Securities Appellate Tribunal
Arcelormittal Nippon Steel India ... vs Sebi on 1 July, 2022
Author: Tarun Agarwala
Bench: Tarun Agarwala
BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Date of Decision: 01.07.2022
Appeal No. 338 of 2022
ArcelorMittal Nippon Steel India Limited
(formerly, Essar Steel India Limited)
AMNS House, AMNS Township 27th KM,
Surat-Hazira Road,
Hazira Surat- 394 270,
Gujarat, India ...Appellant
Versus
Securities and Exchange Board of India,
SEBI Bhavan, Plot No. C-4A, G-Block,
Bandra-Kurla Complex, Bandra (East),
Mumbai- 400 051 ...Respondent
Mr. P. N. Modi, Senior Advocate with Mr. Kunal Katariya,
Mr. Shahezad Kazi, Mr. Sudip Mahapatra, Mr. Gladwin Issac,
and Mr. Utkarsh Trivedi, Advocates i/b S&R Associates for the
Appellant.
Mr. Pradeep Sancheti, Senior Advocate with Ms. ,Nidhi Singh,
Ms. Deepti Mohan, Ms. Binjal Samani, Ms. Aditi Palnitkar and
Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the
Respondent.
CORAM: Justice Tarun Agarwala, Presiding Officer
Justice M. T. Joshi, Judicial Member
Per: Justice Tarun Agarwala, Presiding Officer (Oral)
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1.The present appeal has been filed against the order dated March 28, 2022 passed by the Adjudicating Officer ("AO" for convenience) of the Securities and Exchange Board of India ("SEBI" for convenience) imposing a penalty of Rs. 2 lakhs for not making the requisite disclosure under Regulations 51(1), 51(2) read with Part B of Schedule III (Clause A1, A4, A9) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("LODR Regulations" for convenience) and Regulations 52(1), 52(4), 52(5), 52(7), 54(2) and 57(1) of the LODR Regulations.
2. The facts leading to the filing of the present appeal is, that a show cause notice dated October 18, 2019 was issued to show cause why an inquiry should not be initiated and penalty should not be imposed under Section 15A(b) of the SEBI Act. The allegation in brief levelled against noticee in the show cause notice is, that Essar Steel India Limited now known as ArcelorMittal Nippon Steel India Limited had issued and listed non-convertible debt securities in 2011. It was alleged that Essar Steel India Limited did not make the disclosures as required under the LODR Regulations.
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3. The appellant contended that the National Company Law Tribunal ("NCLT") admitted a petition against Essar Steel India Limited under the Insolvency and Bankruptcy Code, 2016 ("IBC") on August 02, 2017 for corporate insolvency resolution process. A Resolution Professional was appointed on February 08, 2019. The resolution plan filed by ArcelorMittal Nippon Steel India Limited was accepted by the Committee of Creditors and approved by NCLT under the IBC. The resolution plan was upheld by NCLT on July 04, 2019. The Supreme Court also upheld the approval of the resolution plan by NCLT on November 15, 2019 holding that the resolution applicant, namely, ArcelorMittal Nippon Steel India Limited must get a clean slate and cannot be faced with additional claims after the resolution plan was approved. After the passing of the impugned order, the management of Essar Steel India Limited was taken over by the new management, namely, ArcelorMittal Nippon Steel India Limited on December 16, 2019.
4. The show cause notice was issued on October 18, 2019 alleging violation of LODR Regulations by Essar Steel India Limited for the period December 2015 to March 2019. 4
5. In Monnet Ispat & Energy Limited vs. SEBI (Appeal No. 238 of 2020 decided on 29.10.2020) this Tribunal held:-
"18....once a resolution plan has been approved it becomes binding on all creditors including the government and local authorities including the respondent under section 31(1) of the IBC. It is no longer open to the respondent to issue a show cause notice or adjudicate and pass an order of penalty upon the appellant. Consequently, the impugned order cannot be sustained and is quashed. The appeal is accordingly allowed with no order as to costs."
6. Similar orders were passed by this Tribunal in the matter of Alok Industries Ltd. vs. SEBI (Appeal No. 300 of 2020 decided on 01.12.2020) and Raj Oil Mills Limited vs. SEBI (Appeal No. 54 of 2019 decided on 15.02.2020).
7. The AO acknowledges that the orders of this Tribunal in Monnet Ispat and Energy Ltd. vs. SEBI, Alok Industries Ltd. vs. SEBI and Raj Oil Mills Limited vs. SEBI squarely covers the issue but still went on to decide the matter on merits and imposed the penalty holding that the recovery shall not be made till the disposal of the appeals filed by SEBI before the Supreme Court in the matter of Monnet Ispat and Energy Ltd.
8. The learned senior counsel for the respondent Shri Sancheti, contended that the decision of the Supreme Court 5 in Essar Steel India Limited CoC vs. Satish Kumar Gupta 2020 (8) SCC 531 and the decisions of this Tribunal in is only confined to the period till the petition was admitted by NCLT but during the pendency of the resolution plan the Resolution Professional was required to comply with the LODR provisions and in case of non-compliance, the Resolution Professional would be responsible for non-compliance of the provisions. In this regard, the learned counsel placed reliance upon a Circular dated January 03, 2018 issued by Insolvency and Bankruptcy Board of India, a copy of which was placed before the Tribunal.
9. Be that as it may. We are of the opinion, that the controversy involved in the present appeal is squarely covered by the decision of the Supreme Court in Essar Steel India Limited CoC vs. Satish Kumar Gupta 2020 (8) SCC 531 and the decision of this Tribunal in Monnet Ispat & Energy Limited vs. SEBI (Appeal No. 238 of 2020 decided on 29.10.2020), Alok Industries Ltd. vs. SEBI (Appeal No. 300 of 2020 decided on 01.12.2020) and Raj Oil Mills Limited vs. SEBI (Appeal No. 54 of 2019 decided on 15.02.2020).
10. In view of the aforesaid, the impugned order dated March 28, 2022 cannot be sustained and is quashed. The appeal is 6 allowed with no order as to costs. However, it will be open to the respondent SEBI to initiate proceedings for the relevant period against the relevant entities taking into consideration the Circular dated January 03, 2018 passed by the Insolvency and Bankruptcy Board of India which has been issued in exercise of powers under Section 196 read with Section 208 of the IBC, 2016.
11. This order will be digitally signed by the Private Secretary on behalf of the bench and all concerned parties are directed to act on the digitally signed copy of this order. Certified copy of this order is also available from the Registry on payment of usual charges.
Justice Tarun Agarwala Presiding Officer Justice M. T. Joshi Judicial Member RAJALA Digitally signed 01.07.2022 KSHMI by RAJALAKSHMI H NAIR PK H NAIR Date: 2022.07.06 09:42:54 +05'30'