Document Fragment View

Matching Fragments

26. This order is without prejudice to the right of SEBI to take any other action that may be initiated against ZIL and its directors/promoters in accordance with law. The above directions are without prejudice to the rights of FCCB holders to enforce their rights of redemption against ZIL before competent authority, forum or court.
27. The persons/entities against whom this order has been passed may file their reply to SEBI within 21 days from the date of receipt of this order, if they so desire.

7. The case of the Appellants is that the FCCBs in question were issued and the monies collected by the Appellants at a time when the world economy was in boom almost everywhere. The rate of exchange of the American Dollar was between Rs. 41 to Rs. 45 during the relevant period. In the circumstances, it was the earnest belief of the Appellants that atleast a substantial part of the FCCBs would be converted into shares of the issuing Company by the FCCB holders. But, due to the global economic crash in the year 2008 recessionary trends across the whole world were witnessed and the same is a matter of record. Due to this phenomenon, most of the FCCB holders decided not to convert their FCCBs into shares and instead sought repayment / redemption of the FCCBs on maturity and due to economic crash in 2008, increase in cost of USD vis-à-vis Rupees and non-conversion of FCCBs into shares of ZIL, the ZIL did not have resources to repay FCCBs on maturity.

9. The Appellants submit that on October 14, 2011 certain shareholders, claiming to be FCCB holders, filed Suit No. 2034 of 2011 before the Learned City Civil Court at Dindoshi to stop the sale of the MSD Business and understandably they also approached various regulators including SEBI. Next, the trustee of the said FCCBs also filed Suit No. 2865 of 2011 and Company Petition No. 28 of 2012 in the Hon'ble Bombay High Court on October 21, 2011 seeking various reliefs in respect of the FCCBs against Appellant Nos. 1 to 3. The Appellants, therefore, submit that the holders of the FCCBs, through their trustee, have already elected to exercise their right as per law in respect of their interests and redemption of said FCCBs by approaching the Hon'ble High Court and, therefore, they are precluded from raising a parallel dispute before any other forum. It is specifically contended by the Appellants that the rights and interests of the FCCB holders have already been duly protected by the Hon'ble High Court particularly by its order dated October 9, 2012 passed in Suit No. 2865 of 2011 on the Notice of Motion moved by the Plaintiff (trustee, The Bank of New York Mellon, London Branch). The relevant portion of the said order of the Hon'ble High Court is reflected in paragraphs 16 to 20 and the same is reproduced herein below for the sake of convenience:-

15. On the basis of the above said provisions, Respondent No. 1 contends that the companies cannot engage in any act, practice or course of business which would tantamount to fraud "in connection with" the issue or dealing in securities which are listed or proposed to be listed. The Respondents also rely upon the case of Hon'ble Supreme Court reported in 2004(5) SCC 632, namely, Tamil Nadu Kalyana Mandapmam Assn. v. Union of India (UOI) and Ors.

16. As regards the jurisdiction of SEBI to entertain an issue which is pending before the Hon'ble High Court in a Suit / Company Petition filed by the FCCB holders, the learned senior counsel submits that the same does not, rather cannot, prevent SEBI from exercising its jurisdiction and powers vested in it under the SEBI Act, 1992 and Regulations made thereunder. In this connection, our attention is drawn towards Sections 15 Y, 20 A and 21 of the SEBI Act read with Section 22 E of the SCR Act. A judgment of the Hon'ble Bombay High Court in case of Kesha Appliances P. Ltd. and Ors. v. Royal Holdings Services Ltd. and Ors., 2006(1) Bom CR 545 is pointed out. It is also suggested by the learned senior counsel for Respondent No. 1 that by the impugned order, the Ld. WTM has not sought to secure the redemption amount claimed by the FCCB holders but has merely directed the Appellants to provide a bank guarantee for an amount of USD 33.93 Million received by them as sale proceeds after disposing of the MSD Business.