Chokhani International Limited vs Sebi

Date of Decision : 7.8.2019

Misc. Application No.290 of 2018 And Appeal No.348 of 2018

Chokhani International Limited Z-20, 1st Floor, Okhla Industrial Area, Phase II, New Delhi - 110020, Delhi. ..... Appellant

Versus

BSE Limited Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400001. ...... Respondent

Mr. Kunal Katariya, Advocate with Ms. Sourabhi Waknis, Advocate i/b. Aagam Doshi for the Appellant.

Mr. Abhiraj Arora, Advocate with Mr. Vivek Shah, Advocate i/b. ELP for the Respondent.

CORAM: Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member Justice M.T. Joshi, Judicial Member

Per : Justice Tarun Agarwala (Oral)

Misc. Application No.290 of 2018

For the reasons stated in the application, the delay in

filing the appeal is condoned.

The Misc. Application is allowed. 2

Appeal No.348 of 2018

1.

The appellant being aggrieved by the order dated

26th June, 2018 delisting the Company has filed the present

appeal. We have heard the learned counsel for the parties.

We find that the trading in the equity shares of the Company

was suspended with effect from 6th September, 1999 on

account of non compliance of the erstwhile Listing

Agreement. The exchange issued a circular dated

12th February, 2016 allowing suspended companies to apply

for revocation of suspension of trading in securities. Inspite

of the circular no steps were taken by the Company for

revocation of its trading in securities.

2. Consequently, a show cause dated 26th April, 2018

was issued to show cause as to why the Company should not

be compulsorily delisted from the platform of the exchange.

The appellant did not file any objection to the show cause

notice and consequently the impugned order was passed

under Regulation 22 of Chapter V of the Securities and

Exchange Board of India (Delisting of Equity Shares)

Regulations, 2009 (hereinafter referred to as "Delisting

Regulations") read with Section 21A of the Securities 3 Contracts (Regulation) Act, 1956 (hereinafter referred to as

"SCRA"), the Securities Contracts (Regulation) Rules, 1957

(hereinafter referred to as "SCRR").

3. In the impugned order we find that the process that was

required to be adopted by the respondent was as follows:

 Formation of the Delisting Panel, i.e. the present

Committee in terms of Regulation 22(1) of

Delisting Regulations.

 Provide an opportunity of representation and

personal hearing to the Company.

 Issuance of public notice.

 Consideration of representation made by the

Company/any aggrieved person by the

Committee.

 Consideration of criteria specified in Schedule III

of the Delisting Regulations.

4. One of the processes is opportunity of personal hearing

to the Company.

5. The proviso to Section 21(A) of the SCRA Act

provides as under:

"Provided that the securities of a company shall not be delisted unless the company concerned has been given a reasonable opportunity of being heard." 4

6. From the aforesaid, it is clear that the securities of the

Company shall not be delisted unless the Company was given

a reasonable opportunity of being heard. In the instant case,

we find that after the issuance of the show cause notice, no

opportunity of personal hearing was provided to the

appellant. Consequently, the impugned order is violative of

the principles of natural justice as embodied under Article 14

of the Constitution of India.

7. For the reasons stated aforesaid, the impugned order

cannot be sustained and is quashed. The appeal is allowed.

The respondent is directed to proceed from the stage of

issuance of the show cause notice.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C. K. G. Nair Member

Sd/-

Justice M.T. Joshi Judicial Member

7.8.2019 Prepared and compared by RHN