Maars Software International Ltd. vs Sebi

BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI DATE : 28.05.2019

Misc. Application No. 19 of 2019 And Appeal No. 14 of 2019 Maars Software International Ltd. 2nd Floor, New No. 146, Old No. 106/2, Habibullah Road, T. Nagar, Chennai, Tamil Nadu - 600 017. ..... Appellant

Versus

National Stock Exchange of India Ltd. Exchange Plaza, Plot No. C/, G-Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ... Respondent

Mr. Saurabh Bachhawat, Advocate i/b Shubhangi Chavan, Advocate for the Appellant. Mr. Rashid Boatwalla, Advocate with Ms. Shreya Anuwal, Advocate i/b Manilal Kher Ambalal & Co. 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, Presiding Officer (Oral)

1.

There is a delay of 149 days in filing the appeal. The ground

urged is that after passing of the impugned order, the appellant took

time to get necessary documents and related information and

thereafter sought legal advice which took time. For the aforesaid

reasons and for the grounds mentioned in the application, we find 2

that sufficient cause has been shown to condone the delay.

Accordingly, the delay is condoned. Misc. application is allowed.

2. We have heard Shri Saurabh Bachhawat, the learned counsel

for the appellant and Shri Rashid Boatwalla, the learned counsel for

the respondent. The appellant has challenged the delisting order

issued by National Stock Exchange of India Ltd. (hereinafter referred

to as, "NSE"). The appellant is a public listed company and was

incorporated in August 1995. In 2006, the company went into losses

and eventually on May 7, 2009 the trading of its shares was

suspended on the stock exchange. Several letters were written by the

stock exchange to comply with the listing requirements. Opportunity

was given to the appellant company to revoke the suspension but no

steps were taken by the company to get the suspension revoked or to

revive the company.

3. Eventually, a show cause notice dated April 18, 2016 was

issued to show cause as to why the equity shares of the company

should not be compulsory delisted from the stock exchange under

Regulation 22(1) of the Securities and Exchange Board of India

(Delisting of Equity Shares) Regulations, 2009 (hereinafter referred

to as, "Delisting Regulations") on the grounds prescribed in Rule 21

of the Securities Contracts (Regulation) Rules, 1957. The appellant

was also informed by the consequences of the compulsory delisting

that follows under Regulation 24 of the Delisting Regulations. 3

4. The appellant filed its reply praying for adjournment on the

ground that views of the shareholders are required to be taken.

Subsequently, based on the views of the shareholders, it was urged

that the appellant company would take steps to revive the company

and would take steps for the revocation of the suspension, in spite of

which no such steps were taken and eventually, the respondent by an

order dated September 4, 2017 decided to delist the appellant

company with effect from September 15, 2017. The said order was

challenged by the appellant in Appeal No. 276 of 2017 which was

disposed of by an order dated October 30, 2017 directing the

respondent to pass an order under Regulation 22(1) of the Delisting

Regulations after giving an opportunity of hearing to the appellant.

5. Based on the aforesaid direction, the impugned order was

passed after giving an opportunity of hearing. The Delisting

Committee in the impugned order found that though the company

was represented by its Advocate Prakash Shah, but no representative

from the company was present at the time of personal hearing. The

Delisting Committee further noticed that the appellant company does

not have any employees and that the net worth of the company is

negative. Further, no agreement was brought before the Committee

to show that another entity, namely, M. P. Mining and Energy Ltd.

had agreed to acquire the business of the company. The Committee 4

was, therefore, of the view that the appellant company was not in a

position to comply with the listing regulations and, consequently,

directed that the company should be compulsory delisted from the

stock exchange.

6. Before us the only ground urged was that the finding of the

Delisting Committee that no representative of the company was

present at the time of personal hearing was incorrect in as much as

the company's Advocate was present. In our view, the appellants are

making a mountain out of a molehill. The Delisting Committee has

recorded that the company was represented by its Advocate but also

noticed that no representative of the company was present at the time

of personal hearing. The Delisting Committee by recording no

representative of the company was present meant that no employee

or director of the company was present. Obviously, the Advocate of

the company is a legal advisor and is not an employee or director of

the company.

7. It was urged by the learned counsel that negotiation with the

third party, namely, M. P. Mining and Energy Ltd. was going on and

that the Delisting Committee should have taken this aspect into

consideration. In our view, the Delisting Committee had noticed this

development as contended by the appellant but also noticed that the

revival plan was not supported by any enforceable or binding 5

agreement between the promoters of the company and the other

entity, namely, M. P. Mining and Engery Ltd.

8. We also find that nothing has been stated in the appeal nor the

appellant has questioned the veracity of the finding of the Delisting

Committee, namely, that the company did not have any employee on

its roll nor has questioned the finding that the net worth of the

company is now negative.

9. In the light of the aforesaid, we do not find any merit in the

appeal. The order of the Delisting Committee does not suffer from

any error of law. The appeal fails and is dismissed.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C. K. G. Nair Member

Sd/-

Justice M. T. Joshi Judicial Member 28.05.2019 Prepared & Compared by PTM