Securities Appellate Tribunal
Mr. Ganpatraj L. Chowdhary vs Sebi on 21 February, 2019
Author: Tarun Agarwala
Bench: Tarun Agarwala
BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Date of Decision: 21.2.2019
Misc. Application No.17 of 2019
And
Appeal No.12 of 2019
Shobhendra Mansukhlal Daruwala
73 Nav Dariya Mahal,
80B, Nepean Sea Road,
Mumbai - 400 006. ..... Appellant
Versus
1.Securities & Exchange Board of India SEBI Bhawan, Bandra-Kurla Complex, Mumbai - 400 051.
2. Bombay Stock Exchange Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400051.
3. Riddhi Siddhi Gluco Boild Limited 10, Abhishree Corporate Park, Nr. Swagat Bungalow, BRTS Bus Stop, Ambli-Bopal Road, Ahmedabad- 380058.
4. Ganpatraj Lalchand Chowdhary 10, Abhishree Corporate Park, Nr. Swagat Bungalow, BRTS Bus Stop, Ambli-Bopal Road, Ahmedabad- 380058. ...... Respondents Mr. Pankaj Uttradhi, Advocate with Ms. Sabeena Mahadik and Ms. Yashasvini Chandra, Advocate i/b. Visesha Law Services for the Appellant.
Mr. Pradeep Sancheti, Senior Advocate with Mr. Mihir Mody and Mr. Nishant Upadhyay, Advocates i/b. K. Ashar & Co. for the Respondent No.1.
2Mr. P.N. Modi, Senior Advocate with Mr. Nihar Mody, Mr. Tomu Francis and Mr. Arka Saha, Advocates i/b. Khaitan & Co. for the Respondent no.2.
Mr. Somasekhar Sundaresan, Advocate with Ms. Yugandhara and Mr. Samit Shukla, Ms. Viraj Gami and Ms. Raveena Dhawan, Advocates i/b. DSK Legal for the Respondent Nos.3 & 4.
With Appeal No.48 of 2019 Riddhi Siddhi Gluco Biols Limited 10, Abhishree Corporate Park, Near Swagat Bunglows, BRTS Bus Stand, Ambali Bopal Road, Ahmedabad Gujarat - 380058. ..... Appellant Versus BSE Limited Floor 25, P.J. Towers, Dalal Street, Mumbai - 400001. ...... Respondent Mr. Somasekhar Sundaresan, Advocate with Ms. Yugandhra, Mr. Samit Shukla, Ms. Viraj Gami and Ms. Raveena Dhawan, Advocate i/b. DSK Legal for the Appellant.
Mr. P.N. Modi, Senior Advocate with Mr. Nihar Mody, Mr. Tomu Francis and Mr. Arka Saha, Advocates i/b. Khaitan & Co. for the Respondent.
With Appeal No.49 of 2019 Mr. Ganpatraj L. Chowdhary Rajul Villa, Riddhi Siddhi, Opp. Abhishree Corporate Park, Ambali-Bopal Road, Ambali, Ahmedabad- 380058. ..... Appellant Versus BSE Limited Floor 25, P. J. Towers, Dalal Street, Mumbai - 400001. ...... Respondent 3 Mr. Somasekhar Sundaresan, Advocate with Ms. Yugandhra, Mr. Samit Shukla, Ms. Viraj Gami and Ms. Raveena Dhawan, Advocate i/b. DSK Legal for the Appellant.
Mr. Tomu Francis, Advocate with Mr. Arka Saha, Advocates i/b. Khaitan & Co. for the Respondent.
CORAM: Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member Per : Justice Tarun Agarwala (Oral)
1. Riddhi Siddhi Gluco Boild Limited, Respondent no.3 a listed company, received a letter dated 7.12.2017 from one Ganpatraj Lalchand Chowdhary, Respondent no.4 expressing his intention to provide an exit opportunity to all the public shareholders to voluntarily de-list equity share capital held by the public shareholders in accordance with the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (hereinafter referred to as "Delisting Regulations"). The Board of Directors in its meeting held on 12th December, 2017 gave its consent to the delisting offer subject to the approval by the shareholders. Thereafter, a special resolution was passed for delisting of the equity shareholders and thereafter BSE Limited (hereinafter referred to as "BSE") was notified on 2.2.2018. BSE in turn approved in-principle for delisting the equity shares of the company on 20th February, 2018, based on which a public announcement was made on 22nd February, 2018. The offer letters was dispatched and the bidding process opened on 6th March, 2018 and closed on 12th March, 2018.
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2. It transpires that the appellant made a complaint on the SEBI Scores Portal with regard to the irregularities in the delisting process. Other complaints were also received based on which SEBI issued a communication dated 19th March, 2018 directing BSE to keep the delisting process on hold till further directions, based on which BSE issued an order dated 21st March, 2018 intimating that the delisting offer by Respondent no.4 has been kept on hold. SEBI vide communication dated 21st August, 2018 advised BSE to take appropriate action at its end since it was the competent authority to approve the delisting by the companies. The Independent Oversight Committee for Listing Function of BSE after considering all aspects of the matter found that the company had made incorrect submission/declarations for seeking BSE's in-principle approval for delisting of the shares and consequently the in-principle approval granted by BSE vide letter dated 20th February, 2018 for voluntary delisting of equity shares of the company was withdrawn. BSE accordingly directed that the shares/funds should be returned back to the shareholders/promoters respectively immediately upon expiry of seven working days from the date of receipt of the order by the company.
3. The appellant who is a shareholder filed the present Appeal No.12 of 2019 contending that the company and its promoters have not only violated the provisions of the Delisting Regulations but have also indulged in fraudulent acts in violation of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 and that the 5 company and its promoters are liable for imposition of penalty. It was thus urged that the direction of BSE to refund the amount should be stopped so that the said amount could be utilized for payment of penalty, if any.
4. Respondent nos. 3 and 4 namely the company and Ganpatraj Lalchand Chowdhary have also filed Appeal nos.48 of 2019 and 49 of 2019 praying for quashing of the order dated 26th December, 2018 passed by BSE. By the time the appeal was filed BSE intimated the Tribunal that pursuant to its order of 26th December, 2018 the shares have been returned to the shareholders and, therefore, the appeal to that extent has become infructuous.
5. SEBI also filed a reply indicating that pursuant to the complaint filed by the appellant an investigating authority under Section 11C has been appointed to investigate the trading activities of various entities in the scrip of the company and that currently investigation in respect of the shares are continuing and is in progress.
6. In the light of this assertion made by SEBI, learned counsel for the appellant in Appeal no.12 of 2019 contended that his appeal could be disposed of with a direction to the investigating authority to complete the investigation and that till such time final orders are not passed the amount kept in the escrow account should not be refunded to Respondent nos.3 and 4 i.e. to the appellants in Appeal nos.48 and 49 of 2019. On the other hand, Respondent nos.3 and 4 contended that since the shares have already been returned no useful purpose would be served in pursuing their appeals, namely, Appeals No.48 and 49 of 2019. It was further submitted that retention of amount to the escrow 6 amount would cause irreparable loss and harm which in any case would be unjustified under the Regulations. It was urged that since the delisting process have not been approved it was obligatory upon the respondents to refund the amount.
7. Considering the aforesaid, we find that an investigation has been initiated which is in progress. The irregularities alleged are being investigated. No glaring illegality has been pointed out nor there is anything to indicate that the Respondent nos. 3 and 4 would disappear or their assets would dissipate. In our opinion attachment before judgement can only be exercised in exceptional cases and nothing has been pointed out to show that the present case is an exceptional one.
8. In the light of the aforesaid, all the three appeals are disposed of with a direction that SEBI should complete the investigation expeditiously preferably within a period of six months from today. The amount deposited in the escrow account should be refunded to the promoters. Interim order passed in Appeal no.12 of 2019 stands vacated. Misc. Application is also disposed off.
Sd/-
Justice Tarun Agarwala Presiding Officer Sd/-
Dr. C. K. G. Nair Member 21.2.2019 Prepared and compared by RHN