2022 (1) TMI 1245 - AT - SEBI

Tribunal Quashes Order, Finds No Violation of Regulation 23

R.T. Agro Private Limited, Mr. Rashmi Bhimjyani Neelkanth Realtors Pvt. Ltd. Versus Securities and Exchange Board of India Mumbai

R.T. Agro Private Limited, Mr. Rashmi Bhimjyani Neelkanth Realtors Pvt. Ltd. Versus Securities and Exchange Board of India Mumbai - TMI Issues involved:Violation of Regulation 23 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 by related party entities in a rescinding resolution.Detailed Analysis:1. Delay Condonation Application:The delay in filing the appeal was condoned by the Tribunal, allowing the application.2. Penalty Imposition:The appeal was filed against the penalty imposed on the appellants for violating Regulation 23 of the LODR Regulations by the Adjudicating Officer, amounting to Rs.35 lakhs collectively.3. Background and Material Transaction:The case arose from a proposed transaction between R.T. Exports Ltd. and Neelkanth Realtors Pvt. Ltd., treated as a material related party transaction requiring shareholder approval. A special resolution was passed on 15th July, 2014, and later rescinded on 16th December, 2016.4. SEBI Notice and Allegations:SEBI issued a notice alleging the appellants' violation of Regulation 23 of the LODR Regulations, leading to the penalty imposition by the Adjudicating Officer.5. Legal Representation and Hearing:Legal representatives for both parties presented arguments before the Tribunal, discussing the compliance with Section 188 of the Companies Act and Regulation 23 of the LODR Regulations.6. Controversy and Legal Provisions:The main issue was whether the appellants, as related party entities, were justified in voting for rescinding the resolution despite being related parties, as per Section 188 of the Companies Act and Regulation 23 of the LODR Regulations.7. Judicial Interpretation and Decision:The Tribunal analyzed the relevant legal provisions and concluded that the appellants did not violate the regulations by participating in the rescinding resolution. The impugned order was quashed, and the appeal was allowed with no costs.8. Digital Signing and Compliance:Due to the Covid-19 pandemic, the order was digitally signed, and parties were directed to act upon the digitally signed copy for compliance purposes.This detailed analysis covers the issues, legal provisions, arguments, and the Tribunal's decision regarding the violation of Regulation 23 of the LODR Regulations by related party entities in the rescinding resolution.