, its sittings and other matters shall be such as may be prescribed by the State Government." * 44. A careful reading of the above discloses that there is no power under the Act to grant any interim relief of (sic or) even an ad interim relief. Only a final relief could be granted. If the jurisdiction of the Forum to grant relief is confined to the four clauses+ mentioned under Section 14, it passes our comprehension as to how an interim injunction could ever be granted disregarding even the balance of convenience.45. We have dealt with in the preceding paragraphs as to the approval of SEBI and the compliance with the Regulation 27 of the Regulations, 1993. We have also explained what exactly is a concept of first come first served basis. On these two aspects , the respondent is suffering under a labyrinth of confusion. Therefore, we hold that the grounds urged by the respondent seeking to support the impugned order, are untenable.46. The appellant has suffered immensely because it has not even bee n served with copy of order of injunction. The application of the respondent is clearly actuated by mala fides. The Forum should have examined whether ex parte injunction without notice to the opposite side could ever be granted at + Ed.: Increased to nine clauses by Amendment Act 50 of 1993 (w.e.f. 18-6-1993). all. The grounds urged in the injunction application were insufficient for the grant of such a relief. 47.There is an increasing tendency on the part of litigants to indulge in speculative and vexatious litigation and adventurism which the for a seem readily to oblige. We think such a tendency should be curbed. Having regard to the frivolous nature of the complaint, we think it is a fit case for award of costs, more so, when the appellant has suffered heavily.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]To hold out, as the appellant has done, that the allotment of units will be based on firm allotment basis and with a changed sponsor in the advertisement, it is contended, is illegal in law, apart from it being violative of the norms and practices in the capital market. In such a case, the impending disaster could be avoided only by a quiatimet interference of the court. It is also urged that by piercing the corporate veil, it could be easily seen that the real sponsor is no other than the Morgan Stanley Group, New York. Therefore, SEBI should have acted in accordance with Section 11(2)(e) of the SEBI Act, 1992 for prohibiting fraudulent and unfair trade practices relating to securities market. It is also urged that the writ petition came to be filed and dismissed without consideration of these aspects. So, it requires interference of this Court.It has to be carefully noted that the disclaimer clause required to be incorporated at the beginning of offering circular by SEBI while approving the scheme is a standard requirement and nothing peculiar to the present case. The object of this is to bring to the notice of the investors that they should take the firm decision on the basis of the disclosures made in the documents. It is meant for the investors protection. In fact by such a course the SEBI informs the investors that they have approved the scheme but they did not recommend to the investors whether such investment is good or not and leave it to their discretion. In view of this, it will b e clear that the allegations of respondents that the SEBI has not approved the other documents is totallyappellants have made it very clear that those who applied during the opening period of scheme would be given full allotment. This was clarified by the appellant at a press conference held at Calcutta onRegular clarifications were issued in this regard by the appellant. The scheme came to be advertised by the appellant on1993. The respondents chose to make an application to the Consumer Forum on the eve of opening of the scheme. It was on that application, the impugned order came to be passed. In this factual background, we will take up the questions set out for determination.As far as India is concerned, the residence of the company is where the registered office is located. Normally, cases should be filed only where the registered office of the company is situate. Courts outside the place where the registered office is located, if approached, must have regard to the following. Invariably, suits are filed seeking to injured either the allotment of shares or the meetings of the Board of Directors or again the meeting of general body. The Court is approached at the last minute. Could injunction be granted even without notice to the respondent which will cause immense hardship and administrative inconvenience. It may be sometimes difficult even to undo the damage by such an interim order.Therefore, the court must ensure that the plaintiff comes to court well in time so that notice may be served on the defendant and he may have his say before any interim order is passed. The reasons set out in the preceding paragraphs of our judgment in relation to the fact which should weigh with the court in the grant of ex parte injunction and the rulings of this Court must be borne in mind.A careful reading of the above discloses that there is no power under the Act to grant any interim relief of (sic or) even an ad interim relief. Only a final relief could be granted. If the jurisdiction of the Forum to grant relief is confined to the four clauses+ mentioned under Section 14, it passes our comprehension as to how an interim injunction could ever be granted disregarding even the balance of convenience.45. We have dealt with in the preceding paragraphs as to the approval of SEBI and the compliance with the Regulation 27 of the Regulations, 1993. We have also explained what exactly is a concept of first come first served basis. On these two aspects , the respondent is suffering under a labyrinth of confusion. Therefore, we hold that the grounds urged by the respondent seeking to support the impugned order, are untenable.46. The appellant has suffered immensely because it has not even bee n served with copy of order of injunction. The application of the respondent is clearly actuated by mala fides. The Forum should have examined whether ex parte injunction without notice to the opposite side could ever be granted at + Ed.: Increased to nine clauses by Amendment Act 50 of 1993 (w.e.f.all. The grounds urged in the injunction application were insufficient for the grant of such ais an increasing tendency on the part of litigants to indulge in speculative and vexatious litigation and adventurism which the for a seem readily to oblige. We think such a tendency should be curbed. Having regard to the frivolous nature of the complaint, we think it is a fit case for award of costs, more so, when the appellant has suffered heavily.