Krishan Kumar Parwal vs Sebi

Date of Decision: 03.11.2017

Appeal No. 154 of 2017

Krishan Kumar Parwal, A-28, Ramnagar, Shastri Nagar, Jaipur- 302 016 ...Appellant

Versus

1.

Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051

2. BSE Limtied Floor 25, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400 001 ...Respondents

Mr. Amol Vyas, Advocate for the Appellant.

Mr. Karan Bhosale, Advocate with Mr. Chirag Bhavsar, Advocate i/b MDP & Partners for Respondent No. 1

Mr. Tomu Francis, Advocate with Mr. Vivek Shah, Advocate for Respondent No. 2

CORAM: Justice J.P. Devadhar, Presiding Officer Jog Singh, Member Dr. C.K.G. Nair, Member

Per: Justice J.P. Devadhar (Oral)

1. This appeal is filed by HRB Floriculture Limited ("Company" for

convenience) through its Managing Director to challenge the order

passed by the Whole Time Member ("WTM" for short) of Securities and

Exchange Board of India ("SEBI" for short). By the said order the WTM

of SEBI has confirmed the directions contained in the ex-parte order

dated June 15, 2016. By the ex-parte order dated June 15, 2016 the

WTM of SEBI had inter alia freezed the voting rights and corporate 2

benefits like dividend, rights, bonus shares, split, etc. with respect to the

excess of proportionate promoter/ promoter group shareholding

(including persons allegedly shown as public shareholders) in the

company, till the appellant company complies with the minimum public

shareholding requirement.

2. Basic argument of the appellant is that in view of the family

settlement arrived at by and between the promoters of the appellant in the

year 2010, some of the promoters ceased to be promoters and therefore,

their status changed from the "promoter" category to the "public"

category. It is submitted that the Bombay Stock Exchange Limited

(BSE) has accepted the above position and, therefore, it cannot be said

that minimum public shareholding requirement set out in rules 19(2)(b)

and 19A of the Securities Contracts (Regulation) Rules, 1957 ("the

SCRR") and Clause 40A of the Listing Agreement have been violated by

the appellant.

3. In the impugned order, the WTM of SEBI has recorded that the

BSE vide its email dated October 10, 2016 had stated that the appellant

has not informed the BSE that they have achieved minimum public

shareholding requirement. Thus, it is evident that even according to

BSE, the company has not complied with the minimum shareholding

requirement. In these circumstances, in para 3.1.10 of the impugned

order the WTM of SEBI has held that the promoters and persons related

to the promoters continue to hold 90.06% of the total shareholding in the

appellant company and, thus, the appellant company has failed to comply

with the minimum public shareholding requirement. It is also recorded in 3

the impugned order that the promoters have failed to furnish any

document in support of the contention that minimum public shareholding

requirement have been complied with.

4. Although SEBI has held that the appellant company has failed to

comply with the minimum public shareholding requirement, there is no

finding recorded either by BSE or by SEBI on the plea raised by the

appellant that on account of family settlement some of the promoters

ceased to be the promoters and their status changed from the "promoter"

category to "public" category. In these circumstances, we permit the

appellant to make a representation to SEBI in support of its contention

that on account of family settlement some of the promoters ceased to be

promotes and consequently the minimum public shareholding

requirement stands complied with.

5. If the appellant make such a representation within a period of two

weeks from today, then SEBI shall consider the said representation and

pass appropriate order thereon as it deems fit and proper.

6. Appeal is disposed of in the aforesaid terms with no order as to

costs.

Sd/-

Justice J.P. Devadhar Presiding Officer

Sd/-

Jog Singh Member

Sd/-

Dr. C.K.G. Nair Member 03.11.2017 Prepared & Compared By: PK