Mr. Mahendra Girdharilal vs Sebi

Date of Decision : 28.02.2019

Misc. Application No. 91 of 2019 And Appeal No. 73 of 2019

Mr. Mahendra Girdharilal 15, Linking Road, Opp. Arya Samaj Mandir, Santacruz West, Mumbai - 400 052. .... Appellant

Versus

1.

National Stock Exchange of India Limited Exchange Plaza, Plot No. C/1, G-Block, Bandra-Kurla Complex, Bandra East, Mumbai - 400 051.

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

3. T. Stanes And Company Limited 8/23-24, Race Course Road, Coimbatore - 641 018. ...Respondents

Mr. Rakesh Puri, Advocate for the Appellant.

Ms. Shreya Anuwal, Advocate with Ms. Pranjal Krishna, Advocate i/b Manilal Kher Ambalal & Co. for Respondent No. 1.

Mr. Santanu Mitra, Advocate i/b Desai & Diwanji for the Respondent No. 2.

None for Respondent No. 3.

2 CORAM : Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member

Per : Justice Tarun Agarwala, Presiding Officer (Oral)

1. The requirement of filing a certified copy of the

impugned order is waived.

Misc. Application No. 91 of 2019:-

2. There is a delay of 5 days in filing the appeal. Cause

shown is sufficient. The delay in filing the appeal is

condoned. The application is allowed.

Appeal No. 73 of 2019:-

3. The appellant being aggrieved by the order dated July 2,

2018 passed by the National Stock Exchange of India Limited

('NSE' for short), respondent no. 2 allowing T. Stanes And

Company Limited, respondent no. 3 to be removed from the

Dissemination Board has filed the present appeal praying for

the quashing of the order dated July 2, 2018 passed by the

NSE and further praying that a direction should be issued to

bring back the Company, namely, respondent no. 3 on the

Dissemination Board of NSE.

4. The facts leading to the filing of the present appeal is

that the appellant is a shareholder of respondent no. 3 3 Company. The scrips of respondent no. 3 Company was listed

in the Madras Stock Exchange. The said Stock Exchange

surrendered its recognition due to non-fulfillment of the

criteria stipulated by Securities and Exchange Board of India

('SEBI' for short). As a result, the Company's share was

placed in the Dissemination Board of the NSE with effect

from December 1, 2014. A circular in this regard was issued

by the Company dated December 2, 2014 to its shareholders

intimating that they can avail the limited facility of buying

and selling their shares on the Dissemination Board of the

NSE.

5. SEBI issued a circular dated May 30, 2012 issuing

guidelines for exit of De-recognized / Non-operational Stock

Exchanges. Subsequently, SEBI issued a circular dated May

22, 2014 directing the Stock Exchanges to address the issues

faced by the Companies exclusively listed in the Non-

operational Stock Exchanges. Thereafter SEBI issued a

circular dated April 17, 2015 allowing time to exclusively

listed Companies on Dissemination Board to obtain listing

upon compliance with the listing requirements of the nation-

wide Stock Exchanges. Based on the circular dated October

10, 2016 an offer was made by respondent no. 3 Company to

its shareholders to buy-back their shares by a letter of offer 4 dated April 29, 2016. The buy-back offer was made with the

intention to provide an exit opportunity to the existing

shareholders at a fair price. The buy-back offers were

received and the Company made payments of ` 1,92,41,602/-

which is reflected in the annual report of the Company for the

financial year 2016-17. Based on the said buy-back offers the

NSE issued the order dated July 2, 2018 removing the

Company, respondent no. 3 from the Dissemination Board in

terms of the SEBI circular dated October 10, 2016 which

provided that where the exclusively listed Companies failed

to get listed on the nation-wide Stock Exchanges it will

provide an exit mechanism to its investors.

6. The appellant did not accept the letter of offer and chose

not to sell the shares back to the Company. The buy-back

offers were made in the year 2016-17 and after two years the

appellant has now filed the present appeal contending that the

buy-back offer made by the Company was wholly illegal in as

much as the circular dated April 17, 2015 and October 10,

2016 issued by SEBI only permitted the promoters to buy-

back the shares and did not allow the Company to buy-back

the shares. It was contended that the said exercise made by

respondent no. 3 Company was wholly illegal in gross

violation of SEBI circulars and therefore the same should be 5 set aside and a direction should be issued directing NSE to

bring back the respondent no. 3 Company on the

Dissemination Board.

7. The contention of the learned counsel for the appellant

is patently misconceived as we find that SEBI issued a

circular dated July 25, 2017 permitting the Company to buy-

back the shares so as to provide an exit to the public

shareholders. In view of the said circular we do not find any

illegality being made in the buy-back of the shares by the

Company. In any case, we do not find any reason to disturb

the arrangement made two years ago at this belated stage.

8. In the light of the aforesaid, we do not see any illegality

in the order dated July 2, 2018 removing respondent no. 3

Company from the Dissemination Board.

9. The appeal fails and is dismissed. In the circumstances

of the case, there shall be no order as to costs.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C.K.G. Nair Member 28.02.2019 Prepared and compared by: msb