2015 (7) TMI 23 - AT - Companies Law

Intervention Applications Dismissed in SEBI Appeal

Zenith Infotech Ltd. and Others Versus Securities and Exchange Board of India, Mumbai

The Tribunal dismissed intervention applications by entities holding FCCBs in an appeal against SEBI's order. It held that the interveners lacked legal ... Claim of Bondholders - Invested in Foreign Currency Convertible Bonds (FCCBs) - Held that:- In the face of the above pendency of matter before the Hon’ble Supreme Court as well as learned City Civil Court at Dindoshi, this Tribunal in the present appeal, is mainly concerned with the impugned order dated April 23, 2014 passed against the appellants. The issue regarding redemption of FCCBs is not directly before this Tribunal. The Tribunal is, therefore, of the considered opinion that SEBI itself is competent enough to defend its order before this Tribunal and interveners do not have a locus-standi to intervene in the facts and circumstances of the present case. Moreover, permitting intervention by shareholders or Bondholders in any appeal filed by a company against the order passed by SEBI / Stock Exchanges would mean opening a flood-gate and in such a case it would be impossible to dispose of the appeals filed before this Tribunal. It is true that in a given case, the Tribunal may be inclined to allow an application for intervention on behalf of an affected party but it cannot be generalized. Summing up the position, thus, we reiterate the settled legal position that a wrong, having come to our notice, cannot be allowed to be perpetuated. The shareholders / bondholders, who were never heard or impleaded as a necessary or even as a proper party in proceedings before the SEBI at the first instance, cannot be allowed to be implanted as interveners by this Appellate Tribunal in the ordinary course. - Applications disposed of. No observation is made on the merit of the respective contentions of the parties. Issues:1. Intervention applications by entities holding FCCBs.2. Locus standi of interveners in the appeal.3. Competency of SEBI to defend its order.4. Precedent of intervention in Appeal no. 59 of 2013.5. Dismissal of intervention applications.Analysis:1. The judgment dealt with miscellaneous applications for intervention by entities holding Foreign Currency Convertible Bonds (FCCBs) in an appeal filed by a company against an order by SEBI. The entities sought to be impleaded as they were Bondholders and shareholders who claimed to have invested in FCCBs issued by the company in 2011-2012.2. The issue of locus standi of the interveners was crucial. The appellants opposed the intervention, arguing that the entities had no legal standing to intervene in the appeal. The appellants contended that allowing the intervention would lead to a floodgate of similar applications and hinder the disposal of appeals before the Tribunal.3. The Tribunal considered the competency of SEBI to defend its order without intervention. It noted that SEBI was capable of defending its decision before the Tribunal and that the interveners did not have a legal right to intervene in the case based on the circumstances presented.4. The judgment discussed the precedent of intervention in a previous appeal (Appeal no. 59 of 2013) where the interveners were allowed to participate. However, the Tribunal emphasized that the previous decision did not set a binding precedent for future cases and that each intervention application should be considered on its own merits.5. Ultimately, the Tribunal dismissed the intervention applications, stating that the interveners, who were not heard or impleaded in the initial proceedings before SEBI, could not be granted intervention as a matter of course. The judgment clarified that the dismissal did not imply a judgment on the merits of the parties' contentions and directed the main appeal to be listed for admission/final hearing on a specified date.