Aggarsain Spinners Limited vs Shreeji Cotfab Limited & Anr

Through its Authorised Signatory Director Mr. Sunny Garg, Having its Office At: 2nd Floor, SCO No. 404, Sector 20, Punchkula, Haryana Email: aggarsainspinners@gmail.com ...Appellant

Versus

SHREEJI COTFAB LIMITED

5/4, Ground Floor, Singh Sabha Road, Block No. 41, Shakti Nagar, New Delhi-110007 Email: accts.shreeji@gmail.com ...Respondent No. 1

MR. JALESH KUMAR GROVER

Reg. No. IBBI/IPA-001/IP-P00200/2017-2018/10390 Resolution Professional for M/s GPI Textiles Ltd. (Under CIRP) First Floor (above Yes Bank) SCO 818, NAC Manimajra, Chandigarh - 160101, Email: jk.grover27@gmail.com ...Respondent No. 2

COMMITTEE OF CREDITORS Through the Lead Financial Creditors Phoenix Arc Private Limited 5th Floor, Dani Corporate Park, 158, CST Road, Kalina, Santa Cruz (E), Mumbai-400098 ...Respondent No. 3

Present: 2

For Appellant: Mr. Puneet Bali, Sr. Advocate with Mr. Himanshu Vij, Mr. Eshna Kumar, Mr. Surjeet Bhadu and Mr. Akhil Anand, Advocates For Respondent: Mr. Aalok Jaga, Ms. Pallavi Singh and APS Madaan, Advocates for R1 Mr. Abhishek Anand, Mr. Mohak Sharma, Mr. Karan Kohli, Mr. Prateek Kushwaha, Mr. Viren Sharma, Mr. Pathik Choudhury, Mr. Sahil Bhatia, Mr. Mohit and Nikhil Jain, Advocates for R2 Mr. Manish Jain, Ms. Divya Sharma and Mr. Siddhant Jain, Advocates for R3

With Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022

IN THE MATTER OF:

AGGARSAIN SPINNERS LIMITED

Through its Authorised Signatory Director Mr. Sunny Garg, Having its Office At: 2nd Floor, SCO No. 404, Sector 20, Punchkula, Haryana Email: aggarsainspinners@gmail.com ...Appellant No. 1

Mr. RAMESH GARG H. No. 43, Sector 7, Panchkula, Haryana Email: ... Appellant No. 2

Versus

MR. SUMAT GUPTA (Reg. No. IBBI/IPA-001/IP-P00167/2017-2018/10336) RP for M/s. Vallabh Textiles Ltd. (Under CIRP), B-1, Near Zoom Hotel Building, Industrial Area-A, Transport Nagar, Ludhiana

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 3

Email: irp.vallabhtextiles@gmail.com ... Respondent No. 1

COMMITTEE OF CREDITORS Through the Lead Financial Creditors Punjab National Bank, Zonal Sasbra Centre, 5# Ferozpur Road, Ludhiana, Punjab, 141012 ...Respondent No. 2 Present: For Appellant: Mr. Puneet Bali, Sr. Advocate with Mr. Himanshu Vij, Mr. Eshna Kumar, Mr. Surjeet Bhadu and Mr. Akhil Anand, Advocates For Respondent: Mr. Abhishek Anand, Mr. Prateek Kushwaha, Advocates for R2 Mr. Kunal Godhwani, For RP Mr. Rajiv Khurana

JUDGMENT

Per: Justice Rakesh Kumar Jain.

This order shall dispose of two set of appeals i.e CA (AT) (Ins) No. 635

& 636 of 2022 and CA (AT) (Ins) No. 637 & 638 of 2022 as the issues

involved in both set of appeals are common. However, for the sake of

convenience, we are recording the facts of both set of appeals separately.

Facts of Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022

2. This appeal is directed against order dated 24.05.2022 passed by the

Adjudicating Authority (National Company Law Tribunal,

Chandigarh Bench) by which an application bearing I.A. No. 348 of 2021,

filed by Respondent No. 1 M/s Shreeji Cotfab Limited for declaration that

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 4

the Appellant is ineligible to be a resolution applicant in view of Section 29-

A(f) of the Insolvency and Bankruptcy Code, 2016 (in short 'Code') has

been allowed, I.A. No. 155 of 2021 filed by the Appellant 'Aggarsain

Spinners Limited' to place additional documents to clarify the position of the

statutory body i.e. Security Exchange Board of India (in short 'SEBI) has

been dismissed and CA No. 287 of 2019, filed by the Appellant for accepting

its resolution plan has been dismissed holding that the Appellant is

ineligible in view of the Section 29-A(f) of the Code.

3. In brief, M/s Phoenix ARC Private Limited (Financial Creditor) filed an

application under Section 7 of the Code before the Adjudicating Authority

for initiation of Corporate Insolvency Resolution Process (in short 'CIRP)

against M/s GPI Textiles Limited (Corporate Debtor). The Application was

admitted by the Adjudicating Authority vide its order dated 06.07.2018 and

appointed Jalesh Kumar Grover as an Interim Resolution Professional (in

short 'IRP') vide its order dated 12.07.2018. Thereafter, with the majority

decision of the Committee of Creditors (in short 'CoC') Jalesh Kumar Grover

was confirmed as Resolution Professional (in short 'RP')

4. The 6th meeting of the COC was convened on 17.12.2018 in which RP

informed the members of the CoC that pursuant to publication of 'Form-

G' dated 15.09.2018, he has received resolution plan and interest from

two more parties to submit their resolution plan after the last date of

submission of Expression of Interest (in short 'Eol'). After deliberations,

members of the CoC decided to extend the CIRP period in terms of Section

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 5

12(2) of the Code, for a period of 90 days and approved the resolution for

republishing 'Form-G' in the matter of the Corporate Debtor. 'Form-G' was

republished on 22.12.2018, Eols were invited and in pursuance thereof,

various resolution plans were put up before the CoC for consideration. The

RP convened 10th meeting of the CoC on 21.02.2019, in which he apprised

the members of CoC about the amount proposed by the prospective

resolution applicants in the matter of the Corporate Debtor and upon

discussion, members of the CoC asked the RP to call all the prospective

resolution applicants in the matter of Corporate Debtor in the next meeting.

The ranks of prospective resolution applicants, as per the evolution matrix,

at the end of 10th meeting, was that the Appellant was at no. 1, Shivani

Trendz Pvt. Ltd. At no. 2, Navraj Mittal & Others at no. 3 and Pankaj Bhatia

& Shreeji Cotfab were at no. 4.

5. After completion of negotiation process, the RP convened 12th

meeting of the CoC on 27.03.2019, in which the CoC declared resolution

plan submitted by the Appellant as H-1 and asked the RP to place the

resolution plan submitted by the Appellant for voting. The resolution plan

submitted by the Appellant was approved by the CoC with 92.55% voting

share. The RP then filed an application, bearing CA No. 287 of 2019, under

Section 31 of the Code for approval of the resolution plan before the

Adjudicating Authority.

6. According to RP, he received an email dated 15.06.2021 from

Ayat Processors with some documents, stating that the Appellant was

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 6

ineligible, in view of Section 29-A (f) of the Code because at the time of

submissions of resolution plan and approval of the resolution plan by the

CoC, it had already been debarred by the SEBI from accessing the securities

market. The RP filed an additional affidavit dated 05.07.2021 apprising the

Adjudicating Authority regarding the said information and documents

brought on record by Ayat Processors in the matter of the Corporate Debtor.

7. An application bearing I.A. No. 155 of 2021 was filed by the Appellant

to clarify the position of the SEBI in the matter. Another application bearing

I.A. No. 348 of 2021 was filed by Respondent No. 1 for declaration that the

Appellant was ineligible in view of Section 29-A(f) of the Code at the time of

submission of resolution plan to the RP, at the time of completion of the said

resolution plan by the CoC and had also filed a false affidavit of being

Section 29-A compliant.

8. The Appellant is an Exclusively Listed Company (in short ELC) and its

shares were listed on the stock exchanges of Jaipur and New Delhi.

Consequent upon the closure of regional stock exchanges, the Appellant

was moved to Dissemination Board (in short 'DB') of the Bombay Stock

Exchange (in short 'BSE'). According to Respondent No. 1, SEBI had given

two options to company, moved to DB to either give exit opinion option to

the shareholders or to get the Company listed on a nationwide stock

exchange.

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 7

9. The case set up by Respondent No. 1 against the Appellant is that the

Appellant, an ELC was debarred by SEBI for accessing the security market

w.e.f. 27.03.2018 till further orders, for a period of 10 years, due to non-

compliance of the SEBI Circulars dated 10.10.2016, therefore, it

was ineligible in terms of Section 29-A(f) of the Code to submit the

resolution plan and is also guilty of filing of a false affidavit stating therein

that it is Section 29 -A compliant.

10. It is further the case of Respondent No. 1 that as per notice

no. 20180328-44 dated 28.03.2018 of BSE, the details of the non-

compliant ELC has been mentioned and for initiating action against such

ELC including RA and its promoters/directors in terms of the circular

issued by the SEBI.

11. Counsel for the Appellant has submitted that when the Appellant

was moved to DB, two option were given to it either to give an exist plan to

its shareholders or to get it listed on a nationwide stock exchange. It is

submitted that the Appellant took a decision to get its share listed on the

Metropolitan Stock Exchange of India (MSEI) and submitted listing

application on 28.12.2017, within the timelines, paid the listing fees

on 22.12.2017, informed the BSE of the same and also submitted plan of

action to BSE.

12. In the backdrop of the brief relevant facts narrated hereinabove, the

Adjudicating Authority took a decision to allow the application bearing I.A.

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 8

No. 348 of 2021 filed by Respondent No. 1 and consequently dismissed I.A.

No. 155 of 2021 and CA No. 287 of 2019 both filed by the Appellant.

13. Counsel for the Appellant has submitted that not only the impugned

order is patently illegal but also the notice of the BSE dated 28.03.2018,

based upon the circular dated 01.08.2017 of the SEBI. The crux of his

argument is that the order of debarment for a period as long as 10years is

punitive in nature and could not have been passed without following the

salutary principle of natural justice i.e. Audi alterm partem and is also in

violation of Section 11(4) of the SEBI Act, 1992 (in short 'the Act') which

provides for an order before such debarment, which should not only be in

writing but also to contain reasons. He has also submitted that the fourth

proviso to Section 11(4) of the Act mandates for an opportunity of hearing.

14. It is also submitted that there was no delegation of power by SEBI

to BSE in circulars dated 10.10.2016 and 01.08.2017 to restrain any

person from accessing the securities market and even if, for the sake of

argument, it is presumed that the powers were delegated, the BSE could not

have passed the order dated 28.03.2018, debarring the Appellant for a

period of 10 years, in terms of Section 29-A(f), without following the

mandatory procedure prescribed under Section 11(4) of the Act. Counsel for

the Appellant has vehemently argued that the Adjudicating Authority

has committed a patent error in declaring the Appellant as ineligible under

Section 29-A (f) by holding that the SEBI has prohibited the Appellant for

trading in security for accessing the security market and that the notice

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 9

dated 28.03.2018 has been issued by the BSE as a delegatee of the SEBI. It

is submitted that the power to restrain any person from accessing the

security market was never delegated by the SEBI to the BSE as the

said power is bestowed upon SEBI under Section 11(4)(b) of the Act. It is

further submitted that the circular dated 10.10.2016 issued by the SEBI

and actions contemplated under para 6 can only be recommended by the

designated stock exchange (BSE) but it does not have the power to debar the

entities. It is also submitted that Para 8 of the said circular provides for an

advice to facilitate compliance. Counsel for the Appellant has further argued

that circular dated 01.08.2017 is a follow up circular to the circular

dated 10.10.2016 and the same does not delegate any power to BSE in

specific terms. Section 11(1) of the Act provides for power to SEBI but SEBI

can delegate its power only in terms of Section 19 and the circular

dated 10.10.2016 and 01.08.2017 are not issued under Section 19.

15. In order to make good his argument, Counsel for the Appellant

has read the circulars dated 10.10.2016, 01.08.2017 issued by the SEBI

and notice dated 28.03.2018 extensively and has also referred to the

provisions of the Act and in the end submitted that since no order has been

passed for debarment in terms of Section 11(4) of the SEBI or by the BSE

being a delegate, therefore, the notice dated 28.03.2018 cannot be relied

upon by Respondent No. 1 for the purpose of seeking declaration of

debarring the Appellant in terms of the Section 29-A(f) of the Code.

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 10

16. On the other hand, Counsel appearing on behalf of Respondent No. 1

has submitted that SEBI performs two separate functions under Section 11

of the Act. According to him Section 11(1) enjoins a duty upon the SEBI to

protect the interest of investors in securities and to promote the

development of and to regulate the securities market, by such measures as

it thinks fit and in the process of regulating the market, the circulars have

been issued from time to time in respect of ELC which are on DB addressing

them that they have to either provide an exit plan to the shareholders or to

get it listed on the nationwide stock exchange. It is argued that SEBI is not

required to give any kind of opportunity of hearing or to pass an order with

reasons and that too in writing as provided in Section 11(4) of the Act which

is required to be passed during investigation or enquiry or on completion of

such investigation or enquiry. It is argued that Section 11(4) is more person

centric than it is related to the Company. It is further argued that the

impugned notice dated 28.03.2018 is based upon the SEBI circular dated

01.08.2017. It is further submitted that Section 11(4) of the Act is

subservient to Section 11(1) and has referred to the decision of Hon'ble

Supreme Court in the case of Sahara India Real Estate Corporate Limited

and Ors. Vs. Securities and Exchange Board of India and Anr. (Civil Appeal

No. 9813 of 2011).

17. He has further submitted that the Appellant is unnecessarily harping

upon passing of an order by the SEBI with reasons and in writing for the

purpose of debarment which was not required because SEBI has taken

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 11

administrative action by issuance of circulars dated

10.10.2016 and 01.08.2017 on the basis of which BSE has passed on the

notice dated 28.03.2018 which is an administrative act of the SEBI.

18. It is further submitted that during the pendency of these

proceedings, the Appellant had filed a writ petition no. 14490 of 2020 before

the Punjab and Haryana High Court in which it prayed for the issuance of a

writ in the nature of certiorari for quashing the order dated 27.03.2018 by

which five promoters/directors of the Appellant Company were debarred for

a period of 10 years for non-compliance of the SEBI Circular dated

10.10.2016. However, the said writ petition was dismissed as withdrawn

on 22.07.2022.

19. He has pointed out to three emails dated 23.06.2017, 22.08.2017

and 01.02.2018, which came to light from the record of the writ petition, in

order to show that the Appellant was interacting with the SEBI or BSE and

was found remiss in not fulfilling the conditions or submitting the plan

within the stipulated period. It is submitted that because of this reason, on

the basis of the circular of the SEBI, the Appellant has been informed that it

has been debarred. It is further submitted that the Appellant has filed false

affidavit dated 01.01.2019 in which it was averred that they are not

prohibited or debarred and made a lame excuse that they were not aware of

the notice dated 28.03.2018. It is also submitted that even otherwise

the Appellant was required to inform the RP, that it had earned the

disability of debarment, as provided in Regulation 36-A(c) of the CIRP

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 12

Regulations. It is, thus, submitted that there is no error in the impugned

order which requires interference.

20. Counsel for the CoC has submitted that the email, referred to

above by the Respondent No. 1, reflects the knowledge of the Appellant

which should have been shared with the RP/CoC. It is further submitted

that at present the Adjudicating Authority has extended the period of 90

days till 22.08.2022 and has received 18 EOIs and 9 bids, therefore, the

period spent during these proceedings provided by the Adjudicating

Authority may be excluded.

21. It is further submitted that the Appellant had submitted the

information memorandum (Vol. IV Pg. 821) in which, they have mentioned

that the promoter/directors of the Company have been restrained from

accessing the capital market by SEBI. However as the Company will get

listed on MSEI, the said restrained action will get revoked/removed

accordingly. It is submitted that this information memorandum was

submitted on 04.11.2020 and the resolution application was filed on

11.04.2019.

22. In rebuttal, Counsel for the Appellant has again referred to

the provisions of Section 11 of the Act and submitted that there is no order

on record of debarment having been passed either by the SEBI or BSE, and

until and unless an order is passed in terms of Section 11(4) of the Act, no

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 13

action can be taken against the Appellant in terms of Section 29-A(f) of the

Code.

Facts of Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022

23. These Company Appeal (AT) (Ins) Nos. 637 & 638 of 2022 are filed by

Aggarsain Spinners Limited and Mr. Ramesh Garg against two separate

orders, passed by the Adjudicating Authority (National Company Law

Tribunal, Chandigarh Bench), of the same date i.e. 24.05.2022. In one order

dated 24.05.2022, the Adjudicating Authority has allowed I.A. No. 342 of

2021 filed by the Resolution Professional (RP) (Sumat Gupta) by which he

has sought a declaration that the Appellants are ineligible to submit the

resolution plan because of Section 29(A)(f) of the Insolvency and Bankruptcy

Code, 2016 (in short 'Code') and dismissed the application of the Appellants

bearing I.A. No. 154 of 2022 to place additional documents on record to

clarify the position of a statutory body i.e. SEBI and by way of separate

order dated 24.05.2022 dismissed the application bearing I.A. No. 458 of

2020 filed by the RP, on behalf of the CoC of M/s Vallabh Textiles Ltd.

(Corporate Debtor) for approval of the resolution plan of the present

Appellants on the ground that the Appellants have been held ineligible in

view of Section 29(A) (f) of the Code in I.A. No. 342 of 2021.

24. In brief, Punjab National Bank (Financial Creditor) filed an application

under Section 7 of the Code to initiate the Corporate Insolvency Resolution

Process (CIRP) against the M/s Vallabh Textiles Ltd. (Corporate Debtor). The

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 14

said application was admitted on 12.04.2019 and Sumat Gupta was

appointed as IRP. The IRP was confirmed as RP by the CoC in the meeting

held on 09.05.2019.

25. After various rounds of meeting of the CoC, the Appellants were

adjudged as H1, but the Application bearing I.A. No. 458 of 2020 filed by the

RP was rejected on the ground that the RA was held to be ineligible under

Section 29(A) (f) of the Code at the time of submission of the resolution plan

in a separate application i.e I.A. No. 342 of 2021 which was allowed by an

order of even date i.e. 25.05.2022 and in order to avoid liquidation of the

Corporate Debtor, the period of insolvency resolution process was extended

by 90 days for exploring the possibility of resolution of the Corporate Debtor

and the matter was referred back to the CoC which was ordered to be

reinstated and revived to make another attempt to consider other resolution

plan in accordance with law. I.A. No. 342 of 2021 was also filed by the RP of

M/s Vallabh Textiles Limited (CD) in which he had prayed that Respondents

be declared ineligible to submit the resolution plan, being barred by the

provisions of Section 29(A)(f) of the Code and to take action for filing false

affidavit under Section 30(1) of the Code, forfeiture of EMD and direct to

redeposit EMD of Rs. 15,00,000/-, imposition of penalty of Rs. 2.00 Crore

under Section 235A and direct prosecution of the Respondents. I.A. No. 154

of 2021 was filed by the present Respondents to place on record information

received from the SEBI under the RTI Act on 09.03.2022 which was declined

on the ground that information shared by the SEBI under the RTI Act has

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 15

got no bearing on the eligibility criterion of the RA at the time of submission

of resolution plan. In so far as the fact of the I.A. No. 342 of 2021 are

concerned, the RP had filed an application bearing I.A. No. 458 of 2020

under Section 30(6) of the Code for approval of the resolution plan which

was pending adjudication. It is stated that on 15.06.2021 the RP had

received two resolution plans one from Sanjay Garg on whatsapp and other

from M/s Aayat Processors on email by which the RP was informed that RAs

are not compliant of Section 29(A) of the Code because of which the

Respondent company as well its directors have been barred from accessing

the securities market w.e.f. 27.03.2018 till further orders, for a period of 10

years. According to the RP, he was prima facie convinced with the

documents brought to his notice about the non-compliant of Section 29(A) of

the Code by the Respondents as it searched the portal of SEBI as well as

other stock exchanges and found the name of the Respondents appearing on

the website of the BSE as persons debarred from accessing the securities

market for a period of 10 years. It has come on record that the RP received a

memo dated 29.10.2020 from the State Bank of India by which he came to

know about the disqualification of the Respondents who has never informed

him and had rather filed a false affidavit of being Section 29(A) compliant.

The Respondents have placed on record the status as updated on

16.02.2021 by SEBI that the order debarring the Respondents from

accessing the securities market was revoked but according to the RP, the

Respondents were not eligible to submit resolution plan and could not have

participated in the CIRP at the time of their ineligibility and subsequent

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 16

revocation of disqualification was inconsequential. The application bearing

I.A. No. 342 of 2021 was allowed by the Adjudicating Authority, inter alia,

on the ground that the circulars dated 10.10.2016 and 01.08.2017 of the

SEBI laid down the conditions of choosing one of the two options out of

which one was regarding raising the capital for listing on the nationwide

stock exchanges and the other to provide exit mechanism to investor but at

the same time contemplated action of debarment for a period of 10 years

was also made known. It has been held that action has been taken under

Section 11 of the Act through BSE. Counsel for the parties have advanced

the same arguments which we have recorded in the other set of appeals.

26. We have heard Counsel for the parties and perused the record

with their able assistance.

27. The issue involved in this appeal travels in a narrow compass

because the whole emphasis is on the fact that the proceedings under

Section 29-A(f) of the Code has been carried out against the Appellant on the

basis of notice of BSE dated 28.03.2018 which do not fall within the ambit

of Section 11(4) of the Act.

28. On the other hand, the case of the Respondent is that the notice

dated 28.03.2018 is in pursuance of the circular of the SEBI issued while

exercising administrative powers in terms of Section 11(1) of the Act.

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 17

29. Thus, in view of aforesaid facts and circumstances it would be

relevant to refer to certain documents available on record, by way of

reproduction, for ready reference:-

30. Notice Dated 10th October, 2016

*CIRCULAR

SEBI/HO/MRD/DSA/CIR/P/2016/110 October 10, 2016

All recognised/Non-operational /Exited Stock Exchanges.

All Exclusively Listed Companies in the Dissemination Board (shares of companies available for buying and selling and not for companies referred as vanishing companies.)

Dear Sir/Madam, Sub: Exclusively. listed companies of De-recognized/Non operational Stock Exchanges placed in the Dissemination Board (DB).

1. SEBI vide circular dated May 30, 2012 issued guidelines facilitating the exit of Derecognized/Non-operational stock exchanges and exit to the shareholders of exclusively listed companies (ELCs) by allowing them to get listed on nationwide stock exchanges after complying with the diluted listing norms of nationwide stock exchanges, failing which they would be moved to the Dissemination Board (DB).

2. Further, SEBI vide circular dated May 22, 2014, inter-alia, provided that ELCs, on de-recognized/non-operational stock exchanges, can also opt for voluntary delisting by following the existing delisting norms of SEBI. It was also specified that if the ELCs fail to comply with the same, they shall be moved to DB.

3. Subsequently, SEBI vide circular dated April 17, 2015 allowed a period of eighteen months' time to ELCs on DB to obtain listing upon compliance with the listing requirements of the nation-wide stock exchanges.

4. SEBI has been receiving representations seeking clarifications on raising of further capital and the process of exit of ELCs from the DB. Therefore, SEBI, in the interest of the investors of such ELCs, clarifies as follows:

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 18

a. The respective nationwide stock exchanges hosting the ELC on its DB would hereinafter be referred as 'designated stock exchange'.

b. The ELCs on the DB would be required to exercise one of the 'two options as mentioned in Para 4.c or 4.d of the circular.

c. Raising capital for listing on Nationwide Stock Exchanges. In order to facilitate listing on nationwide stock exchanges, the EL Cs on the DB shall be allowed to raise capital for meeting the listing requirements through preferential allotment route in terms of the provisions under the Issue of Capital and Disclosure Requirements Regulations, 2009 (ICDR).

i. For the above purpose the procedures as specified under JCDR shall be followed to the extent possible. Towards this purpose, the designated stock exchange shall be according in principle approval and monitoring compliance with the same. ii. In the process of raising capital through preferential allotment, if the allotment is made to promoters/public such that it is in excess of the threshold limits {5% or 25%) of the SEBI (Substantial Acquisition of Shares and Takeovers Regulations), 2011 (SAST), the provisions of SAST Regulation shall not be applicable for the proposed acquisition subject to the overall holding of the promoter group not exceeding 75% of the paid up capital of the company.

iii. The ELCs which fail to list on the nationwide stock exchanges under the aforesaid mechanism shall provide exit to its investors as per para 4.d of the circular.

d. Procedure to provide exit to investors:

In order to protect the interest of all shareholders of such ELCs, an exit mechanism to investors of such ELCs shall be as prescribed in Annexure-A to this circular. Accordingly, all ELCs shall be required to ensure compliance with the procedure for exit. The oversight and monitoring of such exit mechanism shall be carried out by the designated stock exchange. i. Designated stock exchanges shall further ensure that the promoters have made adequate efforts in terms of the above provisions for providing exit to their shareholders before removing ELCs from the DB.

ii. The designated stock exchange shall display the list of companies willing to provide exit to their investors on their website on a monthly basis.

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 19

5. In order to facilitate the raising of capital or provide exit to investors as mentioned under para 4.c and 4.d, it is prescribed that:

a. The ELCs on the DB which are yet to indicate their intention to comply with listing or to provide exit shall submit their plan of action to designated stock exchanges latest within three months from the date of this circular to the satisfaction of the designated stock exchanges, failing which the designated exchange shall recommend action as specified under Para 6 of this circular.

b. The designated stock exchanges shall review the plan of action and ensure completion of the process within 6 months.

6. Action against companies remaining on the DB

a. Any promoter or director whose company is on the DB and has failed to demonstrate adequacy of efforts for providing exit to their shareholders in conformity with the exit mechanism as provided in this circular shall be liable for the following actions:

• The company, its directors, its promoters and the companies which are promoted by any of them shall not directly or indirectly associate with the securities market or seek listing for any equity shares for a period of ten years from the exit from the DB.

• Freezing of shares of the promoters, directors. • List of the directors, promoters etc. of all non-compliant companies as available from the details of the company with nationwide stock exchanges shall be disseminated on SEBI website and shall also be shared with other respective agencies. • Attachment of bank accounts/other assets of promoters/directors of the companies so as to compensate the investors.

7. The provisions of this Circular are applicable to the exclusively listed companies of all de-recognized/non-Operational stock exchanges which are exited/in the process of exit in terms of exit circular dated May 30, 2012.

8. The respective designated stock exchanges shall ensure that all exclusively listed companies on the DB be accordingly advised to facilitate compliance of the above provisions in a time bound manner.

9. This circular is issued in exercise of powers conferred under Section 11 (1) and 11 (2) (i) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 20

securities and to promote the development of, and to regulate the securities market This circular is available on SEBI website at www.sebi.gov.in.

Yours faithfully,

Bithin Mahanta

Deputy General Manager

Division of SRO Administration

Market Regulation Department

+91-22-26449634

Email: bithinm@sebl.gov.in

Annexure-A.

i. The promoter in consultation with the designated stock exchange shall appoint an 'independent valuers from the panel of expert valuers of the designated stock exchange.

ii. In case the fair value determined is positive the promoter of the company shall acquire shares of such companies from the public shareholders by paying them such value determined by the valuer.

iii. The promoter shall undertake to complete the entire process within seventy-five working days.

iv. The promoter of the company to make a public announcement in at least one national daily with wide circulation, one regional language newspaper of the region where the exited stock exchange was located and the website of the designated stock exchanges.

v. The public announcement shall contain all material information of the fact of such exit opportunity to its shareholders, disclosing therein the name and address of company, including exit price offered by the promoter with the justification therefore, and shall not contain any false or misleading statement.

vi The announcement shall contain a declaration about the liability of the promoter to acquire the shares of the shareholders, who have not offered their shares under exit offer up to a period of one year from the completion of offer at the same price determined by the valuer. vii. The exit offer shall remain open for a period of minimum five working days during which the public shareholders shall tender their shares. The promoter shall open an escrow account in favour of independent valuer/designated stock exchange and deposit therein

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 21

the total estimated amount of consideration on the basis of exit price and number of outstanding public shareholders. The escrow account shall consist of either cash deposited with a scheduled commercial bank or a bank guarantee, or a combination of both. The amount in the escrow account shall not be released to the promoter unless all the payments made in respect of shares tendered for the aforesaid period of one year.

viii. The promoter shall make payment of consideration within fifteen working days from the date completion of offer.

ix. The promoter shall certify to the satisfaction of designated stock exchange that appropriate procedure has been followed for providing exit to shareholders of such companies. Subsequently, the designated stock exchanges upon satisfaction shall remove the company from the dissemination board.

x. The exclusively listed companies which have 100% promoter holding shall be removed from the dissemination board on obtaining a compliance certification from any independent professional with regard to the holding of shares of these companies and submit to the designated stock exchanges.

xi. The names of the companies providing exit opportunity to its shareholders and their promoters shall be displayed in a separate section on the website of the designated stock exchange."

****************

31. Notice Dated 01st August, 2017

"Securities and Exchange Board of India August 01, 2017

CIRCULAR

SEBIIHO/MRD/DSA/CIR/P/2017192

All Listed Entities

All Registered Registrar & Share Transfer Agents

All Depositories

All Recognised/Non-operational / Exited Stock Exchanges

All Exclusively Listed Companies on the Dissemination Board (shares of. companies available for buying and selling and not for companies referred as vanishing companies)

Dear Sir/Madam,

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 22

Sub: Action against Exclusively Listed Companies and its Promoters/Directors pending Exit Offer to the Shareholders

1. SEBI vide circular dated October 10, 2016, provided options to the Exclusively Listed Companies, ("ELCs") on Dissemination Board (DB) to raise capital for meeting the capital requirement for getting listed on the nationwide stock exchanges or to provide exit to investors. An exit mechanism for investors in such ELCs was also specified in the aforesaid circular. Further, ELCs were required to furnish the plan of action by January 09, 2017 to the Designated Stock Exchanges (DSEs), which was subsequently extended till June 30, 2017.

2. The aforesaid circular dated October 10, 2016 stipulated the following action against such ELCs, which remain non-compliant with the above timelines:

• The company, its directors, its promoters and the companies which are promoted by any of them shall not directly or indirectly associate with the securities market or seek listing for any equity shares for a period of ten years from the exit from the DB.

• Freezing of shares of the promoters/directors.

• List of the directors, promoters etc. of all non-compliant companies as available from the details of the company with NSE/BSE shall be disseminated on SEB/ website and shall a/so be shared with other related agencies.

•Attachment of bank accounts/other promoters/directors of the companies so as to compensate the investors.

3. In order to ensure that exit option is provided to the public shareholders of ELCs that are non-compliant with the provisions of the said circular dated October 10, 2016 and have not submitted plan of action to the DSEs and in order to protect the interest of investors in ELCs on DB it is hereby directed that, to being with:

a. Such ELCs and the Depositories shall not effect transfer, by was 0 sale, pledge, etc., of any of the equity shares and me corporate benefits such, as dividend, rights, bonus shares, split, etc. shall be frozen, for all the equity shares, held by the promoters or directors of non-compliant Exclusively one Companies till the promoters of such non-compliant Exclusive Listed Companies provide an exit option to the pub shareholders in compliance with SEBI circular dated October 10, 2016, as certified by the concerned Designated Stock Exchanges ;

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 23

b. The non-compliant Exclusively Listed Companies, its directors, its promoters and the companies which are promoted by any of them shall not be eligible to access the securities market for the purposes of raising capital till the promoters of such non-

compliant Exclusively Listed Companies provide an exit option to the public shareholders in compliance with SEBI circular dated October 10, 2016, as certified by the concerned Designated Stock Exchanges.

c. The promoters or directors of non-compliant Exclusively Listed Companies shall not be eligible to remain or become director of any listed company till the promoters of such non-compliant Exclusively Listed Companies provide an exit option to the public shareholders in compliance with SEBI circular dated October 10, 2016, as certified by the concerned Designated Stock Exchanges.

4. For the aforesaid purposes, "Exclusively Listed Companies"

refer to those companies whose equity shares were exclusively listed at a recognised stock exchange at the time of exit of such exchange and were subsequently moved to the Dissemination Board of NSE and SSE and whose shares are available for buying and selling on Dissemination Board.

5. The concerned Designated Stock Exchanges and Depositories shall co-ordinate with each other and ensure compliance of these requirements.

6. SEBI may also take any other appropriate action(s) against the promoters/directors of Exclusively Listed Companies for non compliance with SEBI circular dated October 10, 2016.

7. This circular is issued in exercise of powers conferred under Section 11 (1) and 11 (2) of the Securities and Exchange Board of India Act, 1992, to protect the interest of investors in securities and to promote the development of and to regulate the securities market. This circular is available on SEBI website at www.sebi.gov.in.

Yours faithfully

Bithin Mahanta

Deputy General Manager

Ph:+912226449634

Email: bithinm@sebi.gov.in

32. Notice Dated 28th March, 2018

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 24

"NOTICES Notice No. 20180326-44 Notice Date: 28 March 2018 Category: Company related Segment: Equity Subject: Exclusively Listed Companies (ElCs) of De-recognized / Non-operational exited-stock Exchanges placed in the Dissemination Board (DB).

It is Informed that as per SES! CircularNo.

SEB1/HO/MRD/DSA/CIR/P/2017/92 dated August 01, 2017 regarding action against Exclusively Listed Companies and its Promoters/Directors.

The Exchange has shared the details of the non-compliant Exclusively Listed Companies and its Promoters / Directors with the Depositories on March 22, 2018, March 23,208, March 26, 2018, March 27, 2018 & March 28, 2018 for initiating the action against following exclusively Listed Companies and its Promoter/Directors in accordance with the above referred circular. The particulars shared with the Depositories are based on the extent of the data made available by De-recognized/Non- operational/existed Stock Exchanges / ROC, to BSE:

Sr. No. Company Name 1. ACME STAPATHI LTD 2. AGGARSAIN SPINNERD LTD x x x

Further the consequences of non-compliant, includes the following:-

1. The non-compliant ELCs, its directors, its promoters and the companies which are promoted by any of them shall not be eligible to access the securities market for the purposes of raising capital till the promoters of such ELCs provide an exit option to the public shareholders in compliance with SEBI circular dated October 10, 2016 ·

2. The promoters and directors of non-compliant ELCs shall not be eligible to remain or become director of any listed company till the promoters of such non-complaint ELCs provide exit option to public shareholders. In compliance with SEBI circular dated October 1 O, 2016 · In case Trading Members require any clarifications on the subject matter of this notice, they may please contact to the following:

At the exchange:

Ms. Siddhi Keluskar - Listing Dept. Tel No. 91-22-22725603

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 25

Mail:

siddhi.keluskar@bseindia.com.ordirect.listing@bseindia.com

For, BSE Ltd Bhushan Mokashi Atul Dhotre Senior Manager Additional General Manager Wednesday, March 28, 2018

33. Section 11 of the SEBI Act is reproduced herein below:-

"Functions of Board.

11. (1) Subject to the provisions of this Act, it shall be the duty of the Board to protect the interests of investors in securities and to promote the development of, and to regulate the securities market, by such measures as it thinks fit.

(2) Without prejudice to the generality of the foregoing provisions, the measures referred to therein may provide for-

(a) regulating the business in stock exchanges and any other securities markets;

(b) registering and regulating the working of stock brokers, sub-

brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with securities markets in any manner;

(ba) registering and regulating the working of the depositories, [participants], custodians of securities, foreign institutional investors, credit rating agencies and such other intermediaries as the Board may, by notification, specify in this behalf;

(c) registering and regulating the working of 15[venture capital funds and collective investment schemes], including mutual funds;

(d) promoting and regulating self-regulatory organisations;

(e) prohibiting fraudulent and unfair trade practices relating to securities markets;

(f) promoting investors' education and training of intermediaries of securities markets;

(g) prohibiting insider trading in securities;

(h) regulating substantial acquisition of shares and takeover of companies;

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 26

(i) calling for information from, undertaking inspection, conducting inquiries and audits of the [stock exchanges, mutual funds, other persons associated with the securities market], intermediaries and self-regulatory organisations in the securities market;

(ia) calling for information and records from any person including any bank or any other authority or board or corporation established or constituted by or under any Central or State Act which, in the opinion of the Board, shall be relevant to any investigation or inquiry by the Board in respect of any transaction in securities;

(ib) calling for information from, or furnishing information to, other authorities, whether in India or outside India, having functions similar to those of the Board, in the matters relating to the prevention or detection of violations in respect of securities laws, subject to the provisions of other laws for the time being in force in this regard: Provided that the Board, for the purpose of furnishing any information to any authority outside India, may enter into an arrangement or agreement or understanding with such authority with the prior approval of the Central Government;

(j) performing such functions and exercising such powers under the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), as may be delegated to it by the Central Government;

(k) Levying fees or other charges for carrying out the purposes of this section;

(l) conducting research for the above purposes; (la) calling from or furnishing to any such agencies, as may be specified by the Board, such information as may be considered necessary by it for the efficient discharge of its functions;]

(m) performing such other functions as may be prescribed. [(2A) Without prejudice to the provisions contained in sub-section (2),the Board may take measures to undertake inspection of any book, or register, or other document or record of any listed public company or a public company (not being intermediaries referred to in section 12) which intends to get its securities listed on any recognised stock exchange where the Board has reasonable grounds to believe that such company has been indulging in insider trading or fraudulent and unfair trade practices relating to securities market."

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 27

[(3) Notwithstanding anything contained in any other law for the time being in force while exercising the powers under 23[clause (i) or clause (ia) of sub-section (2) or sub- section (2A)], the Board shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely :--

(i) the discovery and production of books of account and other documents, at such place and such time as may be specified by the Board;

(ii) summoning and enforcing the attendance of persons and examining them on oath;

(iii) inspection of any books, registers and other documents of any person referred to in section 12, at any place;] [(iv) inspection of any book, or register, or other document or record of the company referred to in sub-section (2A); (v) issuing commissions for the examination of witnesses or documents.] (4) Without prejudice to the provisions contained in sub-sections (1), (2), (2A) and (3) and section 11B, the Board may, by an order, for reasons to be recorded in writing, in the interests of investors or securities market, take any of the following measures, either pending investigation or inquiry or on completion of such investigation or inquiry, namely:--

(a) suspend the trading of any security in a recognised stock exchange;

(b) restrain persons from accessing the securities market and prohibit any person associated with securities market to buy, sell or deal in securities;

(c) suspend any office-bearer of any stock exchange or self- regulatory organisation from holding such position;

(d) impound and retain the proceeds or securities in respect of any transaction which is under investigation;

(e) attach, after passing of an order on an application made for approval by the Judicial Magistrate of the first class having jurisdiction, for a period not exceeding one month, one or more bank account or accounts of any intermediary or any person associated with the securities market in any manner involved in violation of any of the provisions of this Act, or the rules or the regulations made thereunder :

Provided that only the bank account or accounts or any transaction entered therein, so far as it relates to the proceeds actually involved in violation of any of the provisions of this Act,

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 28

or the rules or the regulations made thereunder shall be allowed to be attached;

(f) direct any intermediary or any person associated with the securities market in any manner not to dispose of or alienate an asset forming part of any transaction which is under investigation :

Provided that the Board may, without prejudice to the provisions contained in sub-section (2) or sub-section (2A), take any of the measures specified in clause (d) or clause (e) or clause (f), in respect of any listed public company or a public company (not being intermediaries referred to in section 12) which intends to get its securities listed on any recognised stock exchange where the Board has reasonable grounds to believe that such company has been indulging in insider trading or fraudulent and unfair trade practices relating to securities market : Provided further that the Board shall, either before or after passing such orders, give an opportunity of hearing to such intermediaries or persons concerned.] [(5) The amount disgorged, pursuant to a direction issued, under section 11B of this Act or section 12A of the Securities Contracts (Regulation) Act, 1956 or section 19 of the Depositories Act, 1996, as the case may be, shall be credited to the Investor Protection and Education Fund established by the Board and such amount shall be utilised by the Board in accordance with the regulations made under this Act.] [Board to regulate or prohibit issue of prospectus, offer document or advertisement soliciting money for issue of securities".

34. SEBI Debarred letter dated 27.03.2018:

B C D E F Kumar AFLPK2316K * 27.03.2018 Restrained Director/Promoter of Ramesh Aggarsain Spinners Ltd. from accessing the securities market till further orders for a period of 10 years. Action initiated due to non-compliance with SEBI Circular SEBI/HO/MRD/DSA/CIR/P/2016/110 dated October 10, 2016.

16.02.2021 Revoked the directions against the

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 29

entity as they are compliant

Ashok AAYPG9149G * 27.03.2018 Restrained Director/Promoter of Goel Aggarsain Spinners Ltd. from accessing the securities market till further orders for a period of 10 years. Action initiated due to non-compliance with SEBI Circular SEBI/HO/MRD/DSA/CIR/P/2016/110 dated October 10, 2016.

Revoked the directions against the 16.02.2021 entity as they are compliant

Kansal ACEPK8116F * 27.03.2016 Restrained Director/Promoter of Suresh Aggarsain Spinners Ltd. from accessing the securities market till further orders for a period of 10 years. Action initiated due to non-compliance with SEBI Circular SEBI/HO/MRD/DSA/CIR/P/2016/110 dated October 10, 2016.

Revoked the directions against the 16.02.2021 entity as they are compliant

Jagdish ACEPK0682N * 27.03.2016 Restrained Director/Promoter of Kansal Aggarsain Spinners Ltd. from accessing Rai the securities market till further orders for a period of 10 years. Action initiated due to non-compliance with SEBI Circular SEBI/HO/MRD/DSA/CIR/P/2016/110 dated October 10, 2016.

Revoked the directions against the 16.02.2021 entity as they are compliant

Gopal ACBPK4161F * 27.03.2016 Restrained Director/Promoter of Krishan Aggarsain Spinners Ltd. from accessing Arora the securities market till further orders for a period of 10 years. Action initiated due to non-compliance with SEBI Circular SEBI/HO/MRD/DSA/CIR/P/2016/110 dated October 10, 2016.

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 30

Revoked the directions against the 16.02.2021 entity as they are compliant

35. Email dated 23.06.2017:

"S.C.O. No. 234, Sector 20, Panchkula-134120 Tel 0172-4644666 Fax 0172-4644777 CIN:L1729HR1998PLC034043 Annexure A Date: 23 June 2017 rd

To, Head - Listing Operations, BSE Limited, P.J. Towers, Dalal Street, Fort, Mumbai - 400 001.

Date:

Dear Sir, Sub: Application from the Director, or ELC informing BSE for exercising the option in compliance with SEBI circular SEBI/HO/MRD/DSA/CIR/P/2016/110 dated October 10, 2016 I, Ramesh Kumar, Director, an Indian Inhabitant, aged about 51 years residing at 731, HUDA Sector-11,Panipat (Haryana)PIN- 132103 with PAN number AFLPK2316K and DIN 01037508 in the capacity of Director hereby submit our plan of action to BSE as required by SEBI in its circular SEBI/HO/MRD/DSA/CIR/P/2016/110 dated October 10, 2016. We will get our company's equity shares listed on any stock exchange having nationwide trading in electronic form and follow prescribe procedure mentioned in the above referred SEBI circular.

We undertake lo complete the process within the timelines as prescribed in SEBI Circular SEBI/HO/MRD/DSA/CIR/P/2016/110 dated October 10, 2016. The details of the company are as given below: Sr. Particulars Details to be filled in by the ELC No.

1. Name of the Aggarsain Spinners Limited Exclusively Listed Company (ELC)

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 31

2. Date of incorporation 05.11.1993

3. Place of incorporation Delhi

4. CIN of the ELC L1729HR1998PLC034043

5. Pan of the ELC AABCA1351Q

6. Tan of the ELC ....................

7. Name of all the Stock Delhi Stock Exchange Exchange where listed Jaipur Stock Exchange prior to shift to DB

8. Address of Registered Bhola Bhawan, Near Geeta Office of the ELC Mandir, Geeta Colony, Panipat (Haryana) PIN-132103 Tel. Nos. 9814075222 Fax Nos. ..................

Email Id. aggarsainspinners@gmail.com Web-Site ............................. 9. Certified True Copy of Attached Board Resolution for exercising the option 10. Details of contact person/compliance officer

Name Mr. Ramesh Garg Tel No. 0172-4644777 Cell No. 9814075222 Mail Id. aggarsainspinners@gmail.com

Thanking you, Yours faithfully, For Aggarsain Spinners Limited

Ramesh Kumar Designation:Director DIN :01037508 Address:731, HUDA Sector-11 Panipat (Haryana)PIN-134109 E-MAIL ID:aggarsainspinners@gmail.com

REGD. OFFICE: BHOLA BHAWAN, GEETA COLONY, PANIPAT 143102"

36. Email dated 22.08.2017:

"Submission of documents for removal of company name from Dissemination Board-Listing on other Stock Exchange

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 32

Atul Dhotre atul.dhotre@bseindia.com To: Direct listing direct.listing@bseindia.com Tue, Aug 22, 2017 at 2:40PM Dear all,

We are in receipt of plan of action, pursuant to SEBI circular SEBI/HO/MRD/DSA/CIR/P/2016/110 dated October 10, 2016. As you are aware that the said SEBI circular prescribed the process to be followed by ELCs for removal of its name from DB. As per the circular, the Company are required to complete the entire process as prescribed.

It is observed that after submission of plan of action by the Company, the Exchange is yet to receive the remaining documents related to status of the company listing on other stock exchange.

The process to be followed by the ELCs is available on the exchange website www.bseindia.com The URL for the same is given below

http//www bseindia.com/investors exercising option........ Please note that further the SEBI vide its circular no. SEBI/HO/MRD/DSA/CIR/P/2017/82 dated August 1, 2017 (copy attached) has mentioned the actions to be initiated against Exclusively Listed Companies (ELCs) and its promoters /directors pending listing on stock exchange. In view of the same, you are requested to complete the process as intimated to the exchange (action plan) as soon as possible to avoid the initiation of the action against the promoter/directors of the company as prescribed in aforesaid SEBI Circular.

For further clarification related to the above, you may contact the following officials at BSE.

At the Exchange At the Exchange Ms. Siddiqa Reoon Ms. Siddhi Kaluskar

Listing Dept. Listing Dept. Tel No. 91-22-22728154 Tel No. 91-22-2272 5603 Mail Mail siddiqa.rioon@bseindia.com siddhi.caluskar@bseindia.com or or directlisting@bseindia.com directlisting@bseindia.com

Regards

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 33

Atul Dhotre Senior Manager Listing Operations (MF & Direct Listing)

BSE Limited. P J Tower, Dalal Street, Mumbai - 400001, India Phone (Direct.) 022 22728934 Mobile: 9833722388

www bse.india.com World's Fastest Exchange with a Speed of 6 Microseconds

37. Email dated 01.02.2018:

"Non Submission of documents pursuant to plan of action submitted by Exclusively Listed Company (ELCs) Siddiqa Reoon Siddiqa.reoon@bseindia.com Thu, Feb 1, 2018 at 7:44 PM To: Direct listing directlisting@bseindia.com Dear Sir/Madam, SEBI vide its circular no.

SEBI/HO/MRD/DSA/CIR/P/2016/110 dated October 10, 2016 had advised the ELCs to indicate their intention to comply with listing or to provide exit. Such ELCs had to submit their plan of action to designated stock exchange latest within three months from the date of the circular to the satisfaction of the designated stock exchange.

Further SEBI in the said circular also prescribed action against promoters/directors of such exclusively listed companies (ELCs) which do not provide any action plan. In order to comply with the above. ELCs were initially given a period till January 09, 2017 which was subsequently extended till June 30, 2017. According to the said SEBI circular ELCs were required to submit plan of action to the designated stock exchange exercising one of the two options prescribed by SEBI, the implementation of which was to be completed within a period of six months from the June 30, 2017 i.e. by December 31, 2017. We have observed that you have submitted the Plan of Action to BSE, however, it has been more than six months since we received intimation off the plan of action from your end but we are yet to receive the supporting remaining documents w.r.t completion/implementation of the plan of action. The documentation requirements and procedure to be followed by ELCs seeking removal from DB can be accessed at the following URL:

http//www bseindia.com/investors/exercising_option.aspx.......

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 34

You are requested to note that the exchange would be initiating the action against promoters/directors of your company as prescribed by SEBI in its circular SEBI/HO/MRD/DSA/CIR/P/2017/92 dated August 01, 2017 if the remaining supporting documents is not received by the Exchange on or before February 7, 2018.

In case of any clarifications on the subject matter of this letter, you may please contact to the following:

Ms. Siddiqa Reoon Ms. Siddhi Kaluskar

Listing Dept. Listing Dept. Tel No. 91-22-22728154 Tel No. 91-22-2272 Mail 5603 siddiqa.reoon@bseindia.co Mail m or siddhi.caluskar@bsein directlisting@bseindia.co dia.com or m directlisting@bseindia.c om

Siqqiua Reoon Management Trainee Listing Operations (MF & Direct Listing)

PJ Tower 20th Floor, Dalal Street, Mumbai - 400001, India Phone (Direct) 022-22728154 World's Fastest Exchange with a speed of 6 Microseconds."

38. The circular dated 10.10.2016 provides for the clarification to raise the

capital and process of exit from the DB. The ELCs hosted by nationwide

stock exchange on its DB is referred to as Designated stock exchange and

these ELCs were to exercise one of the two options as mentioned in Para 4.c

or 4.d of the circular, 4.c deals with Raising capital for listing on Nationwide

Stock Exchanges and 4.d, provides procedure to provide exit to investors.

The action contemplated for non-compliance either of the two mentioned

herein above is specified in Para 6 of the circular which says that "any

promoter or director whose company is on the DB and has failed to

demonstrate adequacy of efforts for providing exit to their shareholders in

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 35

conformity with the exist mechanism as provided in this circular shall be

liable for the following actions i.e. the company, its directors, its promoters

and the companies which are promoted by any of them shall not directly or

indirectly associate with the securities market or seek listing for any equity

shares for a period of ten years from the exit from the DB." The circular

dated 01.08.2017 issued by the SEBI provides that ELCs were required to

furnish the plan of action by January 09, 2017 to the Designated Stock

Exchange, which was subsequently extended till June 30, 2017. It reiterated

the action which can be taken against such ELCs who are not following the

circular dated 10.10.2016. It has been noticed in the impugned order that in

the closing balance sheet of the Appellant for the month of March, 2017 the

Appellant had disclosed that:

"Material changes Consequent to the closure of regional stock exchanges, name of your company has been moved to the DB of the BSE. The SEBI has given an option to such companies whose name has moved to DB either to given an exit option to the shareholders or to get the company listed at exchange having nation wide trading"

39. It is pertinent to mention that by email dated 23.06.2017 the

Appellant submitted the plan of action regarding listing of equity shares at

the stock exchange having nationwide trading in pursuance to the circular

dated 10.10.2016. The SEBI sent email dated 02.08.2017 to the Appellant

that it had received the plan of action submitted by it pursuant to the

circular dated 10.10.2016 and informed it to complete the process in terms

of circular of the SEBI. It also informed the Appellant that after submission

of the plan of action by it the exchange has not yet received the remaining

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 36

documents related to status of the company listing on other stock

exchange. The Appellant was also informed that the process to be followed

by the Appellant is available on the exchange website of the SEBI and

further requested it to complete the process as intimated to the exchange

(action plan) as soon as possible to avoid the initiation of the action against

the promoters/directors of the company as prescribed in aforesaid SEBI

circular. Since, the Appellant did not complete the process, therefore, on

01.02.2018 the SEBI sent an email informing that as per the circular dated

10.10.2016 the process of action plan was to be completed within three

months from the date of the circular to the satisfaction of the designated

stock exchange. It was also informed that initially the time was given up to

09.01.2017 which was subsequently extended up to 30.06.2017. It is also

informed that ELCs were required to submit plan of action to the

designated stock exchange exercising one of the two options, the

implementation of which was to be completed within a period of six months

from the June 30, 2017 i.e. by December 31, 2017 but it constrained to

observe that it has been more than six months since they have received

intimation of the plan of action from there side and they were yet to receive

the supporting remaining documents with respect to

completion/implementation of the plan of action. The Appellant was

informed that action would be initiated against the promoters/directors of

the company as prescribed by the SEBI in the circular dated 01.08.2017 if

the remaining supporting documents are not received on or before

07.02.2018. It is argued by Counsel for Respondent that firstly the

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 37

agitation of the Appellant is that it had no knowledge about the proceeding

being carried out against the Appellant by the SEBI/BSE of debarment is

incorrect and secondly the impugned notice was issued by the Respondent

(BSE) on the basis of the circulars of the SEBI. It is, therefore, submitted

that the action taken in this regard falls within the purview of Section 11(1)

of the Act and does not attract the provisions of Section 11(4) of the Act as

suggested by Counsel for the Appellant.

40. Moreover, the validity of the notice of the BSE cannot be determined

in the proceedings before the Tribunal for which the appropriate forum is

the writ court. Admittedly, the directors of the Appellant including the

Appellant No. 2 had approached the Hon'ble High Court of Punjab and

Haryana to challenge the correctness of the notice of the SEBI but for the

reasons best known to them the petition was withdrawn and permission

was taken to raise all the issues before this Tribunal.

41. We also are of the view that if the Appellant had any issue with the

veracity of the notice or circular of SEBI, it should have raised this issue in

appeal in the relevant forum. We follow the Judgment of Hon'ble Supreme

Court in the case of M/s Embassy Property Developments Pvt. Ltd. Vs.

State of Karnataka & Ors., Civil Appeal No. 9170 of 2019.

42. Section 29(A)(f) of the Code provides that "A person not eligible to be

resolution applicant: (f) is prohibited by the securities and exchange board

of India from trading in securities or accessing the securities markets." The

Appellant in this case has been categorically debarred for the reasons that

it failed to comply with the mandatory direction issued by the SEBI in the

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 38

circular dated 10.10.2016 and 01.08.2017 by which the Appellant was

repeatedly cautioned that in case, one of the option is not exercised within

the time line prescribed, the necessary action shall be taken as prescribed

in clause 6 of the circular dated 10.10.2016.

43. We are not impressed with the argument of Counsel for the Appellant

that the SEBI was required to follow the provisions of Section 11(4) of the

Act before initiating the action in terms of circular dated 10.10.2016 and

01.08.2017 as the said action has been taken in terms of Section 11(1) of

the Act. In this regard, reference could be had to be the decision of the

Hon'ble Supreme Court in the case of Sahara India Real Estate Corporation

Limited & Ors. (Supra) in which it was held that:

"The reason for the instant inference is, that sub-section (2) does not curtail the powers and functions vested with the SEBI under sub-section (1) of section 11 of the SEBI Act as subsection (2) aforementioned commences with the words "Without prejudice to the generality of the foregoing provisions ... ". This expression obviously preserves, the power vested in the SEBI under sub- section (1) of section 11 of the SEBI Act, to protect the interest of investors in securities and to promote the development and to regulate the securities market "by such measures as it thinks fit".

Furthermore, sub-section (2) of section 11 of the SEBI Act, after making a reference to the measures generally referred to in sub- section (1) empowers/authorizes that SEBI "may provide for'' a series of measures, which are delineated in clauses (a) to (m) thereof (of sub-section (2) of section 11 of the SEBI Act). The use of the words "may provide for'' besides indicating the discretion vested in the SEBI, demonstrates that, the measures depicted in clauses (a) to (m) are illustrative and not exhaustive, more so, because subclause (2) of section 11 of the SEBI Act does not dilute the power vested in the SEBI under sub-section (1) thereof. While interpreting sub-section (1) of section 11 of the SEBI Act, it has already been concluded hereinabove, that the measures to be adopted by the SEBI in carrying out its obligations are couched in open-ended terms having no pre-arranged limits, to the discretion of the SEBI. Likewise, sub-sections (2A) and (4) of section 11 of the SEBI Act, commence with the words "without prejudice to the

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 39

provisions contained in sub-section (2)". This establishes the legislative intent i.e., that sub-section (2A) and (4) are subservient to sub-section (2) of section 11. But it has already been concluded above, that sub-section (2) is subservient to sub-section (1) of section 11. Therefore both sub-sections (2A) and (4) will inferentially be subservient to sub-section (1) of section 11 of the SEBI Act. Therefore, the obligation cast on SEBI, to protect the interest of investors in securities, to promote the development of the securities market, and to regulate the securities market " by such measure as it thinks fit", remains undiluted even by sub- sections (2A) and (4) of Section 11 of the SEBI Act."

44. The Tribunal has also observed that "Thus, it can be safely concluded

that under the SEBI Act, it enjoins two types of powers first is quasi-

judicial power and second is regulatory power. So far as quasi-judicial

powers of SEBI are concerned, a due process of law is to be adopted by

SEBI before passing any order of punishment or penalty, but in the case in

hand, it is the open-ended regulatory power of SEBI, which has been

delegated to BSE, vide which Resolution Applicant has been debarred to

access the capital market for 10 years. Thus, it can be held in unequivocal

terms that Resolution Applicant was ineligible under Section 29A(f) of the

Code and deemed to be prohibited by SEBI from trading the securities or

accessing the securities market."

45. Counsel for the Appellant has submitted that there is no delegation of

power by SEBI to BSE which is required to be done in accordance with

Section 19 of the Act but in this case, we are of the considered opinion that

BSE has passed on the information to the Appellant by the impugned

notice that it had been declared as non-compliant of Section 29(A) (f) of the

Code in view of its act and conduct considered by the SEBI in pursuance of

the circulars dated 10.10.2016 and 01.08.2017 and has exercised power

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022 40

under Section 11(1) of the Act. It is also a fact that the Appellant had

admitted that it is barred in the list of BSE from accessing the security

market for 10 years and when the resolution plan was submitted on

28.01.2019 and the Appellant was ineligible in view of Section 29(A) (f) of

the Code.

46. Thus, in view of the detail discussions, we are of the considered

opinion that the impugned order does not require any interference as there

is no merit in these appeals and hence, the same are hereby dismissed.

However, before parting with this order, keeping in view the prayer made by

Counsel for the CoC, the period spent during the proceedings before this

Tribunal are hereby excluded.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Kanthi Narahari] Member (Technical)

[Dr. Alok Srivastava] Member (Technical)

New Delhi

14th September, 2022

Sheetal

Company Appeal (AT) (Insolvency) No. 635 & 636 of 2022 and Company Appeal (AT) (Insolvency) No. 637 & 638 of 2022