Synergy Cosmetics (Exim) Limited vs Sebi

Order Reserved On: 01.02.2019 Date of Decision : 25.02.2019

Misc. Application No. 414 of 2018 And Appeal No. 469 of 2018

Synergy Cosmetics (Exim) Limited 806, Saffron Building, Panchvati to Ambawadi Road, Ambawadi, Ahmedabad- 380 006 ...Appellant

Versus

BSE Limited 25th Floor, P J Towers, Dalal Street, Fort, Mumbai- 400 001 ...Respondent

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

Mr. Jitendra Motwani, Advocate with Mr. Abhiraj Arora, Mr. Vivek Shah and Mr. Chirag Shetty, Advocates i/b ELP for the Respondent.

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

Per: Justice Tarun Agarwala

1.

The appellant is a listed company and its securities got delisted on

the platform of the respondent on 25.06.2001. The respondent vide its

notice dated 18.10.2016 suspended the trading in securities of the

appellant company for non-compliance of listing requirements. Since no

steps were taken by the appellant company for revocation of the 2

suspension, a show cause notice dated 26.04.2018 was issued calling

upon the appellant to show cause as to why the securities of the appellant

company should not be compulsorily delisted from the platform of the

respondent. The respondent BSE Limited by the impugned order dated

26.06.2018 issued an order compulsorily delisting the securities of the

appellant company. The appellant being aggrieved by the computation of

the fair value of the shares at ` 9.07 per equity share has filed the appeal

under Section 23L of the Securities Contracts (Regulation) Act, 1956

(hereinafter referred to as "SCRA").

2. There is a delay of 73 days in filing the appeal. An explanation

has been given by the appellant in the application for condonation of

delay giving reasons for not filing the appeal within the stipulated period.

The application for condonation of delay has been vehemently opposed

by the learned counsel for the respondent contending that the appeal was

required to be filed under Section 21A of the SCRA and not under

Section 23L. It was further contended, that the period for filing the

appeal cannot be extended by the Tribunal under Section 21A and,

therefore, the appeal is not maintainable and is required to be dismissed.

It was further urged, that when a specific provision has been provided for

filing an appeal under Section 21A of the SCRA, the said provision being

specific would govern the provision relating to the filing of the appeal

and would override the general provision, namely, Section 23L on the

basis of the principles involved in the latin maxim 'generalia specialibus

non derogant' which means that the general law yields to special law. It

was thus contended that if there are two provisions relating to the filing 3

of the appeal then on the basis on the principle of harmonious

construction, merely, that where there is a specific provision of law

dealing with the same subject would prevail over the general. In support

of his submission, the learned counsel for the respondent has placed

reliance upon the decision of the High Court of Calcutta in Ashoka

Marketing Limited & Anr. Vs. The Calcutta Stock Exchange Limited &

Ors. 2017 SCC Online Cal 15508 decided on 16.11.2017 wherein the

Calcutta High Court held that the provision of Section 21A(2) and

Section 23L operate in different fields and that the provision of Section

23L are not attracted to an appeal filed against the decision of the stock

exchange taken in the delisting process and that such a decision would

attract the provision of Section 21A(2) for the purpose of filling an

appeal.

3. On the question of principle of harmonious construction the

learned counsel placed reliance upon a decision of Supreme Court in St.

Stephen's College v. University of Delhi, (1992) 1 SCC 558 and in the

matter of South India Corporation (P) Ltd. Vs. Secretary, Board of

Revenue Trivandrum and Another, (1964) 4 SCR 280.

4. It was also contended that if an appeal is preferred under Section

21A(2) the said appeal can be preferred only with the stipulated period

prescribed therein and that the delay in filing the appeal beyond the

stipulated time cannot be condoned by the Tribunal. In support of this

contention the learned counsel placed reliance on a decision of the

Supreme Court in the matter of Singh Enterprises Vs. Commissioner of

Central Excise, Jamshedpur And Others (Civil Appeal No. 5949 of 4

2007), decided on 14.12.2007 and in the matter of S.P. Perumal Vs. V.

Ramasamy and Others (Company Appeal (AT) No. 263 of 2018)

decided on 08.01.2019, the National Company Law Appellate Tribunal,

New Delhi.

5. We have heard Shri Akshit Jain the learned counsel for the

appellant and Shri Jitendra Motwani the learned counsel for the

respondent

6. Before dealing with the submissions raised by the learned counsel

for the respondent it would be essential to peruse the provisions of the

SCRA.

7. Section 21A provides for delisting of securities. For facility, the

said provision is extracted hereunder:

"Delisting of securities.

21A (1) A recognised stock exchange may delist the securities, after recording the reasons therefor, from any recognised stock exchange on any of the ground or grounds as may be prescribed under this Act:

Provided that the securities of a company shall not be delisted unless the company concerned has been given a reasonable opportunity of being heard.

(2) A listed company or an aggrieved investor may

file an appeal before the Securities Appellate Tribunal

against the decision of the recognised stock exchange

delisting the securities within fifteen days from the

date of the decision of the recognised stock exchange

delisting the securities and the provisions of sections 5 22B to 22E of this Act, shall apply, as far as may be,

to such appeals:

Provided that the Securities Appellate Tribunal may,

if it is satisfied that the company was prevented by

sufficient cause from filing the appeal within the said

period, allow it to be filed within a further period not

exceeding one month."

Section 21A(2) provides that a listed company or an aggrieved investor

may file an appeal before the Securities Appellate Tribunal against the

decision of the recognised stock exchange delisting the securities within

fifteen days from the date of the decision. The proviso to Section 21A(2)

states that the Securities Appellate Tribunal may further extend the

period for filing the appeal not exceeding one month, if sufficient cause

is shown. Thus, a specific provision for filing an appeal has been

provided under Section 21A(2) against the decision of the recognised

stock exchange delisting the securities. We are further of the opinion,

that the Tribunal being a creature of statute has no jurisdiction to condone

the delay beyond this stipulated time provided under the Act. The appeal

is therefore required to be filed within fifteen days from the date of the

decision which can be extended not exceeding one month. After one

month, the Tribunal has no power to extend the period or condone the

delay where an appeal is filed after the stipulated period. In this regard,

provision of Section 22D of the Act will not be helpful which provides

that the provisions of the Limitation Act, 1963 shall, as far as may be,

apply to an appeal made to a Securities Appellate Tribunal. 6

8. A perusal of Section 21A(2) and the proviso makes it clear that a

period of limitation is prescribed which is different from the period

prescribed in the Limitation Act. Therefore, Section 22D of the SCRA

cannot be come to the aid in extending the period of limitation under

21A(2) because the provision of the Limitation Act only apply "as far as

may be". For facility, the provision of Section 22D of SCRA is extracted

hereunder:

"Limitation.

22D. The provisions of the Limitation Act, 1963 (36 of

1963) shall, as far as may be, apply to an appeal

made to a Securities Appellate Tribunal."

9. In view of the aforesaid, we are of the view that when there is a

special provision for filing an appeal within a stipulated period the

provision of Section 5 of the Limitation Act will not apply. Our view is

fortified by a decision of the Supreme Court in Bengal Chemists &

Druggists Association Vs. Kalyan Chowdhury (2018) 3 SCC 41 decided

on 02.02.2018. The Supreme Court held:

"4) A cursory reading of Section 421(3) makes it

clear that the proviso provides a period of limitation

different from that provided in the Limitation Act, and

also provides a further period not exceeding 45 days

only if it is satisfied that the appellant was prevented

by sufficient cause from filing the appeal within that

period. Section 433 obviously cannot come to the aid

of the appellant because the provisions of the 7 Limitation Act only apply "as far as may be". In a

case like the present, where there is a special

provision contained in Section 421(3) proviso, Section

5 of the Limitation Act obviously cannot apply."

10. Section 23L provides a provision for an aggrieved person to file an

appeal to the Securities Appellate Tribunal. For facility, the said

provision is extracted hereinunder:-

"Appeal to Securities Appellate Tribunal.

23L. (1) Any person aggrieved, by the order or decision of the recognized stock exchange or the adjudicating officer or any order made by the Securities and Exchange Board of India under 4B [or sub-section (3) of section 23-I], may prefer an appeal before the Securities Appellate Tribunal and the provisions of sections 22B, 22C, 22D and 22E of this Act, shall apply, as far as may be, to such appeals.

(2) Every appeal under sub-section (1) shall be filed within a period of forty-five days from the date on which a copy of the order or decision is received by the appellant and it shall be in such form and be accompanied by such fee as may be prescribed:

Provided that the Securities Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period.

(3) On receipt of an appeal under sub-section (1), the Securities Appellate Tribunal may, after giving the parties to the appeal, an opportunity of being heard, 8

pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against.

(4) The Securities Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned adjudicating officer.

(5) The appeal filed before the Securities Appellate Tribunal under sub-section (1) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within six months from the date of receipt of the appeal."

A perusal of the aforesaid provisions indicates that any person aggrieved

by an order or decision of the recognized stock exchange or adjudicating

officer or any order made by Securities and Exchange Board of India

may prefer an appeal before this Tribunal within forty five days. The

proviso to Section 23L further indicates that the appeal can be entertained

after the expiry of the forty five days if the Tribunal is satisfied that there

was sufficient cause for not filing the appeal within the stipulated period.

Thus, a wide discretion is given to the Tribunal to condone the delay after

forty five days for which purpose the provision of Section 24D would

apply.

11. In this regard, at this stage it may be pointed out that Section 21A

and Section 23L were both inserted in the SCRA by the Securities Laws

(Amendment) Act, 2004, w.e.f. 12.10.2004. Both the provisions came

into force simultaneously w.e.f. 12.10.2004. Section 21A and Section

23L provides a provision for filing an appeal against the decision of a 9

stock exchange. At this stage, we also need to take a look at the

provisions of Securities Contracts (Regulation) (Appeal to Securities

Appellate Tribunal) Rules, 2000 (hereinafter referred to as the Rules of

2000) which have been framed in exercise of the powers conferred by

Section 30 read with Section 22A of the SCRA, 1956. Rule 2(b) of the

Rules of 2000 defines "appeal" as under:-

"2(b) "appeal" means an appeal filed under section 21A or section 22A or section 23L of the Securities Contracts (Regulation) Act, 1956 or under sub-rule (5) of rule 19 or sub rule (5) of rule 20 of the Securities Contracts (Regulation) Rules, 1957;]"

Rule 3 provides the period of limitation for filing an appeal. For facility,

the said provision is extracted hereunder:-

"Limitation for filing appeal.

3 [(1)] Where a recognised stock exchange acting in pursuance of any power given to it by its bye-laws, refuses to list the securities of any company, the company shall be entitled to be furnished with reasons for such refusal and may,--

(a) within 15 days from the date on which the reasons for such refusal are furnished to it, or

(b) where the stock exchange had omitted or failed to dispose of, within the time specified in sub-section (1A) of section 73 of the Companies Act, 1956 (hereinafter in this rule referred to as the "specified time"), the application for permission for the shares or debentures to be dealt with on 10

the stock exchange, within 15 days from the date of expiry of the specified time or within such further period, not exceeding one month, as the Appellate Tribunal may, on sufficient cause being shown, allow, appeal to the Securities Appellate Tribunal having jurisdiction in the matter against such refusal, omission or failure, as the case may be.

[(2) Every appeal shall be filed within a period of forty-five days from the date on which a copy of the order, against which the appeal is filed, of a recognised stock exchange withdrawing admission to dealings or suspending admission to dealings which continues for a period exceeding three months in any security/units or other instruments of a "collective instrument scheme", as defined under the Securities and Exchange Board of India Act, 1992 (15 of 1992), is received by the appellant:

Provided that the Appellate Tribunal may entertain an appeal after the expiry of the period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period.]"

A perusal of the aforesaid Rule 3 makes it apparently clear, that an appeal

against the decision of a stock exchange shall be filed within forty five

days and that the period beyond forty five days can be condoned if

sufficient cause is shown to the Tribunal.

12. Having given our thoughtful consideration in the matter and upon

perusing the provisions of Section 21A and Section 23L, we are of the

opinion that the provision of Section 23L are wide enough to embrace an 11

appeal filed against a decision of delisting. Section 23L cannot be given

a narrow interpretation so as to exclude the exercise which are covered

by Section 21A. The argument of the respondent that, if the matter is

covered by Section 21A then Section 23L would be inapplicable by

necessary implication especially when there is a specific provision cannot

be accepted. There is no doubt that when there is a specific provision

then it must be governed by that provision and not by the general

provision (in terms of the latin maxim "generalia specialibus non

derogant") i.e. to say whenever a specific remedy is made available in

law, the other remedy, more general in nature, necessarily gets excluded.

In our view, this principle of a specific remedy would exclude the general

remedy would not be applicable in the instant case. This sound principle

of jurisprudence, namely, that a special provision on a matter excludes

the matter of a general provision on that matter cannot be applied in a

situation when there are two provisions dealing with remedies in filing an

appeal. When there is a plurality of remedies, the principle of specific

provision excluding the general provision by necessary implication will

not be applicable. In the instant case, there is no conflict between the

two provisions namely Section 21A and Section 23L. Even if the two

remedies happen to be inconsistent, they continue for the person

concerned to choose from, until he elects one of them. In this regard, the

doctrine of election will come into play and the aggrieved person has the

remedy either to file an appeal under Section 21A or under Section 23L.

13. In Bihar State Co-operative Marketing Union Ltd., Vs. Uma

Shankar Sharan and Anr. AIR 1993 SC 1222 the question which was 12

considered was whether a matter, if it comes within the scope of Section

40 of the Bihar and Orissa Co-operative Societies Act, 1935 has to be

excluded from the purview of Section 48 of the Act. The Supreme Court

held that both the provisions were applicable for the purpose of filing an

appeal and that both the provisions were held to be available to the

appellant. The Supreme Court held:-

"6. Validity of plural remedies, if available under the

law, cannot be doubted. If any standard book on the

subject is examined, it will be found that the debate is

directed to the application of the principle of election,

where two or more remedies are available to a person.

Even if the two remedies happen to be inconsistent,

they continue for the person concerned to choose from,

until he elects one of them, commencing an action

accordingly. In the present case there is no such

problem as no steps under S.40 were ever taken by the

appellant. The provisions of S.48 must, therefore, be

held to be available to the appellant for recovery of the

loss."

The said decision is squarely applicable in the instant case and

consequently the decision of the Calcutta High Court in the matter of

Ashoka Marketing Limited & Anr. Vs. The Calcutta Stock Exchange

Limited & Ors. 2017 SCC Online Cal 15508 decided on 16.11.2017

stands impliedly overruled.

13

14. The contention that there has to be a harmonious construction of the

two Rules would not applicable in the instant case as there is no conflict in

the two provisions. The principle of harmonious construction would be

applicable when there is a conflict between two provisions. The Rule of

construction is well settled namely, that when there are, in an enactment,

two provisions which cannot be reconciled with each other, they should be

so interpreted, that if possible, effect should be given to both. This is

known as harmonious construction. A familiar approach in such cases is

to find out which of the two apparently conflicting provisions is more

general and which is more specific and to construe the more general one

so as to exclude the more specific. The question as to the relative nature

of the provisions general or special has to be determined with reference to

the area and extent of their application either generally or specially in a

particular situation. The principle is expressed in the maxim 'generalia

specialibus non derogant' which means general things do not derogate

from special things and 'generalia specialibus derogant' which means that

special things derogate from general things i.e. to say if a special

provision is made on a certain matter, that matter is excluded from the

general provision.

15. There is another aspect. Securities and Exchange Board of India

(Delisting of Equity Shares) Regulation, 2009 (hereinafter referred to as

the Regulation of 2009) have been framed in exercise of the powers

conferred by Section 31 read with Section 21A of SCRA. Under Chapter

V, Regulation 22 provides compulsorily delisting of the equity shares of a

company by a recognized stock exchange. Regulation 23 provides that 14

after the equity shares of a company are delisted, the stock exchange shall

appoint an independent valuer for determining the fair value of the

delisted equity shares. The promoter of the company, if aggrieved by the

determination of the fair value can only file an appeal under Section 23L

and not under Section 21A of SCRA. In the instant case, a composite

order under Regulation 22 and 23 of the Regulation of 2009 has been

passed by the stock exchange. Thus, an appeal determining the fair value

can be challenged in an appeal filed under Section 23L of the SCRA.

16. In the light of the aforesaid, when two provisions deal with the

remedies of filing an appeal the doctrine of election will come into play

and it is open to an appellant to file an appeal either under Section 21A or

under Section 23L. We consequently hold that an appeal can be filed

against delisting of the securities under Section 23L. The appeal filed by

the appellant is thus maintainable.

17. There is a delay of 73 days in filing the appeal. It has been urged

that the reason for the delay is that the appellant company has its

registered office at Ahmedabad, in Gujarat and it took them some time to

find a specialized lawyer dealing in securities market. Thereafter, it took

some time to collect, compile as well as collate various documents as

required by the advocate. It was also urged that the appellant is in

financial difficulties and that they had to pool the resources to file the

appeal which also took time. It was contended that they are not

aggrieved by the order of delisting but are only aggrieved by the

determination of the fair value as determined by the independent valuer at 15

` 9.07 per equity share for which purpose they approached the respondent

to provide the details with regard to the determination of the fair value. It

was contended that since no information was supplied the present appeal

was filed along with an application for condoning the delay.

18. Having heard the learned counsel for the parties, on this aspect we

are of the opinion that sufficient cause has been explained by the

appellant which is adequate as well as satisfactory and, therefore, we are

of the opinion, that the delay of 73 days in filing the appeal should be

condoned. The Supreme Court in Ram Nath Sao alias Ram Nath Sahu

& Ors. Vs. Gobardhan Sao & Ors (2002) 3 SCC 195 held that the

expression "sufficient cause" should receive a liberal construction so as

to advance substantial justice when no negligence or inaction or want of

bonafides is imputable to a party. Consequently, the delay in filing the

appeal is condoned and the application for condonation of delay is

allowed.

19. List the appeal for admission on 28.02.2019.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C.K.G. Nair Member 25.02.2019 Prepared & Compared By: PK