SEBI Order Quashed, Deposit Reduced, Audit Required

The Tribunal quashed SEBI's order directing the deposit of Rs. 1292.46 Crore, citing lack of justification and erroneous calculation. The appellant was directed to deposit Rs. 500 Crore and cooperate with the forensic audit. SEBI was instructed to process the delisting application concurrently with the audit to safeguard shareholder interests and ensure operational viability.

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Issues Involved:
1. Validity of SEBI's ex-parte ad-interim order directing the deposit of Rs. 1292.46 Crore in an escrow account.
2. Adequacy of the information provided by the appellant to SEBI and the forensic auditor.
3. SEBI's handling of the delisting application and its relation to the forensic audit.
4. The role and interest of the intervener in the proceedings.

Issue-wise Detailed Analysis:

1. Validity of SEBI's Ex-parte Ad-interim Order:
The appellant challenged SEBI's ex-parte ad-interim order dated October 20, 2020, which directed the appellant company to deposit Rs. 1292.46 Crore into a special escrow account. The Tribunal found this direction arbitrary and without application of mind. The order was based on the assumption that the entire sale consideration should be deposited, ignoring that 50% of the sale consideration would go to the promoters and promoter group. The Tribunal noted that SEBI's calculation based on the floor price of Rs. 63.77 per share was erroneous and did not consider the actual discovered price in the delisting process, which could be higher. The Tribunal concluded that the direction to deposit Rs. 1292.46 Crore was not justified and quashed the order.

2. Adequacy of Information Provided:
SEBI contended that the appellant had not provided adequate information regarding the sale consideration and its distribution. The appellant argued that all necessary information was supplied, but some documents were delayed due to the pandemic and ongoing statutory audits. The Tribunal found that the appellant had parked Rs. 854.41 Crore in fixed deposits and had provided this information to SEBI. The Tribunal directed the appellant to cooperate fully with the forensic auditor and supply all requisite documents within ten days.

3. SEBI's Handling of the Delisting Application:
The Tribunal noted that SEBI had not processed the delisting application, waiting for the forensic audit report. The Tribunal emphasized that the delisting application and the forensic audit are separate issues. The delisting price is determined through a reverse book-building process, and SEBI should not interfere in the price determination. The Tribunal directed SEBI to process the delisting application simultaneously with the forensic audit and pass appropriate orders within six weeks.

4. Role and Interest of the Intervener:
The intervener, holding 30.7% of the company's shares, sought to be made a respondent, arguing that their complaint led to the impugned order. The Tribunal ruled that the intervener was not a necessary party but allowed them to be heard. The Tribunal acknowledged the intervener's interest in the distribution of the sale proceeds and allowed their participation to the extent of being heard.

Conclusion:
The Tribunal quashed SEBI's order directing the deposit of Rs. 1292.46 Crore and provided a detailed framework for resolving the issues. The appellant was directed to deposit Rs. 500 Crore in an escrow account and fully cooperate with the forensic audit. SEBI was instructed to process the delisting application concurrently with the forensic audit. The Tribunal emphasized the need to protect the interests of all shareholders while ensuring the company's operational viability.

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