Securities Appellate Tribunal
Sanjay Kanoria & Anr. vs Sebi on 22 July, 2024
BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Date of Decision : 22.07.2024
Appeal No. 386 of 2024
1.Sanjay Kanoria
2. Mrs. Priyadarshini Kanoria A-136, Neeti Bagh, New Delhi - 110049. ..... Appellants 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. Darius Khambata, Senior Advocate with Ms. Shruti Sardessai, Mr. Shashank Singh, Ms. Vidhi Mehta, Advocates i/b Mr. Aagam Doshi, Advocate for the Appellants.
Mr. Sumit Rai, Advocate with Mr. Pratham Masurekar, Mr. Nishit Dhruva, Ms. Rasika Ghate, Ms. Shefali Shankar, Advocates i/b MDP Legal for the Respondent.
With Misc. Application No. 719 of 2023 And Misc. Application No. 720 of 2023 And Misc. Application No. 1200 of 2023 And Misc. Application No. 1358 of 2023 And Misc. Application No. 386 of 2024 And 2 Appeal No. 579 of 2023
1. Sanjay Kanoria
2. Mrs. Priyadarshini Kanoria A-136, Neeti Bagh, New Delhi - 110049. ..... Appellants Versus
1. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. BSE Ltd.
Floor 25, P. J. Towers, Dalal Street, Mumbai - 400 001.
3. Central Depository Services (India) Limited Marathon Futurex, A-Wing, 25th Floor, N M Joshi Marg, Lower Parel, Mumbai - 400 013.
4. National Securities Depository Ltd. Trade World, A Wing, 4th Floor, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai - 400013.
5. Vishvjyoti Trading Ltd. (VTL) 7-A, Sai Shakti CHS, L T Road, Near Railway Station, Dahisar (West), Mumbai - 400063.
6. Purvi Finvest Pvt. Ltd.
7. Trimurti Finvest Pvt. Ltd. ... Respondents Mr. Darius Khambata, Senior Advocate with Ms. Shruti Sardessai, Mr. Shashank Singh, Ms. Vidhi Mehta, Advocates i/b Mr. Aagam Doshi, Advocate for the Appellants.
2 3 Mr. Sumit Rai, Advocate with Mr. Pratham Masurekar, Mr. Nishit Dhruva, Ms. Rasika Ghate, Ms. Shefali Shankar, Advocates i/b MDP Legal for the Respondent Nos. 1 (SEBI). Mr. Pesi Modi, Senior Advocate with Mr. Neville Lashkari, Mr. Manish Chhangani, Mr. Sumit Yadav, Mr. Atul Kumar Agrawal, Mr. D Kalyan Reddy, Advocates i/b The Law Point for the Respondent Nos. 2 (BSE).
Mr. Mahesh Kumar, Advocate for the Respondent Nos. 3 (CDSL). Mr. Pulkit Sukhramani, Advocate with Ms. Vidhi Jhawar, Mr. Deepank Anand, Mr. Samreen Fatima, Advocates i/b JSA , Advocates & Solicitors for the Respondent Nos. 4 (NSDL). Mr. Nirman Sharma, Advocate with Ms. Nirali Mehta, Ms. Supriya Nair, Advocates i/b Mindspright Legal for the Respondent Nos. 5 (Vishvjyoti Trading Limited).
None for the Respondent Nos. 6 (Purvi Finvest). None for the Respondent Nos. 7 (Trimurti Finvest).
With Misc. Application No. 89 of 2024 And Misc. Application No. 90 of 2024 And Misc. Application No. 91 of 2024 And Appeal No. 238 of 2024
1. Sanjay Kanoria
2. Mrs. Priyadarshini Kanoria A-136, Neeti Bagh, 3 4 New Delhi - 110049. ..... Appellants Versus
1. BSE Ltd.
Floor 25, P. J. Towers, Dalal Street, Mumbai - 400 001.
2. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ... Respondents Mr. Darius Khambata, Senior Advocate with Ms. Shruti Sardessai, Mr. Shashank Singh, Ms. Vidhi Mehta, Advocates i/b Mr. Aagam Doshi, Advocate for the Appellants.
Mr. Pesi Modi, Senior Advocate with Mr. Neville Lashkari, Mr. Manish Chhangani, Mr. Sumit Yadav, Mr. Atul Kumar Agrawal, Mr. D Kalyan Reddy, Advocates i/b The Law Point for the Respondent Nos. 1 (BSE).
Mr. Sumit Rai, Advocate with Mr. Pratham Masurekar, Mr. Nishit Dhruva, Ms. Rasika Ghate, Ms. Shefali Shankar, Advocates i/b MDP Legal for the Respondent Nos. 2 (SEBI). CORAM : Justice P. S. Dinesh Kumar, Presiding Officer Ms. Meera Swarup, Technical Member Dr. Dheeraj Bhatnagar, Technical Member Per : Justice P. S. Dinesh Kumar, Presiding Officer (Oral) We have heard Shri Darius Khambata, learned senior counsel for the appellants, Shri P. N. Modi, learned senior counsel for BSE in Appeal No. 579 of 2023, Shri Sumit Rai, learned counsel for SEBI 4 5 and Shri Nirman Sharma, learned counsel for the Company Vishvjyoti Trading Ltd. in Appeal No. 579 of 2023.
2. The principal contention of Shri Darius Khambata is that the appellants had sold their shares in 2014 but they were dematerialized in 2016. The other directors of the company are hostile and, therefore, appellants had no co-operation from them for decategorizing them as the promoters.
3. After taking us through a detailed list of dates, Shri Khambata submitted that on July 16, 2021, the first appellant wrote to the Chartered Accountant of the Company1, namely, Rishi Sekhri & Associates with a request to take appropriate action or to issue directions for updating the promoters' shareholding pattern and details of promoters / shareholders of the company. On July 27, 2021, a notice was issued by the ROC2 to the company calling upon the Company to offer its comments. Sometime during 2021, the CA3 of the company certified that the appellants were not the promoters and shareholders of the company since April 2016. Thereafter, on March 4, 2022, appellants wrote to the SEBI with a request to exercise powers under Regulation 102 of the Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations, 2015 (hereinafter referred to as 'LODR 1 'Company' - Vishvjyoti Trading Ltd.
2'ROC' - Registrar of Companies 3 'CA' - Chartered Accountant 5 6 Regulations') to grant exemption from applicability of certain provisions of the LODR Regulations. According to Shri Khambata, SEBI had forwarded appellants' representation to the BSE and, in turn, conveyed BSE's views in the matter which, inter-alia, stated that it was incumbent for the Company to take requisite steps and comply with the requirements for reclassification of the promoters in terms of Regulation 31A of the LODR Regulations.
4. Shri Khambata, further submitted that while the matter was pending consideration with the SEBI, the order dated May 30, 2024 impugned in this appeal has been passed. In substance, he prayed that the directions may be issued to the SEBI to exercise its power under Regulation 102 of the LODR Regulations and pass appropriate orders.
5. Shri P. N. Modi, learned senior counsel for the BSE submitted that transfer of shares have taken place on April 21, 2016. In so far as the contention with regard to the inter se relation between the appellants and the company and appellant's request to the SEBI to exercise power to relax and to pass appropriate orders, Shri Modi submitted that it is for the SEBI to consider and BSE has no role to play.
6. Shri Sumit Rai, learned counsel for the SEBI submitted that the admitted position being that the sale has taken place in 2014, the 6 7 appellants have approached the regulator, namely, the SEBI for the first time in 2022. By then, the amendment of 2018 had come into force. The only manner in which the promoters could have been reclassified was by approaching the company well in time.
7. Shri Nirman Sharma, learned counsel for the Company submitted that the Company has never received any communication till July 2021. If any representation is submitted to the company, the same be dealt with in accordance with law.
8. To a pointed query as to whether any response was given from the Company, Shri Nirman Sharma fairly submitted that since the proceedings were in progress with SEBI in 2022, no reply was given to the appellants.
9. Both Shri Khambata, and Shri Modi, relied upon an order of this Tribunal in Synthetic Marbles and Resin Ltd. vs. National Stock Exchange of India Ltd.4 and contended that in similar circumstances, this Tribunal had directed the appellants therein to submit an application under Regulation 43 of the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2021 (hereinafter referred to as 'Delisting Regulations') with a further direction to the SEBI to investigate into the matter and to pass an appropriate order.
4 Synthetic Marbles and Resin Ltd. vs. National Stock Exchange of India Ltd. (Appeal No. 471 of 2023 decided on September 4, 2023) 7 8
10. Having heard the learned senior counsel for both the sides and having perused the records, we may record that the undisputed facts of the case are, though it is claimed that the shares were sold and transferred in 2016, appellants have approached the Company and the ROC for the first time in July 2021 and SEBI on March 4, 2022.
11. SEBI has sent an email dated April 6, 2022 ('Exhibit DD' into the appeal memo) along with a trailing mail of the BSE dated April 1, 2022. In paragraph No. 4 of its mail, the BSE has stated, thus :-
"4. While we understand the grievances raised by them that they are not the promoters of the Company, it may be appreciated that the Exchange has no role to play in identification of the promoter and promoter group of a listed company and the Exchange necessarily and must reply upon the disclosures made by a listed company from time to time. Further, as stated above, it is incumbent that the company take requisite steps and comply with the requirements for reclassification of promoters in terms of Regulation 31A of SEBI LODR Regulations."
12. In substance, appellants want themselves to be re-classified. According to them, their relation with the company is hostile though it is denied by the Company. The fact remains that the appellants have approached the SEBI with a request on March 4, 2022 to consider exercising powers of relaxation and to pass appropriate 8 9 order. But no orders have been passed as on date. In Synthetic Marbles and Resin Ltd. (Supra), this Tribunal was dealing with a similar situation and has directed the appellants therein to file an application giving details and evidence for defreezing of its demat account and the SEBI was directed to investigate into the matter and pass appropriate orders.
13. In the facts of this case and in the light of the judgment of this Tribunal in Synthetic Marbles and Resin Ltd. (Supra), we are of the view that end of justice would be met by directing SEBI to consider appellants request made on March 4, 2022 and February 14, 2024, to investigate into the matter and pass an appropriate order. SEBI shall be at liberty to issue notice and seek assistance of the BSE, if so advised. We direct accordingly.
14. It was argued that the provision of law was not correctly mentioned in the application. We may record that it is no more res integra that mentioning a provision of law incorrectly in an application shall not change the nature of the application and what is required to be seen is the content in the application. In that view of the matter, we direct SEBI to consider appellants' application either under Regulation 102 of the LODR Regulations or Regulation 43 of the Delisting regulations, 2021, to hold investigation and to pass appropriate order after issuing notice to the appellants as also to the 9 10 company. The company shall actively cooperate in the proceedings. The entire exercise shall be completed in an outer limit of three months from today.
15. In view of the above order, the appeal no. 579 of 2023 and 238 of 2024 do not survive for consideration at this point of time and they are accordingly disposed of reserving a liberty to the appellants to approach this Tribunal again if need arises. All contentions of all parties are kept open.
16. All Misc. Applications stand disposed of.
Justice P. S. Dinesh Kumar Presiding Officer Ms. Meera Swarup Technical Member Dr. Dheeraj Bhatnagar Technical Member 22.07.2024 PRAMILA TANAJI Digitally signed by PRAMILA TANAJI MISAL Date: 2024.07.24 MISAL PTM 14:29:05 +05'30' 10