TMI Blog1989 (5) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... eld' of others. Progress is ensured and development helped if each performs his role in the common endeavour. Having regard to the facts and the circumstances of the case in view of the various facts mentioned hereinbefore, we are of the opinion that there was no undue haste. There was proper application of mind that the sanction was for a new project. Sufficient security for the debentures as was enjoined to be ensured before sanction has been ensured in the facts and the circumstances of this case and guidance provided by means of guidelines has been substantially complied with. There has been no infraction as such of the norms required to be followed in granting the sanction. The challenge to the sanction, therefore, must fail. Appeal dismissed. - T. P.Case Nos. 161-165 of 1988 - - - Dated:- 3-5-1989 - MUKHARJI, SABYASACHI AND RANGNATHAN, S., JJ. For the Petitioner: S. Ganesh, Arun Jaitely, Miss Bina Gupta, Miss Madhu Khatri, A.N. Haksar, Praveen Anand, Anip Sachthey, B.L. Pagaria, P.K. Jain, Udai Holla and T. Sridharan For the Respondent: G. Ramaswamy, Soli, J. Sorabjee, M.H. Baig, F.S. Nariman, H.N. Salve, R. Sasiprabhu, S.S. Shroff, Mrs. P.S. Shroff and S.A. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad restrained the issue of such injunctions and directed that the shares and debentures would be issued irrespective of any order of injunction passed by any court or authority in India. Different cases, as mentioned hereinbefore, were thereafter transferred to this Court. On the basis of the said consent, it was stated that the respondent No. 3 had issued prospectus and at the relevant time had intended to open the issue from 22nd August, 1988, of about 3 crores debentures of the face value of Rs.200 each which was the largest convertible debentures issue in India. It was alleged that the respondents had adopted very sharp methods to collect money from the public and ultimately to defraud them. It was stated that under the terms of the prospectus, each debenture of the face value of Rs.200 would be fully convertible: Respondent No. 3 would issue one share of Rs. 10 at par on the date of allotment. There would, thus, be an equity capital of about Rs.30 crores in all on allotment. Further, it was stated that the Company would convert Rs.40 of each convertible debentures into share after 3 years and the balance of Rs. 150 into share at any time between five and seven years. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the month of August, 1987 thereby avoiding payment of interest. In this manner, it was alleged, the Company saved interest of Rs.30 crores whereas in fact it incurred a loss. The case of the petitioner was that the Company was obviously trying to repeat the same game through the new Company by maintaining the share price only on an equity capital converted on each debenture. The paramount duty of respondents Nos. 1 2 before according permission was, it was asserted, to ensure that the requirement of the Company in raising such capital was bona .fide. It was observed that no public interest was intended to be served by respondent No. 1, as it had chosen to allow respondent No. 3 to collect such huge amounts in excess of the requirement. It is further the case of the petitioner that the operations' of RIL (Promoter) subsequent to the raising of past issues made by it were subjected to severe criticisms both in the press and in the public. It was pointed out that though the issue proposed was of shares of Rs.50 crores and debentures of Rs.516 crores, the company was allowed to retain over-subscription to the tune of 15% amounting to Rs.77.40 crores. It was alleged that the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the associated companies of respondent No. 3/RIL which had popularly come to be known as 'Reliance Loan Mela'. It was alleged that the Controller of Capital Issues and Union of India acted mala fide in issuing the consent order which was designed to benefit respondent No. 3 and prejudice the interests of the investing public. It was further alleged that in giving the consent order the respondent No. 1 blatantly overlooked the magnitude of the sum of Rs.600 crores, proposed to be raised from the public through the new issue of debentures. It was alleged that the act of respondent No. 1/2 was vitiated as in issuing the consent order respondent No. 2 was influenced by extraneous considerations not germane to the public interest. The Capital Market in India has undergone turbulent changes in the recent years. Small investors such as employees, workers and small business community were coming forward, according to the petitioner, for the purpose of investment in corporate sector. It was further stated that the small investors had no means of verifying the correctness or otherwise of the statements and the soundness/financial viability of any company. It was further alleged that the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace value of each debenture by way of second conversion after three years but before four years from the date of allotment at a premium to be fixed by the Controller of Capital issues; (iii) The balance of Rs. 150 representing 75% of the face value of each debenture as third conversion after five years but not later than seven years from the date of allotment at a premium to be fixed by the Controller ofapital Issues." The premium, it was stated on behalf of respondent No. 3, that would be charged at the time of conversion into equity shares would be as fixed and decided by the prescribed statutory authority, namely, the Controller of Capital issues, and the 3rd respondent and its Board of Directors would not have any say in the matter or be entitled to fix the same on their own. It was further stated that, subject to the necessary approvals being obtained in that behalf, the shareholders and the convertible debenture holders of the respondent No. 3, promoter company, would be entitled to participate in all the future issues of the 3rd respondent. The fully convertible debentures of the 3rd respondent would thus be a growth instrument with different rights, viz., earni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res and not by large capital borrowings from the public financial institutions (except to the extent of foreign currency loans of Rs.85 crores from them). The interest which would, therefore, have been payable to the financial institutions will be paid to the debenture holders ensuring them a return and simultaneously the convertible clause which would have been applicable to term-loans obtained from the financial institutions would be available to the investors thereby ensuring them growth in equity value. It was further stated that since the preferential allotment of 50% of the total issue was made to RIL shareholders, the shareholding pattern of the 3rd respondent will be the most widely held people's shareholding in the country and it was pleaded that there will be at least 20 lacs shareholders of the 3rd respondent which would be a world market record. It was further stated that RIL, who are the promoters of the project, have one of the best track records for setting up of the Projects such as Polyester Staple Fibre (PSF), Polyester Filament Yarn (PFY), Linear Alkyl Benzene (LAB) and Purified Terphthalic Acid (PTA) plants at Patalganga in record time. Business records of Rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a public financial institution and one of the foremost consultants in the field. During the discussions which were initiated in the second half of 1987 with ICICI, the idea of implementing these projects through a new independent Company instead of RIL had taken shape duly taking into account the financial aspects, management aspects, issues related to management and operation control of setting up the projects within the existing company vis-a-vis the setting up of the projects in the new company, namely the 3rd respondent company, was taken up. The 3rd respondent company and ICICI also considered various alternative means of financing project keeping in view the following criteria: (a) That the project should be financially beneficial to the company. (b) That it should be financially attractive to the investor. (c) That it should be operationally easy for the company and the investor. (d) That it should meet the institutional/stock exchange/Ministry of Finance norms and guidelines as regards financing of projects. (e) That it should be sustainable and attractive enough in terms of the profitability/servicing capability of the project. (f) That it should reduce the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness and soundness of the financial viability of the scheme. It was stated that the Central Govt. did not take the responsibility for financial soundness of the scheme. It was asserted that a new share of a new company could not be raised at a premium but the Govt. had improperly permitted the issue of shares of a new company at a premium in the instant case. It was stated that the consent order of the Controller of Capital Issues stated that premium would be payable on the shares to be allotted on conversion which, according to the deponent, amounted to fraud on the investing public and the subterfuge to boost up the market value of shares of RIL. It was reiterated that the RPL had been promoted by RIL whose shares had fluctuated in the share market so widely for which no explanation came forth from the company. These fluctuations in the share market were, according to the petitioner, on account of purchases/ sales made by certain interested quarters close to the management. On many occasions the sale of the share of RIL in the stock market was banned in some stock exchanges due to fall in prices which, according to the deponent, was a clear indication of cooperation and support f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1988. He has explained in his affidavit the background of the circumstances leading to the consent order. In relation to the 3 projects, namely, (i) for manufacture of 1,00,000 tonnes per annum Polyvinyl Chloride (PVC), (ii) 60,000 tonnes per annum of MEG (Mono Ethylene Glycol); and (iii) 50,000 tonnes per annum. of HDPE (High Density Polyethylene), RPL submitted an application for issue of capital on or about 4th May, 1988 inthe prescribed form. RPL proposed raising of capital by various instruments, like, equity shares, cumulative convertible preference shares (CCP'), partly convertible debentures, intended to be issued to the public, to the shareholders of RIL, debenture-holders and deposit holders of RIL. The original proposal for approval related to the following instruments: Instrument Amount in Rs. (Crores) Equity Reliance Industries Ltd. 47.00 Shareholders, debenture holders 4.00 and deposit holders of Reliance Industries Ltd. Public 6.00 Cumulative convertible Preference Shares (CCPS) Non-resident Indians/Foreign Collaborators/Indian Resident Public 81.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration of the Controller of Capital Issues so that on balance investment in the industrial sector in high priority industries could be encouraged. RPL revised its proposal under which it proposed to raise equity shares of Rs.50 crores from RIL--its promoter. The fully convertible debenture issue of Rs.5 16 crores from public was sought to be subscribed to in a manner that 50% on preferential share basis to be allotted to shareholders, debenture-holders and fixed deposit holders of RIL. RPL made a suggestion for issue of debentures' of the face value of Rs.200 each with the following terms and conditions: (i) 5% of the face value of the debentures at par on allotment; (ii) 20% of the face value (inclusive of premium) at a premium as may be decided in consultation with the Controller of Capital Issues at the end of the fourth year from the date of allotment. (iii) the residual portion (inclusive of premium) at a premium as may be decided in consultation with the Controller of Capital Issues at the end of the seventh year from the date of allotment. In view of the revised project cost it was felt that the promoter's contribution of Rs.50 crores was less and RIL as promo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ores for setting up 3 undertakings of RPL--post transfer from RIL, to RPL for implementation. Applications for the endorsement of industrial licences and the Letter of Intent had been filed with the Deptt. of Industrial Development, Secretariat for industrial Approvals and these were pending consideration. The object of the issue was setting up of a new project and was within the scope of the guide lines. The proposal contemplated was within the debt-equity norms and ratio in accordance with para 4 of the non-statutory guidelines as the debt in the proposal aggregated to Rs.47 1 crores. This is because debentures are considered as debt only when they are unredeemed beyond the period of 5 years as per Explanation to Section 5(ii) of the Capital Issues (Exemption) Order, 1969. In the present case, 25% of the face value of the debenture would stand redeemed by the 3rd and 4th year and before the 5th year, and it would therefore not be considered as debt for evaluating debtequity-ratio as per the guidelines. Similarly, the promoter's contribution of Rs. 100 crores plus 25% converted debentures at the end of 5 years would be categorised as equity representing share-capital and free-re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand in the national economy. The objectives of the control, according to the deponent, contemplated under the Capital Issues (Control) Act was to prevent wasteful investments and to promote sound methods of corporate finance. It was asserted that the administrative guidelines were only enabling in nature and could not and ought not to be construed as preventing the statutory authority from adopting or modifying varying norms in operational area of implementing the purposes of the Act especially when there were no fetters under the Statute. The Controller of Capital Issues had issued, it was stated, guidelines as a result of the war-time needs and controls, since the year 1947 and flow from the experience gained under the Defence of India Rules 1939. Hence, according to the deponent, these controls have been progressively reduced and the Capital Issue (Exemption) Order, 1969 was brought into force so as to reduce the rigours of the Act. In the absence of any control for capital issues for securities, according to the deponent, there would be no fetter or restriction on the part of the Company to borrow or raise capital from the market. It is to check raising of wasteful capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y application of mind to the crucial terms of the issue which were detrimental to public interest. This contention, when analysed, turns on a number of aspects which can be dealt with separately. (a) It is submitted that the application was made on 4.5.88 and sanctioned on 4.7.88--within hardly a period of two months; this reflects undue haste and favouritism, particularly if one has regard to the magnitude of the public issue proposed to be made and the various financial and other intricacies involved. We are unable to accept this contention. In the first place, an application of this type is intended to be disposed of with great expedition. In particular, in a project of the type proposed to be launched by the petitioner, passage of time may prejudicially affect the applicant and it is not only desirable but also necessary that the application should be disposed of within as short a time as possible. It is, therefore, difficult to say that the period of two months taken in granting consent in the present case is so short that an inference of haste must follow. Secondly, on behalf of the Union of India a list of various applications received and disposed of by the office of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier series of debentures by the RIL or the purposes thereof could have escaped the notice of the CCI, particularly, when it is remembered that the issue of G series of debentures by the RIL was quite recent and had also attracted a lot of publicity. We have elsewhere discussed the contention raised on behalf of the petitioners that the consent given has contravened the guidelines because finances were being raised for no new project but for the same old projects for which RIL had collected funds. We have there pointed out that, MEG project, for all practical purposes, was a new project that was to be implemented by the RPL and the funds raised by the RIL had been insufficient for even the PAT and LAB projects launched by it. The learned Addl. Solicitor General states that there was earlier correspondence between the RIL and the CCI regarding the cost over-run of the PTA and LAB projects. We have not gone into the details of this correspondence as it is not our purpose to enquire into the details of the matter. We are referring to it only for indicating that the CCI was fully aware of the earlier series of debentures, of the stage of the various projects proposed therein, of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns were made by RIL for change of Company from RIL to RPL for the MEG Project. It appears that on 11th August, 1988 approval/sanction was granted by the Govt. of India for change in the implementing agency from RIL to RPL. On or about 19th January, 1985 a letter from the Govt. of Maharashtra was issued, stating that there was no objection to the Company's proposal for change of location for the MEG Project from Maharashtra to Gujarat. It also appears from the various documents which are mentioned in Vol. IV of the present Paper Books at different pages (from 22 to 44) that by various orders under the MRTP Act, sanctions and modifications were approved, the latest sanction being dated 11th October, 1988 whereby the Govt. approved the proposal of RPL for modified scheme of Finance. It is also significant to mention that on 25th January, 1988 an application was made under Sec. 22(3)(d) of the MRTP Act with the proposal to implement the MEG Project along with other projects of RPL. It may be mentioned that by a letter dated 6th June, 1988 RIL had informed that they had originally planned to utilise a sum of Rs.85 crores from 'G' Series debentures for this project. But, however, they we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there was a valid licence; and it may be mentioned that on 24th August, 1985 pursuant to an application made by RIL under section 22(3)(a) of the MRTP Act, the Govt. granted approval for the establishment of a new undertaking for manufacture of HDPE. Regarding foreign collaboration, an application was made by RIL in 1984 for approval of foreign collaboration with M/s Du Pont Inc. Canada, for manufacture of HDPE. Such approval was given and the validity was extended and the foreign collaboration approval was endorsed in favour of RPL on 12th October, 1988. Similar other consents were there. Mention may be made of letters dated 28th April, 11th March, 6th December, 1986, 2nd January, 1987, 15th July, 25th, 26th July, 19th August, 1988 which appear at various pages of Vol. IV of the papers. Finally, capital-goods clearance was endorsed in favour of RPL for the PVC project on 12th August, 1988. Capital goods clearance was also endorsed in favour of RPL for HDPE project on 23rd August, 1988. Thus, it will be seen that all the basic groundwork had already been done by the RIL. It is in above perspective that one has to examine the events that have happened. The question that has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under any other Acts/laws in force. Having regard to the above history as well as having regard to the terms and conditions of the consent letter, the grant of consent itself being conditioned on the RPL obtaining the necessary approvals, consents and permissions before embarking on the project, we do not think that there was any impropriety in the CCI granting the consent without waiting for the formal endorsement of the various licences, letters and approvals in favour of the RPL. (d) It is next submitted that under para 3 of the guidelines issued the Government, the amount of issue of debentures for project financing and other objects will be considered on the basis of the approvals of the scheme of finance by the financial institutions/banks/ Government under the provisions of the MRTP Act, etc. The criticism in this respect is that since no approvals of the scheme of finance by the financial institutions/banks/Government under the provisions of the MRTP Act etc. had been produced before the Controller of Capital Issues he could not have been satisfied that the amount of issue of debentures was necessary and adequate on the basis of such approvals. This argument proceeds on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CICI were made available to him. When a project is being appraised by the institution like the ICICI and when the CCI is also aware, by reason of the participation of his representatives at the meetings of the Department of Industry and the Department of Company Affairs about the stage or outcome of the proposals made under the IDR and MRTP Acts, it is clear that the CCI did not overlook any crucial aspect and that his grant of consent in anticipation of the necessary transfers to the RPL was based on a practical appraisal of the situation and fully in order. The assumptions behind the petitioners' arguments that the terms of the issue as proposed by the RPL were approved in toto by the CCI-without examination is also unfounded. The record before us indicates that there were frequent discussions leading to alterations in the original proposals from time to time as well as changes in the conditions of consent both before and even after the letter of consent dated 4.7.1988. Some aspects of these have been referred to elsewhere and some are referred to below and these will show that consent was not granted as a matter of course. The allegation that consent was accorded without any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividend) taxable. Each CCP would be fully converted into equity share of Rs. 10 each at such a premium not exceeding Rs.40 per share as might be approved by the CCI at any time between the 3rd and/or 5th year from the date of allotment to be decided by the company, by draw of lots, if necessary. Then there are other conditions regarding securities, underwriting, allotment of equity shares to RIL shareholders. In May, 1988, several NRIS also evinced interest in equity participation in RPL. It was stated that though the CCP shares appeared to be most appropriate instrument, the computation of reserved/preferential entitlement resulted in very low entitlement to the existing shareholders of RIL. It was then contemplated to increase the preferential entitlement of RIL investors on partially convertible debentures and the ratio of convertible debentures was altered so as give equal share between RIL investors and the members of public. A three stage conversion was contemplated. Thereafter, in June 1988, a revised proposal to the CCI was made by RPL. It is not necessary to set out in detail the said revised proposal. After several discussion, on or about 1st June, 1988, between the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Industries Ltd. 50%. (ii) Employees (including Indian working Directors)/ workers of the company and of M/s RIL. 5% Unsubscribed portion, if any, of the reservations will be added to the public offer. The Convertible debentures will carry interest 12.5% p.a. (taxable). The Debentures will be fully and compulsorily convertible in the following manner: (a) 5% of the face value at par on allotment of the debentures. (b) 20% of the face value at a premium if any, as may be decided by this office after three years but before four years from the date of allotment of debentures. (c) The balance at such a premium if any, as may be decided by this office after 5 years but before the end of 7 years from the date of allotment. 3. The consent given as aforesaid is qualified by the conditions mentioned in the Annexure and the company shall comply with the terms of the conditions so imposed. 4. I am to make it quite clear that the grant of consent to the issue of capital represents no commitment of any kind on the part of the Central Govt. to render assistance in the matters. of priorities or licences for supplies of raw materials, machinery, steel, etc., of transport facili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... least three years from the date of allotment. (w) It is a condition of this consent order that the proceeds from the issue of debentures should be invested in fixed duration deposits/instruments with the cooperative/nationalised banks, UTI, Financial Institutions, Public Sector Undertakings (other than public sector bonds) and be used strictly for the requirements of the projects mentioned in the application and not for any other purpose. (x) M/s Reliance Industries Limited will bring in additional amount of Rs.50 crores as interest free unsecured loans, at the time of allotment of the above convertible debentures as additional promoters contribution which will be converted into equity at par on the expiry of 36 months from the date of allotment of convertible debentures. (y) (i) The company shall scrupulously adhere to the time limit of 10 weeks from the date of closure of the subscription list for allotment of all securities and despatch of allotment letters/certificates and refund orders. (ii) The company shall, at the time of filing its application for listing to the regional Stock Exchange, furnish an undertaking for compliance of the above condition, along with a scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by CCI for convertible debentures for RPL--all these were widely reported in various newspapers and magazines including national dailies such as Times of India, Indian Express, Financial Express, Gujarat Samachar, Hindustan Times, Bombay Samachar, Business Standards and other magazines and news items. Thereafter, till mid August, 1988, there were detailed advertisements about the company and nearly 1600 insertions in nearly 200 newspapers and dailies were made advising the opening of the issue. There were from mid July, 1988 onwards till August, 1988, advertisement campaigns in television and radio to attract investments in Petrochemicals advising the public about the issue of Rs.593.40 crores of convertible debentures of RPL. It is asserted on behalf of the respondents that the public issue of these shares was made known since mid July, 1988. As mentioned hereinbefore since the words "till conversion" were capable of wide interpretation and might have rendered the shares/convertible debentures non-transferable for upto 7 years, the CCI modified the consent and limited this restriction to a period of 3 years. On July 27, 1988, the prospectus of RPL was filed with the Registrar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er or direction or injunction already passed or which might be passed would remain suspended till further orders of this Court. It was mentioned that on August 29, 1988, the complaint filed by Shri Sharma before the MRTP Commission was dismissed. On August 31, 1988, one Shri Arvind Kumar Sanganeria issued notice through his Advocate advising that a Writ Petition was being preferred in the Bombay High Court. On September 1, 1988, this Court granted an ex-parte stay of the proceedings in Writ Petition No. 4388 of 1988 pending before the Bombay High Court. As mentioned hereinbefore, on September 9, 1988, this Court had transferred the four Writ Petitions in the four High Courts and civil suit to this Court. It appears that there was a further writ petition filed by Shri Suni1 Ambani in the High Court of Allabahad on the basis of two articles published in the Indian Express. Shri Ganesh made submissions in Transfer Case No. 164 of 1988. Shri Haksar made his submissions in T.C. No. 161 of 1988. Shri Pagaria argued T.C. 162 of 1988. Shri Udai Holla who was the counsel for the petitioner in Karnataka matters, appeared in T.C. 163 of 1988 and made his submissions. We heard Mr. G. Ramaswamy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be paid in one instalment only. (ii) In case of non-convertible debentures or nonconvertible portion of convertible debentures a company may have the option of getting the debentures converted into equity fully with the approval of and at such. price as may be determined by the Controller of Capital Issues. The debenture holders will, however, be free not to exercise this right." Clause (8) provides for the denomination of debentures. Clause (9) enjoins the listing of debentures on the Stock Exchange. Clause (10) stipulates that only secured debentures would be permitted for issue to the public. Clause,(11) enjoins the underwriting of the debentures and clause (12) also provides for listing of the shares of the company proposing debenture issue. Clause (13) permits linked issue of shares and debentures. There were certain amendments to these guidelines which would be noted at the relevant time. While considering the question of the application or non-application of mind or infringement of guidelines, it is necessary to bear in mind the role of the CCI in this respect. The CCI functions under the Capital Issues (Control) Act, 1947. This is an Act to provide for control over th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egulation of the issue of bonus shares, regulation of capital reorganisation plans of companies including mergers, and amalgamations which involved the use or re-issue of capital and the regulation of the capital structure. Shri Ashok Mehta, then a Member of Parliament, suggested that the purpose of the Act might be used for evolving a national investment policy. The Minister of Finance further observed that many things might have been done to give a proper form and shape to the national investment policy (emphasis supplied), but the Minister expressed his surprise how these could have been secured through a negative piece of control (emphasis supplied) like the Capital Issue Control Act. He observed that there were other provisions like the Industries (Development Regulation) Act, under which licences were given to new industries. But this, according to the Minister, was not the purpose of the negative control of the capital issue. Various suggestions were made by the members of the Parliament about the role of the Act, for instance, to encourage public companies, not too much concentration of particular industries at particular areas, etc. The Minister referred to the various o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, has neither the duty, nor the staff, the facilities or the expertise to enquire about. or investigate into, the financial soundness or acceptability of the issue proposed to be made. He pointed out that one of the conditions on which all consent is granted is that the Central Government does not take any responsibility for the financial soundness of any scheme or the correctness of any statement made or opinions expressed in the prospectus and the condition is also explicitly set out in the prospectus. We are unable to agree fully with this somewhat narrow aspect of the CCI's role. In the very speech in Parliament to which the learned Additional Solicitor General referred, the Minister also stated: "Apart from this main object of the Bill which is thus to prevent the diversion of investible resources of non-essential projects, the control has also been used for man), other purposes. The more important of these purposes which may be called ancillary purposes are the regulation of the issue of bonus shares, regulation of capital reorganisation plans of companies including mergers and amalgamations which involved the issue or re-issue of capital, the regulation of the capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational Airport Authority, [1979] 3 SCR 10 14, where this Court observed that it must be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licence or granting other forms of largess, the government could not act arbitrarily at its sweet will and, like a private individual, deal with any persons it please, but its action must be in conformity with standard or norm which is not arbitrary, irrational or irrelevant. We accept the position that the power of discretion of the government in the matter of grant of largess including award of jobs, contracts, quotas, licences etc. must be confirmed and structured by rational, relevant and nondiscriminatory standard or norm and if the government departed from such standard or norm in any particular case or cases, the action of the government would be liable to be struck down, unless it could not be shown by the government that the departure was not arbitrary but was based on some valid principle which in itself was not irrational, irrelevant, unreasonable or discriminatory. Mr. Haksar drew our attention to the observations of this Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar, the draft prospectus which, according to him, clearly showed that there was in reality no security for the debentures. We are unable to accept this contention. Perhaps the most important of the arguments addressed on behalf of the petitioners was that the scrutiny by the CCI of the prospectus was so cursory that the most glaring travesty of truth contained therein has passed unnoticed by him. Sri Ganesh points out that the guidelines were clear that a company can issue only secured debentures and draws attention to the fact that the company proclaimed the issue to be of "fully secured convertible debentures". Yet, the prospectus, on its very face, disclosed that the debentures were unsecured. Shri Ganesh urges that, if only the CCI had perused carefully the figures and statements made in the prospectus he could never have accepted, at face value, the assertion of RPL that the debentures were "secured" ones within the meaning of the guidelines or accorded his consent to the issue. This argument is in three parts and may be dealt with accordingly. (i) The first criticism of the petitioners is that, in certain brochures and pamphlets issued by RPL, the debentures are described a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page. If these are added, the value of the investment in assets would work out to Rs.629 crores which far exceeds the value of the debentures after the first conversion which comes to Rs.563.73 crores. This figure of Rs.629 crores takes into account only the investment in assets made out of the borrowed funds and not the future profits and assets acquired therefrom. But, even taking this as the basis, it is clear that, with the escalation in the value of the fixed assets with the passage of time on the one hand and the redemption of a good portion of the debentures by the end of three years on the other, the security provided is complete and, in any event, more than adequate to safeguard the interests of the debenture holders. There is substance in this contention. (iii) The third loophole, according to the petitioners, is the insecurity created by the terms of clauses 5 and 6 of the prospectus dealing with 'security' and 'borrowings'. Sri Ganesh submits that clauses 5 and 6 severely qualify the rights of the debenture holders under the present issue in several respects. (a) There is, in their favour, only a residual charge on all or any of the assets of the company at Hazira ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in favour of debenture holders, to carry on its business normally. It will be appreciated that the company's normal business activities would necessarily involve, inter alia, alienation of some of the assets of the company from time to time (such as, for example, the sale of the goods manufactured by the company) as well the procurement and discharge of loans and accommodation facilities from banks, financial institutions and others (such as, for example, entering into agreements for hire purchase of plant and machinery and making payments of instalments towards their price). The entire progress of the company would come to a standstill in the absence of such an enabling provision. Such a provision is not only usual but also essential because the basic idea is that the finances raised by the debentures should be employed for running the project profitably and thereby generating more and more funds and assets which will also be available to the debenture holders. Secondly, we think--and indeed RPL also conceded both in arguments as well in an affidavit filed on its behalf by Sri Mohan Ramachandran dated th January. 1989--that what the two clauses provide is only that the consent a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany in this respect under the Companies Act, the CCI` Act, the MRTP Act and involving the consent of public financial institutions, commercial banks, the term lenders, the shareholders, the MRTP Commission, the Central Government and the CCI before the creation of such securities. Lastly, the contention of the petitioners completely overlooks the basic principles underlying the commercial law concept of debentures secured by a floating charge as evolved in British Jurisprudence over the past two hundred years. Clauses like clauses 5 and 6 are usually inserted in debenture issues and the company has drawn our attention to two like instances in certain issues approved in December 1988 and January, 1989. It has also been argued for the company that a fully convertible debenture is not a debenture at all in the true sense of the term and is more akin to an issue of equity and -that, therefore, there is no need that it should be covered by adequate security at all. These aspects of the matter are dealt with by us at some length later; it is sufficient here to say that we are unable to accept the contention that the security in favour of the debenture holders is illusory and inadequate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ensure .sufficient and fruitful utilisation of capital would be completely defeated if more than one capital issue is permitted for the same project. In this connection, Shri Ganesh referred to the affidavit of the CC1 which, according to him, clearly indicated that CCI was specifically aware of the fact that the scheme of finance for setting up the very same project had been approved in favour of RIL. Our attention was drawn to the affidavit filed on behalf of the CCI, where he had stated at p. 203 of the Paper Book of T.C. No. 164 of 1988, that by a Press Release dated 15th September, 1984, certain guidelines which the said deponent described as "non-statutory guidelines" for approval of issue of secured convertible and nonconvertible debentures. These guidelines had been subsequently amended by a Press Release dated 8th March, 1985 and these were released on 19th August, 1985 for issue of convertible cumulative preference shares and also there are guidelines issued by Press Release dated 1st August, 1985 for employees stock option scheme. In accordance with .these guidelines, according to the deponent on behalf of the CCI, the consent of the CCI for capital issue for secured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k at the projects not as new ones but only as those of the RIL to be implemented by RPL, the additional finances were needed for the extention, expansion and diversification of the projects originally envisaged. This is one of the objects for which a debenture issue is permissible under the guidelines. Shri Ganesh then submitted that Guideline No. 3 for the Issue of Debentures by Public Limited Companies laid down that the CCI would consider an application for capital-issue only after the approval of the financial institutions, banks and Government are received. The statutory application form prescribed by the Capital Issues (Application for Consent) Rules, 1966 requires, according to Shri Ganesh, that the consent and clearances of the various authorities and institutions should be annexed to the application. Shri Ganesh submitted that in the present case, many of the relevant applications had not even been filed by RIL and RPL as on 4th July, 1988 when the CCI passed the Consent Order. It was submitted by Shri Ganesh, also by Shri Haksar and especially by Shri Pagaria, that RPL's application had been processed in unseemly haste and without due and proper application of mind. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not made any attempt to appreciate or quantify the extent of the said benefits and advantages and go into the question whether the same are fair, reasonable and just. Consequently, for this reason also, there had not been, according to Shri Ganesh, due application of mind by the CCI before the Consent Order was issued. We are unable to accept this criticism. The discrimination alleged is on two grounds. The first is that RIL is entitled straightaway to the allotment of shares of the face value of Rs.57.50 crores whereas only 5% of the investment by the debenture-holders can be converted into shares at par simultaneously with the issue. The second is that a loan of Rs.50 crores advanced by RIL to RPL will be converted into shares at par at the end of 3 years whereas the debenture~holders will have to pay a premium even for converting 20% of their debentures into shares by that time. These allegations do not bear scrutiny. So far as the first ground is concerned, there is no justification for a comparison between these two categories of investors. RIL is the promoter company which has conceived the projects, got them sanctioned, invested huge amounts of time and money and transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19(1)(g) of the Constitution. He submitted that the Capital Issues (Control) Act, 1947 is a pre-constitutional law and the Act was enacted as being expedient to provide for control of issue of capital. Under Article 14 read with Article 38, it was obligatory to ensure that there was no disproportionate wealth. He drew our attention to MRTP Act and other Acts and also to a large number of decisions to highlight that the directive principles should be imported for ensuring that the CCI performs his functions for the welfare of the community and to bring about an egalitarian society. That was his first submission and he further submitted that the petitioner was really in a position to come under the Public Interest Litigation propounding the cause of the public. Secondly, he submitted that the concept of company being the property of the Board of Directors had undergone a radical change. He submitted that company in a new socio-economic set-up is a social institution having duties and responsibilities towards community for which it functions. According to him, maximisation of social welfare should be the legitimate goal of the companies and the shareholders. He, therefore, stated tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or too risky and onerous to be permitted in public interest. But this is a decision which he will have to venture upon, on his own responsibility, in patent cases where the nature of the project or the scheme of financing is, on its face, startlingly non-feasible, impracticable or risky. He cannot, however, be compelled to withhold consent. or found fault with for having granted consent, in a case such as this, where the proposed project is in a core industrial sector. where there is considerable scope for foreign currency savings and the scheme of financing proposed has been developed in consultation with and scrutinised and approved by a leading public sector financial institution (which has also agreed to be the trustee for the Debentureholders). It is too much to suggest that the CCI should be held to have failed in his duty by accepting the opinion of such institutions and not investigating for himself from various angles and in particular, the adequacy of the security offered to the debenture holders under the scheme. While we do appreciate that in the changed atmosphere, the corporate sector, when seeking to attract public moneys while raising new capital must perform both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a maximum of 200 debentures--which on first conversion would become 200 shares--be allotted to each of the employees of RPL as well as RIL. The CCI, however, modified Para 5 by his letter of the 19th July, 1988 to say that allotment to the employees shall not exceed 50 debentures per individual. In this context, it does not appear that the restriction of the allotment to the employees was at the instance of the company nor does it seem that any discrimination was intended in respect of the allotments to the employees. Nor has our attention been invited to any legal requirement or guidelines prescribing any fixed or minimum quota of allotment to the employees of the company. We are, therefore, unable to see any discrimination. In any case, the petitioner in this case has no cause for grievance on that score. It was submitted that the Consent Order suffered from arbitrariness, mala fides, unprecedented hurry and with extraneous considerations. We are unable to see any such discrimination. It was submitted that the Consent Order had been passed without, satisfying that the pre-requisite condition of the various clearances and no objection certificates and licences under MRTP Act, FE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsufficient security, no consent could have been granted and even if the issue was over-subscribed, the money was repayable to the persons who had subscribed to the issue on the basis of the promises and they were entitled not only to the refund of the money but to all benefits by way of interest, etc. He drew our attention to certain decisions, which in our opinion, are irrelevant. He submitted that the people have a right to know and this right had been violated by not telling the people the full facts. It was submitted that RPL did not place any material before the Central Government to justify the consent. We are unable to accept this submission. It was next submitted that the guidelines were mandatory. It was next contended by Shri Pagaria that there was nondisclosure of true and correct facts not only in respect of the interest of Directors of RIL in the RPL properties but also the security and with regard to the approval of the financial scheme under MRTP Act, the licence under the Petroleum Act, Explosive Act, etc., Shri Pagaria has referred to the requirements under a large number of enactments and contended that, until requisite consents, approvals, licences etc. are obta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had been violation of several laws. No particular violation had been indicated. Furthermore, it was submitted that the Industries (Development Regulation) Act, 1951, Companies Act, 1956, Capital Issues (Control) Act, 1947, MRTP Act, 1969, FERA, 1973 have to be read in conjunction and as such the corporate sector should not be permitted to accumulate wealth on account of favour from the Government. The factual position being as indicated before, it is not possible to entertain these bald submissions. On behalf of the CCI, it was submitted that the contention that the CCI had not followed his own guidelines relating to the sanction of the issue is misconceived. It was further submitted that the security for debentures had been properly there. It was submitted that the following facts would establish that there had been no breach of duty or obligation cast on the CCI either under the Act or under the Guidelines or under Capital Issues (Application for Consent) Rules. The relevant guidelines for consideration of this question are as follows: (a) Guidelines for Issue of Debentures by Public Limited Companies--Press Release 1984. 4. DEBT-EQUITY RATIO: The debt-equity ratio shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y will be in such form and manner as required by the trustees for debenture holders". These requirements are contained in Part V(E): Particulars of Issues--Particulars of Preference Shares and Debentures--(e) indicate the security to be offered in the case of debentures. It is in these circumstances that it was not necessary for the CCI to evaluate the security or the adequacy thereof at the stage of grant of consent. The CCI did examine the proposal with reference to the debenture residual value beyond the fifth year of its allotment and in relation to the asset creation and take on record prior to grant of consent the project estimations and cash flows statements of the ICICI for the years 1989 to 1996 which had looked into the projects and also examined the question of creation of security and asset creation for RPL in relation to the issue for three projects. It was further submitted that as per this statement, the debt service coverage ratio was 1.89 in 1991 and going upto 2.55 in 1995. It was therefore inaccurate to say that the CCI had not satisfied himself on the matter of security or had failed to apply his mind to documents before him. It is further stated on behalf of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a cost overrun, or for an unimplemented portion of a project. It is a fact that the MEG and HDPE projects had not been implemented in RIL and they were now being implemented only in RPL. It is further submitted on behalf of the CCI that the public financial institution, namely, ICICI looked into the project and reported to the CCI, in their letter dated 15th June. 1988 that the estimated cost of projects for which the consent was being sought was Rs.650 crores. The consent order of the CCI clearly indicated that the consent conveyed in the letter shall lapse on the expiry of 12 months from the date thereof. The consent order further categorically stated that the approval was without prejudice to any other approval/permission that might be required to be obtained under any other Acts and laws in force. It necessarily therefore followed that the obligation to obtain other permissions continued. There was no legal condition that other approvals should be examined by the CCI before grant of its own consent. This was submitted on behalf of the CCI and there is substance in the submission. In the application form prescribed in Schedule A of the Capital Issues (Applications for Consent) R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decided by the CCI's office, at the time of such conversion. It was further submitted that the computation of premium depends on several factors, such as the net worth of the company, the performance of the company, the profit earning capacity value of the company, etc. Since RPL was in the Petrochemical sector, which had ordinarily the gestation period, at the time of grant of the consent, it was not possible for the CCI to forecast or estimate the rate of conversion on the second and the third stage and advisedly the CCI reserved to itself the right to determine this premium on factual data available at the time of conversion. Therefore, this cannot be said to be bad. The convertible debentures would receive interest @ 12.5% on the sum of Rs.190 (31.5% interest would accrue on this amount). It was, therefore, not necessary for the CCI to quantify the extent of benefits and advantages before grant of consent and had to enter into computation for evaluating this. Naturally, the RIL, as a promoter, stood on a different footing and there were rational intelligible critera distinguishing general members of the public from a promoter proposing the capital issue and the establishment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Maharashtra. Thereafter, the company decided to further backward integrate and to manufacture PTA (Purified Teriphthalic Acid) which is one of the raw materials used in the manufacture of polyester filament yarn/polyester staple fibre. Simultaneously, it also diversified horizontally into the manufacture of Linear Aklyl Benzene (LAB) used in the manufacture of detergents, as this product could also be manufactured from the petrochemical downstream products in which the company was engaged. RIL's 3rd stage of backward-integration involved, it was asserted, in the manufacture of Mono Ethylene Glycol (MEG), used in the manufacture of polyester staple fibre and polyester staple yarn. It also decided to diversify into the manufacture of critically scarce plastic raw materials like High Density' Polyethylene (HDPE), Poly Vinyl Chloride (PVC) and Mono Ethylene Glycol (MEG) a polyester raw material used in the manufacture of polyester fibre, etc. The company had also applied for Gas Cracker Project, which is said to have been cleared recently, whereby (natural) gas oil would be cracked to produce ethylene and other petrochemicals. Thus right from the Naphtha stage to the yarn fibre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... convertible debenture is a new type of instrument introduced in this case and these appear to have caught the imagination of the investors. It has been asserted before us that subsequent to RPL issue, others have also gone for this type of project. Our attention was drawn to rule 2(b)(x) of the Companies (Acceptance of deposits) Rules, 1975 which provided clearly that a convertible debenture was not to be included in the definition of debenture. it was further asserted that the security visualised in clauses (5) and (6) of the Prospectus was one which was prevalent and customary in corporate practice and was regarded as valid and adequate. Nothing contrary to this was indicated before us. Our attention was drawn to Sec. 2(12) of the Companies Act under which a debenture need not be secured at all. In that light the guidelines should be interpreted. Therefore, it was submitted, Guideline 10, reasonably interpreted, means that such security should be provided as is customarily adopted in corporate practice in the matter of issuing debentures. It has to be borne in mind that the debentures issued in the present case are compulsorily convertible. Therefore, no repayment of principal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly indicate that any instrument which is compulsorily convertible into shares, is regarded as an "equity" and not as a loan or debt. Even a non-convertible debenture need not be always secured. In fact, modern tendency is to raise loan by unsecured stock, which does not create any charge on the assets of the Company (The Encyclopaedia of Forms and Precedents; 4th Edn. Vol. 6 para 17 at pages 1094, 1095 and para 22 at pages 1097-98). Whenever, however, a security is created, it is invariably in the form of a floating charge (See' The Encyclopaedia of Forms and Precedents, 4th Edn., Vol. 6 Para 25 at page 1099). It follows, therefore, that the secured debenture almost invariably contains a floating charge. In addition to the floating charge, debentures are frequently secured by trust deed also as had happened in the present case where specific property, land, etc. has been mortgaged to trustees. Shri Ganesh made a submission that under clause (5) of the Prospectus, the company could deal with its assets and properties without the permission of debenture-holders or debenture trustees and that it could create future charges which would rank superior in priority. The concept of floati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Marine Management Ltd., [1978] 1 WLR 966. This however does not mean that the company can keep on creating future charges with superior ranking without any let or hindrance because the debenture holders/trustees can any time move to crystallise the floating security if they felt that the security is in jeopardy. In the present case, there is no case to suggest or believe that ICICI (which is one of the most important national Government financial institutions), will not act effectively and promptly to ensure that the security in favour of the debenture-holders is not rendered illusory. Even Guidelines dated 14th January, 1987 has cast the responsibility of supervising, creating, monitoring and implementation of security in favour of debenture-trustees. The company cannot normally create a general floating charge ranking in priority to or pari passu with a prior floating charge unless the prior floating charge itself permits such a course. In this connection, reference may be made to the observations in The Encyclopaedia of Forms and Precedents, 4th Edn., Vol. 6 para 27 at pages 1102-1103. It, therefore, follows that: (i) A debenture is usually secured by floating charge only. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the future security should not rank superior to the floating charge in favour of the existing debentures holders. Having regard to the factors which the investors should have taken into consideration, we are of the opinion that all relevant factors were borne in mind by the CCI. There is no substance also in the ground of discrimination. It is reiterated that Article 14 of the Constitution does not forbid reasonable classification. RIL is a promoter company. It had conceived the projects, got them sanctioned and invested huge amounts of time and money in the process. It was open to RIL to undertake these projects on its own and not to make any public issue at all. The ground that there was non-application of mind because the CCI did not take into consideration the issue of G-Series is also without substance. Under Guideline 2(a) of the Guidelines of 1984, capital could be raised only for setting up of new project. MEG, it was submitted, was not a new project for capital had been raised for it by RIL under G-Series. It was further submitted that the Controller did not ask RPL to get the bankers prior clearance certificate under Guideline II(v) of the Guidelines of January 14, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th procedural impropriety, his decisions cannot and should not be faulted on the ground that other consequences might follow. Of course, no other consequences have been indicated before us. As a matter of fact, there was no allegation that the CCI acted mala fide or on extraneous considerations. The CCI applied its mind to the facts of this case and the factors in general. There was no undue haste. A statement was produced indicating that the application for grant of consent had been disposed after some time, but within the time frame in which such applications are normally disposed of. It may, however, be stated that being not statutory in character, these guidelines are not enforceable. See the observations of this Court in Fernandez v. State of Mysore, [1967] 3 SCR 636: Also see R. Abdullah Rowther v. State Transport, etc., AIR 1959 SC 896; Dy. Asst. Iron Steel Controller v. Manekchand Proprietor, [1972] 3 SCR 1; Andhra Industrial Work v. CCI E, [1975] 1 SCR 321; K.M. Shanmugham v. S.R.V.S. Pvt. Ltd., [1964] 1 SCR 809). A policy is not law. A statement of policy is not a prescription of binding criterion. In this connection, reference may be made to the observations of Sagna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from directly affects the rights so vested the persons whose rights are affected have a clear right to approach the court for relief. Sometimes guidelines control the choice of persons competing with one another for the grant of benefits largesses or favours and, if the guidelines are departed from without rhyme or reason, an arbitrary discrimination may result which may call for judicial review. In some other instances (as in the Ramanna Shetty, case), the guidelines may prescribe certain standards or norms for the grant of certain benefits and a relaxation of, or departure from, the norms may affect persons, not directly but indirectly, in the sense that though they did not seek the benefit or privilege as they were not eligible for it on the basis of the announced norms, they might also have entered the fray had the relaxed guidelines been made known. In other words, they would have been potential competitors in case any relaxation or departure were to be made. In a case of the present type, however, the guidelines operate in a totally different field. The guidelines do not affect or regulate the right of any person other than the company applying for consent. The manner of appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idelines. He has acted objectively and bona fide. He has not acted in undue haste. No substantial prejudice or injury to the petitioners have been demonstrated. In the aforesaid view of the matter, we are, therefore, unable to interfere. In this connection, furthermore, a common sense view has to be adopted--See the observations in Council of Civil Service Unions Others v. Minister for the Civil Service, [1985] AC at 407. Public interest in this case does not require that we should interfere. In this case, there is no illegality in the decision of the Controller of Capital Issues. He has not exercised a power which he does not possess. There is also no irrationality. He has not acted in any manner that no reasonable authority would have acted in the decision. There is no procedural impropriety in his decision. He has not failed in his duty to act fairly insofar as fairness was warranted by the justice of the situation. In the aforesaid view of the matter, we are of the opinion that there was no substance in the writ petitions and also in the civil suits covered by these transfer applications. The main question, as mentioned hereinbefore, canvassed in these transfer petitions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to the fore for the first time a public interest aspect of the issue of shares and debentures. In the past decades, investors in shares and equities constituted a very limited section of the public and consisted of two extreme types --either persons who could shrewdly appraise the merits of each issue and take a considered decision or persons who just wanted to invest and get a return for their moneys but were indifferent to the terms and conditions of such investment. The position has changed in recent years. There has been a vast increase in the number of members of the public who have surplus money to invest; the size of the issues has assumed macro-proportions; and the types of instruments are also becoming more and more sophisticated. Entrepreneurs, with legal and expert assistance at their command, could easily trap unwary investors and the development of a public interest lobby that can scrutinise issues carefully and advise prospective investors on their comparative merits and demerits may not be entirely undesirable. It is also perhaps necessary that the CCI, in considering the grant of consent to such issues, should have these aspects brought to his notice. We think t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... courts in a federal structure and have regard to self-restraint and circumspection, we do not at this stage lay down any more definite norms. We may also perhaps add that it may be impossible to lay down hard and fast rules of general application because of the diverse situations which give rise to problems of this nature. Each case has its own special facts and complications and it will be a disadvantage, rather than an advantage, to attempt and apply any stereo-typed formula to all cases. Perhaps in this sphere, the High Courts themselves might be able to introduce a certain amount of discipline having regard to the principles of comity of courts administering the same general laws applicable all over the country in respect of granting interim orders which will have repercussion or effect beyond the jurisdiction of the particular courts. Such an exercise will be useful contribution in evolving good conventions in the federal judicial system. On the 9th September, 1988, when we transferred these matters, we directed respondent no. 3 to deposit a sum of Rs. 1 lac to be held if the petitioners were made to spend unduly. Having considered the facts and circumstances of the case, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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