LIC IPO Share Allotment: Supreme Court Refuses Interim Relief, Issues Notice To Govt

The SC has decided to examine the validity of the amendment to the LIC Act by way of Finance Act, 2021 and issued notice to the Centre on pleas challenging the decision to dilute 5% of stake in LIC

New Delhi: The Supreme Court (SC) on Thursday refused to grant interim relief to a matter regarding share allotment of LIC IPO. The apex court has issued notice to the Centre on petitions challenging the constitutional validity of provisions of certain sections of Finance Act, 2021 and LIC Act 1956, according to news reports.

The SC has decided to examine the validity of the amendment to the LIC Act by way of Finance Act, 2021, while the court has issued notice to the government regarding pleas challenging the decision to dilute 5 per cent of its stake in LIC through public listing.

On Wednesday, the SC admitted a writ petition against the LIC IPO. The petition was filed by policyholders, Thomas Franco Rajendra Dev, joint convenor of NGO People First.

According to IANS report, the petitioners have filed the case in the Supreme Court to issue a writ of mandamus, to declare Section 5 of the Life Insurance Corporation Act, 1956 (as amended by the Life Insurance Corporation (Amendment) Act, 2011) to be void and inoperative to the extent the capital of the corporation is characterised as ‘equity capital’, and to declare Sections 130, 131, 134, and 140 of the Finance Act, 2021 and Sections 4,5,24 ad 28 of the Life Insurance Corporation Act, 1956 (as amended by the Finance Act, 2021) to be void and inoperative for being ultra vires Articles 14 read with Article 300A of the Constitution.

The petitioners also sought that Part III of the Chapter VI of the Finance Act, 2021 be declared void ab initio for the certification of the Finance Bill, 2021 as a Money Bill to be in violation of and ultra vires Article 110 of the Constitution.

The petition also sought that both the government and the insurer to issue all necessary communications to regulators, including the Sebi, IRDAI and the general public immediately that the LIC IPO is revoked in view of the SC orders.

The LIC IPO, which got over on Monday, saw 73.3 lakh applications from retail investors. This is the highest ever for a domestic issue and it topped Reliance Power’s 2008 record of 48 lakhs.

The LIC policyholders’ portion witnessed the maximum subscription at over six times, generating bids of over Rs 12,000 crore. The portion reserved for the employees of the insurer was subscribed 4.4 times. The retail individual investors’ portion saw two times subscription, with bids worth over Rs 12,450 crore.

However, the issue got a tepid response from foreign portfolio investors due to rising bond yields and volatile market conditions.

The BSE data said that LIC has received bids for 478,367,010 shares against the offered 162,078,067 shares (excluding those offered to anchor investors).