Riddhi Siddhi Gluco Biols Limited vs Sebi

Date of Decision: 21.2.2019

Misc. Application No.17 of 2019 And Appeal No.12 of 2019

Shobhendra Mansukhlal Daruwala 73 Nav Dariya Mahal, 80B, Nepean Sea Road, Mumbai - 400 006. ..... Appellant

Versus

1.

Securities & Exchange Board of India SEBI Bhawan, Bandra-Kurla Complex, Mumbai - 400 051.

2. Bombay Stock Exchange Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400051.

3. Riddhi Siddhi Gluco Boild Limited 10, Abhishree Corporate Park, Nr. Swagat Bungalow, BRTS Bus Stop, Ambli-Bopal Road, Ahmedabad- 380058.

4. Ganpatraj Lalchand Chowdhary 10, Abhishree Corporate Park, Nr. Swagat Bungalow, BRTS Bus Stop, Ambli-Bopal Road, Ahmedabad- 380058. ...... Respondents

Mr. Pankaj Uttradhi, Advocate with Ms. Sabeena Mahadik and Ms. Yashasvini Chandra, Advocate i/b. Visesha Law Services for the Appellant.

Mr. Pradeep Sancheti, Senior Advocate with Mr. Mihir Mody and Mr. Nishant Upadhyay, Advocates i/b. K. Ashar & Co. for the Respondent No.1.

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Mr. P.N. Modi, Senior Advocate with Mr. Nihar Mody, Mr. Tomu Francis and Mr. Arka Saha, Advocates i/b. Khaitan & Co. for the Respondent no.2.

Mr. Somasekhar Sundaresan, Advocate with Ms. Yugandhara and Mr. Samit Shukla, Ms. Viraj Gami and Ms. Raveena Dhawan, Advocates i/b. DSK Legal for the Respondent Nos.3 & 4.

With Appeal No.48 of 2019

Riddhi Siddhi Gluco Biols Limited 10, Abhishree Corporate Park, Near Swagat Bunglows, BRTS Bus Stand, Ambali Bopal Road, Ahmedabad Gujarat - 380058. ..... Appellant

Versus

BSE Limited Floor 25, P.J. Towers, Dalal Street, Mumbai - 400001. ...... Respondent

Mr. Somasekhar Sundaresan, Advocate with Ms. Yugandhra, Mr. Samit Shukla, Ms. Viraj Gami and Ms. Raveena Dhawan, Advocate i/b. DSK Legal for the Appellant.

Mr. P.N. Modi, Senior Advocate with Mr. Nihar Mody, Mr. Tomu Francis and Mr. Arka Saha, Advocates i/b. Khaitan & Co. for the Respondent.

With Appeal No.49 of 2019

Mr. Ganpatraj L. Chowdhary Rajul Villa, Riddhi Siddhi, Opp. Abhishree Corporate Park, Ambali-Bopal Road, Ambali, Ahmedabad- 380058. ..... Appellant

Versus

BSE Limited Floor 25, P. J. Towers, Dalal Street, Mumbai - 400001. ...... Respondent 3

Mr. Somasekhar Sundaresan, Advocate with Ms. Yugandhra, Mr. Samit Shukla, Ms. Viraj Gami and Ms. Raveena Dhawan, Advocate i/b. DSK Legal for the Appellant.

Mr. Tomu Francis, Advocate with Mr. Arka Saha, Advocates i/b. Khaitan & Co. for the Respondent.

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

Per : Justice Tarun Agarwala (Oral)

1. Riddhi Siddhi Gluco Boild Limited, Respondent no.3 a listed

company, received a letter dated 7.12.2017 from one Ganpatraj

Lalchand Chowdhary, Respondent no.4 expressing his intention to

provide an exit opportunity to all the public shareholders to voluntarily

de-list equity share capital held by the public shareholders in

accordance with the Securities and Exchange Board of India (Delisting

of Equity Shares) Regulations, 2009 (hereinafter referred to as

"Delisting Regulations"). The Board of Directors in its meeting held

on 12th December, 2017 gave its consent to the delisting offer subject

to the approval by the shareholders. Thereafter, a special resolution

was passed for delisting of the equity shareholders and thereafter BSE

Limited (hereinafter referred to as "BSE") was notified on 2.2.2018.

BSE in turn approved in-principle for delisting the equity shares of the

company on 20th February, 2018, based on which a public

announcement was made on 22nd February, 2018. The offer letters

was dispatched and the bidding process opened on 6th March, 2018

and closed on 12th March, 2018.

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2. It transpires that the appellant made a complaint on the SEBI

Scores Portal with regard to the irregularities in the delisting process.

Other complaints were also received based on which SEBI issued a

communication dated 19th March, 2018 directing BSE to keep the

delisting process on hold till further directions, based on which BSE

issued an order dated 21st March, 2018 intimating that the delisting

offer by Respondent no.4 has been kept on hold. SEBI vide

communication dated 21st August, 2018 advised BSE to take

appropriate action at its end since it was the competent authority to

approve the delisting by the companies. The Independent Oversight

Committee for Listing Function of BSE after considering all aspects of

the matter found that the company had made incorrect

submission/declarations for seeking BSE's in-principle approval for

delisting of the shares and consequently the in-principle approval

granted by BSE vide letter dated 20th February, 2018 for voluntary

delisting of equity shares of the company was withdrawn. BSE

accordingly directed that the shares/funds should be returned back to

the shareholders/promoters respectively immediately upon expiry of

seven working days from the date of receipt of the order by the

company.

3. The appellant who is a shareholder filed the present Appeal

No.12 of 2019 contending that the company and its promoters have

not only violated the provisions of the Delisting Regulations but have

also indulged in fraudulent acts in violation of Securities and

Exchange Board of India (Prohibition of Fraudulent and Unfair Trade

Practices relating to Securities Market) Regulations, 2003 and that the 5

company and its promoters are liable for imposition of penalty. It was

thus urged that the direction of BSE to refund the amount should be

stopped so that the said amount could be utilized for payment of

penalty, if any.

4. Respondent nos. 3 and 4 namely the company and Ganpatraj

Lalchand Chowdhary have also filed Appeal nos.48 of 2019 and 49 of

2019 praying for quashing of the order dated 26th December, 2018

passed by BSE. By the time the appeal was filed BSE intimated the

Tribunal that pursuant to its order of 26th December, 2018 the shares

have been returned to the shareholders and, therefore, the appeal to

that extent has become infructuous.

5. SEBI also filed a reply indicating that pursuant to the complaint

filed by the appellant an investigating authority under Section 11C has

been appointed to investigate the trading activities of various entities

in the scrip of the company and that currently investigation in respect

of the shares are continuing and is in progress.

6. In the light of this assertion made by SEBI, learned counsel for

the appellant in Appeal no.12 of 2019 contended that his appeal could

be disposed of with a direction to the investigating authority to

complete the investigation and that till such time final orders are not

passed the amount kept in the escrow account should not be refunded

to Respondent nos.3 and 4 i.e. to the appellants in Appeal nos.48 and

49 of 2019. On the other hand, Respondent nos.3 and 4 contended that

since the shares have already been returned no useful purpose would

be served in pursuing their appeals, namely, Appeals No.48 and 49 of

2019. It was further submitted that retention of amount to the escrow 6

amount would cause irreparable loss and harm which in any case

would be unjustified under the Regulations. It was urged that since

the delisting process have not been approved it was obligatory upon

the respondents to refund the amount.

7. Considering the aforesaid, we find that an investigation has

been initiated which is in progress. The irregularities alleged are being

investigated. No glaring illegality has been pointed out nor there is

anything to indicate that the Respondent nos. 3 and 4 would disappear

or their assets would dissipate. In our opinion attachment before

judgement can only be exercised in exceptional cases and nothing has

been pointed out to show that the present case is an exceptional one.

8. In the light of the aforesaid, all the three appeals are disposed of

with a direction that SEBI should complete the investigation

expeditiously preferably within a period of six months from today.

The amount deposited in the escrow account should be refunded to the

promoters. Interim order passed in Appeal no.12 of 2019 stands

vacated. Misc. Application is also disposed off.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C. K. G. Nair Member

21.2.2019 Prepared and compared by RHN