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SC has decided to consider the validity of the amendment to the LIC Act by way of the Finance Act, 2021.
Digital Desk: The Supreme Court (SC) refused to grant interim relief in a case involving LIC IPO share allotment on Thursday.
As per sources, the apex court has issued notice to the Centre on petitions challenging the constitutional validity of provisions of certain sections of the Finance Act, 2021, and LIC Act, 1956.
The SC has decided to consider the validity of the amendment to the LIC Act by way of the Finance Act, 2021, while the court has issued notice to the government regarding pleas challenging the choice to dilute 5 percent of its stake LIC through a 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.
As stated, the petitioners have filed the case in the Supreme Court to issue a writ of mandamus declaring 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 characterized as ‘equity capital’ and declared in Sections 130, 131, 134, and 140 of the Finance Act, 2021 and Sections 4,5, 24, and 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 seek that Part III of Chapter VI of the Finance Act, 2021, is 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 issue all necessary communications to regulators, including the SEBI, IRDAI, and the general public, immediately that the LIC IPO be revoked in light of the SC orders.
The LIC IPO, which ended 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 saw the highest subscription at over six times, generating over Rs 12,000 crore bids. The portion reserved for the workers of the insurer was subscribed 4.4 times. The retail individual investors’ portion saw two times subscription, with bids worth over Rs 12,450.
However, the difficulty got a tepid response from foreign portfolio investors thanks to rising bond yields and volatile market conditions.
The BSE data said that LIC had received 478,367,010 shares against the offered 162,078,067 shares (excluding those offered to anchor investors).
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