Pacific Finstock Limited vs Sebi

Order Reserved On: 05.02.2020 Date of Decision : 21.02.2020

Appeal No. 419 of 2019

Pacific Finstock Limited 09th Floor, Galav Chamber, Near Sardar Patel Statue, Sayajigunj, Vadodara- 390 020 ...Appellant

Versus

BSE Limited 25th Floor, P J Towers, Dalal Street, Mumbai- 400 051 ...Respondent

Mr. Prakash Shah, Advocate with Ms. Rinku Valanju, Advocate i/b R V Legal for the Appellant.

Mr. P. N. Modi, Senior Advocate with Mr. Nihar Mody, Mr. Anubhav Ghosh and Mr. Ravishekhar Pandey, Advocates i/b The Law Point 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

1.

The appellant, being aggrieved by the order dated August

02, 2019 passed by the BSE Limited ("BSE" for convenience)

rejecting the listing application has filed the present appeal. 2

2. The facts leading to the filing of the present appeal is, that

the appellant was a listed company on the Vadodara Stock

Exchange and Ahmedabad Stock Exchange but subsequently it

came on the Dissemination Board of the BSE and remained on

the Dissemination Board for the last several years. Securities

and Exchange Board of India ("SEBI" for convenience) issued a

Circular dated October 10, 2016 by which the companies which

were on the Dissemination Board were required to get their

company listed on nationwide stock exchange or provide an exit

opportunity to existing shareholders. In terms of this Circular,

the appellant submitted a plan of action to BSE on February 16,

2017 and a revised plan of action was submitted on June 28,

2017. In the meanwhile, the appellant vide notice dated August

07, 2017 was identified as a suspected shell company. Against

this notice, the appellant filed an Appeal No. 264 of 2017 before

this Tribunal which was disposed of by an order dated

September 29, 2017 directing the appellant to make a fresh

application for direct listing of its securities which would be

considered by BSE and which would further be subject to any

order that may be passed by SEBI.

3. It transpires that the appellant filed a fresh listing

application. During the pendency of the application the Whole 3

Time Member ("WTM") passed an order dated October 26,

2017 directing BSE to consider the outcome of the forensic

audit while considering the listing application. Accordingly, the

appellants' application was kept in abeyance till the submission

of the Forensic Audit Report. The WTM's order dated October

26, 2017 was subsequently confirmed by a confirmatory order

dated August 02, 2018 against which the appellant filed an

Appeal No. 295 of 2018 which was eventually dismissed as

infructuous by an order dated March 07, 2019.

4. In the meanwhile, the promoters/ directors of the appellant

company were debarred from accessing the securities market

vide SEBI's order dated September 28, 2019 passed in the

matter of Kavit Industries Ltd. This fact was brought to the

notice of the appellant and sought clarification as to how the

company is required to comply with the requirements for direct

listing of its securities. It transpires that the company vide letter

dated May 18, 2019 intimated that two of its directors have

resigned with effect from April 15, 2019 and that SEBI vide its

order dated February 13, 2019 has removed the tag of

"suspected shell company". BSE after considering the aforesaid

response, found that one of its promoters Shri Jayesh

Raichandbhai Thakkar, continued to remain as the promoter of 4

the company inspite of being debarred by SEBI vide order dated

September 28, 2018 and, therefore, the direct listing

requirements norms had not been complied with. Accordingly,

the listing application was rejected.

5. Before the Tribunal the only ground urged is that the law

which was applicable on the date when the listing application

was filed on July 29, 2017 could alone be considered. There is

no dispute on this proposition namely that the listing norms that

was in force on the date when the application was filed was

alone required to be considered. Subsequent norms or amended

norms or regulations are not required to be considered.

However, the status of the directors/ promoters of the company

are required to be considered on the date of the passing of the

order on the listing application. If on the date when the listing

application was being considered the promoters/ directors of the

company committed default and thereby incurred a debarment

from accessing the securities market then it was imperative

upon the authority to consider such debarment while

considering the listing application. In the instant case, the

debarment was in direct conflict when the norms stipulated for

considering the listing agreement. Such order of SEBI of

debarment of one of the promoters was brought to the 5

knowledge of the company. The said listing requirements

norms were not rectified and consequently the BSE had no

option but to reject the listing application. The said order does

not suffer from any manifest error of law and requires no

interference. 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 21.02.2020 Prepared & Compared By: PK