Court case(1994) 4 SCC 225

Morgan Stanley Mutual Fund launched a public issue of units of a growth fund. Before the units were allotted, an investor, Kartick Das, approached a District Forum complaining against the issue, and the Forum passed an interim order restraining the Fund from proceeding with the allotment. Proceedings in other fora followed, and the Fund came to the Supreme Court contending that an applicant for units was not a consumer, that units or shares are not "goods" bought by an applicant before allotment, that no service was hired, and that the District Forum had no power under the 1986 Act to grant interim injunctions.

The Supreme Court allowed the appeal. Before allotment, an applicant has only made an offer to subscribe; there is no purchase of goods for consideration, since shares come into existence for the applicant only on allotment, and there is no hiring of service. A prospective investor is therefore not a consumer, and the complaint was not maintainable. The Court also held that the 1986 Act, as it then stood, conferred no power on the District Forum to grant an interim injunction of the kind passed, and that matters concerning public issues fall within the regulatory domain of the securities regulator.