Jyoti Limited vs Bse Limited

1 C.A. No. 4707/2022

2024 INSC 992 REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 4707 OF 2022

JYOTI LIMITED .....APPELLANT(s)

Vs.

BSE LIMITED & ANR .....RESPONDENT(s)

O R D E R

Heard learned counsel for the parties.

Under challenge in this statutory appeal is the

judgment and order dated 21.12.2021 passed by the Securities

Appellate Tribunal, Mumbai in Appeal No. 224 of 2019 titled

as “Jyoti Limited Vs. BSE Limited and Anr.”.

The appellant-Jyoti Limited applied for listing of

certain equity shares to the Bombay Stock Exchange1 but the

application to that effect was not accepted for the reason

that the appellant had not taken in principle approval from

the Stock Exchange and that the appellant had not even taken

the approval of the shareholders for the allotment of the

shares to the Asset Reconstruction Private Limited2. The

above order of the BSE rejecting the application of the Signature Not Verified Digitally signed by SNEHA DAS Date: 2024.12.17 appellant for the listing of shares was upheld and confirmed 16:59:19 IST Reason:

by the Securities Appellate Tribunal by the order impugned.

1 BSE for short 2 RARE for short 2 C.A. No. 4707/2022

In assailing the above orders, the submission of

learned counsel appearing for the appellant is that Section

9(1) of the Securitisation and Reconstruction of Financial

Assets and Enforcement of Security Act, 2002 3 permits the

RARE to take measures such as conversion of any portion of

debt into shares of the borrower company i.e., the appellant

herein and once such power is exercised, the shares have to

be listed on the Stock Exchange. Further submission of the

learned counsel for the appellant is that it is only where

the company, i.e., the appellant herein, proposes to

increase the subscribed capital, the consent/ the

resolution/approval of the shareholders is required, as

mandated by Section 62(1)(c) of the Companies Act, 2013.

Since in the case at hand the appellant company had not

proposed to increase the subscribed capital rather it is the

RARE that has done it, no such approval of the shareholders

is necessary.

Section 9 of the SARFAESI Act authorizes RARE to

convert portion of the debt into shares of the borrower

company but such authority is subject to Section 62 of the

Companies Act, 2013 which in turn requires a resolution of

the shareholders of the company. However, when such a

proposal is not by the appellant company, the approval of

the shareholders may not be necessary.

3 SARFAESI Act for short 3 C.A. No. 4707/2022

Notwithstanding the above, in the case at hand, it is

evident that the appellant company had entered into

discussion with RARE and it was agreed upon between the

parties to convert part of its outstanding debts of Rs.32.80

Crore into equity shares. Accordingly, a resolution of the

Board of Directors of the appellant company was passed to

the above effect on 02.05.2018 but such an action was never

endorsed by the shareholders of the company. Thereafter, the

appellant company itself filed an application before the BSE

on 15.05.2018 for listing of the shares i.e. 59,63,636

equity shares allotted to the RARE.

Having considered the relevant provisions of the law

and the submissions advanced by the learned counsel for the

appellant, we find that the conversion of the debt into

additional shares had taken place with the agreement of the

appellant company and RARE, and it is on the basis of such

an agreement between the parties that a resolution was

passed on 02.05.2018 by the Board of Directors of the

appellant company accepting the proposal to convert the debt

into shares and to allot them in favor of RARE, thus,

resulting in increase of the equity capital of the appellant

company. Even the application for listing of the aforesaid

additional shares was made by the appellant company to the

BSE meaning thereby that the proposal for increasing the

subscribed capital of the company by converting part of the 4 C.A. No. 4707/2022

debt into equity shares, as aforesaid, was initiated by the

appellant company itself and not actually by RARE.

Therefore, the proposal was that of the company only.

Accordingly, as contemplated by Section 62(1)(c) of the

Companies Act, 2013, the approval of the shareholders would

be mandatory before the shares are accepted for listing on

the BSE.

Insofar as the other ground for rejection of the

application is concerned, that is to say, for want of

approval of the BSE, the Securities Appellate Tribunal has

returned a clear finding that the approval of the BSE is

necessary in view of Regulation 28 of the SEBI (Listing

Obligations and Disclosure Requirements) Regulations, 2015

and we do not have different opinion on it rather we accept

the said finding which is not perverse in any manner.

In view of the aforesaid facts and circumstances, we

are of the opinion that no error or illegality has been

committed either by the BSE or the Securities Appellate

Tribunal in refusing to accept the request of the appellant

company for the listing of the shares at the Stock Exchange

inasmuch as Section 62 of the Companies Act stands duly

attracted and in the light of sub-clause (c) of sub-section

(1) of Section 62 of the Companies Act, special resolution

of the shareholders is necessary which is lacking in the

instant case.

5 C.A. No. 4707/2022

The aforesaid order has been passed by us in the

peculiar facts and circumstances of this case where the

appellant company itself has passed the resolution and

applied for the listing of shares and as such is deemed to

be the proposer for increasing the share capital.

Accordingly, this statutory appeal under Section 22 F

of Securities Contracts (Regulation) Act, 1956 is devoid of

merit and is dismissed.

Pending application(s), if any, shall stand disposed

of.

...................J. (PANKAJ MITHAL)

....................J. (SANDEEP MEHTA) New Delhi;

DECEMBER 10, 2024.

6 C.A. No. 4707/2022

ITEM NO.30 COURT NO.16 SECTION XVII

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Civil Appeal No. 4707/2022

JYOTI LIMITED Appellant(s)

VERSUS

BSE LIMITED & ANR. Respondent(s)

(IA No. 94381/2022 - EXEMPTION FROM FILING C/C OF THE IMPUGNED JUDGMENT)

Date : 10-12-2024 This matter was called on for hearing today.

CORAM :

HON'BLE MR. JUSTICE PANKAJ MITHAL HON'BLE MR. JUSTICE SANDEEP MEHTA

For Appellant(s) Mr. Lakshmeesh S. Kamath, AOR Mrs. Samriti Ahuja, Adv.

Ms. Aditi Prakash, Adv.

For Respondent(s) Mr. Pratap Venugopal, Sr. Adv.

Ms. Surekha Raman, Adv.

Mr. Amarjit Singh Bedi, Adv.

Mr. Shreyash Kumar, Adv.

Mr. Yashwant Sanjenbam, Adv.

Mr. Imilikaba Jamir, Adv.

M/S. K J John And Co, AOR

Mr. Rahul Gupta, AOR

UPON hearing the counsel the Court made the following O R D E R

The present statutory appeal is dismissed in terms of the signed reportable order which is placed on the file.

Pending application(s), if any, shall stand disposed of.

(SNEHA DAS) (RAM SUBHAG SINGH) SENIOR PERSONAL ASSISTANT COURT MASTER (NSH)