Securities Appellate Tribunal
Mr. Mahendra Girdharilal vs Sebi on 28 February, 2019
Author: Tarun Agarwala
Bench: Tarun Agarwala
BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Date of Decision : 28.02.2019
Misc. Application No. 91 of 2019
And
Appeal No. 73 of 2019
Mr. Mahendra Girdharilal
15, Linking Road,
Opp. Arya Samaj Mandir,
Santacruz West,
Mumbai - 400 052. .... Appellant
Versus
1.National Stock Exchange of India Limited Exchange Plaza, Plot No. C/1, G-Block, Bandra-Kurla Complex, Bandra East, Mumbai - 400 051.
2. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051.
3. T. Stanes And Company Limited 8/23-24, Race Course Road, Coimbatore - 641 018. ...Respondents Mr. Rakesh Puri, Advocate for the Appellant. Ms. Shreya Anuwal, Advocate with Ms. Pranjal Krishna, Advocate i/b Manilal Kher Ambalal & Co. for Respondent No. 1.
Mr. Santanu Mitra, Advocate i/b Desai & Diwanji for the Respondent No. 2.
None for Respondent No. 3.
2CORAM : Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member Per : Justice Tarun Agarwala, Presiding Officer (Oral)
1. The requirement of filing a certified copy of the impugned order is waived.
Misc. Application No. 91 of 2019:-
2. There is a delay of 5 days in filing the appeal. Cause shown is sufficient. The delay in filing the appeal is condoned. The application is allowed. Appeal No. 73 of 2019:-
3. The appellant being aggrieved by the order dated July 2, 2018 passed by the National Stock Exchange of India Limited ('NSE' for short), respondent no. 2 allowing T. Stanes And Company Limited, respondent no. 3 to be removed from the Dissemination Board has filed the present appeal praying for the quashing of the order dated July 2, 2018 passed by the NSE and further praying that a direction should be issued to bring back the Company, namely, respondent no. 3 on the Dissemination Board of NSE.
4. The facts leading to the filing of the present appeal is that the appellant is a shareholder of respondent no. 3 3 Company. The scrips of respondent no. 3 Company was listed in the Madras Stock Exchange. The said Stock Exchange surrendered its recognition due to non-fulfillment of the criteria stipulated by Securities and Exchange Board of India ('SEBI' for short). As a result, the Company's share was placed in the Dissemination Board of the NSE with effect from December 1, 2014. A circular in this regard was issued by the Company dated December 2, 2014 to its shareholders intimating that they can avail the limited facility of buying and selling their shares on the Dissemination Board of the NSE.
5. SEBI issued a circular dated May 30, 2012 issuing guidelines for exit of De-recognized / Non-operational Stock Exchanges. Subsequently, SEBI issued a circular dated May 22, 2014 directing the Stock Exchanges to address the issues faced by the Companies exclusively listed in the Non- operational Stock Exchanges. Thereafter SEBI issued a circular dated April 17, 2015 allowing time to exclusively listed Companies on Dissemination Board to obtain listing upon compliance with the listing requirements of the nation- wide Stock Exchanges. Based on the circular dated October 10, 2016 an offer was made by respondent no. 3 Company to its shareholders to buy-back their shares by a letter of offer 4 dated April 29, 2016. The buy-back offer was made with the intention to provide an exit opportunity to the existing shareholders at a fair price. The buy-back offers were received and the Company made payments of ` 1,92,41,602/- which is reflected in the annual report of the Company for the financial year 2016-17. Based on the said buy-back offers the NSE issued the order dated July 2, 2018 removing the Company, respondent no. 3 from the Dissemination Board in terms of the SEBI circular dated October 10, 2016 which provided that where the exclusively listed Companies failed to get listed on the nation-wide Stock Exchanges it will provide an exit mechanism to its investors.
6. The appellant did not accept the letter of offer and chose not to sell the shares back to the Company. The buy-back offers were made in the year 2016-17 and after two years the appellant has now filed the present appeal contending that the buy-back offer made by the Company was wholly illegal in as much as the circular dated April 17, 2015 and October 10, 2016 issued by SEBI only permitted the promoters to buy- back the shares and did not allow the Company to buy-back the shares. It was contended that the said exercise made by respondent no. 3 Company was wholly illegal in gross violation of SEBI circulars and therefore the same should be 5 set aside and a direction should be issued directing NSE to bring back the respondent no. 3 Company on the Dissemination Board.
7. The contention of the learned counsel for the appellant is patently misconceived as we find that SEBI issued a circular dated July 25, 2017 permitting the Company to buy- back the shares so as to provide an exit to the public shareholders. In view of the said circular we do not find any illegality being made in the buy-back of the shares by the Company. In any case, we do not find any reason to disturb the arrangement made two years ago at this belated stage.
8. In the light of the aforesaid, we do not see any illegality in the order dated July 2, 2018 removing respondent no. 3 Company from the Dissemination Board.
9. The appeal fails and is dismissed. In the circumstances of the case, there shall be no order as to costs.
Sd/-
Justice Tarun Agarwala Presiding Officer Sd/-
Dr. C.K.G. Nair Member 28.02.2019 Prepared and compared by: msb