Purity Flexpack Ltd. vs Sebi

Date of Decision : 7.1.2020

Appeal No.125 of 2018

Purity Flexpack Ltd. At Vanseti, Post Tajpura, Near Halol, Panchmahal - 389350. ..... Appellant

Versus

1.

BSE Limited P.J. Towers, Dalal Street, Mumbai - 01.

2. Securities and Exchange Board of India SEBI Bhavan, C-4A, G- Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 51. ...... Respondents

Mr. Somashekar Sundaresan, Advocate with Ms. Yugandhara Khanwilkar, Mr. Anshuman Sugla and Mr. Nikhil Shah, Advocate i/b. Joby Mathew & Associates for the Appellant.

Mr. P.N. Modi, Senior Advocate with Mr. Manish Chhangani, Advocate i/b. Khaitan & Co. for the Respondent no.1.

Mr. Vivek Shah, Advocate i/b. ELP for the Respondent no.2.

CORAM: Justice Tarun Agarwala, Presiding Officer Justice M.T. Joshi, Judicial Member

Per : Justice Tarun Agarwala (Oral) 2

1. The appellant commenced its business in the year 1988

as a private limited Company and became a public limited

Company in the year 1989. The shares of the appellant are

listed on the BSE Limited (hereinafter referred to as 'BSE')

and Vadodara Stock Exchange (hereinafter referred to as

'VSE').

2. In order to wipe out the past losses the appellant passed

a resolution at its Board meeting dated 26 th August, 2004

proposing the reduction of the share capital of the Company

to the extent of Rs.8.50/- per share thereby reducing the share

capital from Rs.5,20,00,000/- to Rs.78,00,000/-. The said

resolution of the Board of Directors was approved by the

shareholders in a special resolution dated 27th September,

2004 and thereafter the Company filed a Company petition

before the Gujarat High Court for its approval. The High

Court of Gujarat by its order of 2nd December, 2004 approved

the resolution of the shareholders and affirmed the reduction

of the share capital of the Company. The said order of the

Gujarat High court was duly intimated to the BSE.

3. The appellant in March 2005 acquired 1,53,300 shares

of Vaikunth Packing Limited. The Board of Directors of the 3

appellant Company and Vaikunth Packing Limited proposed

an amalgamation of both the companies. A scheme of

amalgamation was prepared and filed before the Gujarat High

Court who by it order dated 1 st March, 2006 sanctioned the

scheme of amalgamation.

4. Pursuant to the scheme of amalgamation and the order

of the Gujarat High Court, a resolution was passed by the

appellant dated 18th May, 2006 allotting 2,93,400 fully paid

equity shares to the erstwhile shareholders of the transferor

Company. Based on the said resolution the appellant vide

letter dated 20th May, 2006 filed an application before BSE

requesting that the aforesaid shares pursuant to the

amalgamation scheme be listed on the stock exchange. BSE

for various reasons as recorded in their orders refused to list

the said shares and, in this regard, there is a series of

correspondence.

5. The appellant in its Board meeting dated 6 th August,

2014 proposed the issuance of 21,46,800 bonus shares at a

face value of Rs.10 each with a 2:1 ratio which was approved

by the shareholder by a special resolution dated

27th September, 2014. The appellant sought approval from 4

BSE which was not accepted and in this regard there is a

series of correspondence with BSE since 2013.

6. Vide one such letter of BSE dated 23rd May, 2017 the

stock exchange reiterated its inability to accede to the request

of listing of 2,93,400 equity shares or issuance of 21,46,800

bonus shares. Another letter was again sent by BSE vide

letter dated 30th January, 2018 pursuant to a letter dated 12th

January, 2018 written by the Company. The communication

dated 23rd March, 2017 and 30th January, 2018 by BSE has

been challenged in this appeal praying for its quashing and

for an issuance of a direction to the BSE to list 2,93,400 fully

paid up equity shares on BSE and also for issuance of bonus

shares.

7. We have heard Mr. Somashekar Sundaresan, Advocate

assisted by Ms. Yugandhara Khanwilkar, Mr. Anshuman

Sugla and Mr. Nikhil Shah, Advocates for the Appellant, Mr.

P.N. Modi, Senior Advocate assisted by Mr. Manish

Chhangani, Advocate for the Respondent no.1 and Mr. Vivek

Shah, Advocate i/b. ELP for the Respondent no.2.

8. In our view, the appeal is grossly barred by time. The

scheme of amalgamation was approved on 1st March, 2006. 5

The resolution was passed by the Company on 18 th May,

2006 allotting 2,93,400 fully paid equity shares to the

erstwhile shareholders of the transferor Company. The

appellant made an application on 20th May, 2006 requesting

BSE to list the shares which had been refused and finally

rejected on 20th September, 2013. Similarly, the bonus shares

were approved in September, 2014 which was not accepted

by BSE immediately thereafter.

9. In our view, if the equity shares were not being listed

on the platform of the BSE and if approval was not being

given for issuance of bonus shares the remedy available to

the appellant was to question the veracity of the action of the

respondent at that stage itself. Making various

correspondences with the stock exchange from time to time

will not enlarge the time of filing an appeal before this

Tribunal.

10. In our view, no plausible or valid explanation has been

given for condoning the inordinate delay in questioning the

action of the respondents. The suggestion made that costs

may be imposed is not an acceptable solution. Delay can be

condoned on sufficient, valid and legal grounds which in the 6

instant case is not in existence. In the absence of any valid

legal ground, we do not find it to be a fit case to entertain this

appeal at this belated stage.

11. Consequently, for the reasons stated aforesaid, the

appeal is dismissed on the ground of laches.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Justice M.T. Joshi Judicial Member

7.1.2020 Prepared and compared by RHN