2022 (9) TMI 1426 - HC - SEBI

Court orders unsealing of envelope with Debenture Holders' voting results, complying with SEBI Circular; Advocates to assess.

The court ordered the opening of a sealed envelope containing the voting results of a meeting of Debenture Holders, aligning with the Supreme Court's ... Interim Application seeking orders to open the sealed envelope and disclose the voting results of the meeting of the Debenture Holders convened - Holding of the meeting was pursuant to the orders of this Court - HELD THAT:- There is merit in the submission of the Mr. Sharan Jagtiani, particularly considering the order dated 10th August, 2022 of the Supreme Court. The meeting of the debenture holders was convened by Respondent No.2 on 13th May, 2022. Pursuant to orders of this Court dated 31st March, 2022 and 6th April, 2022 in Interim Application (L) No [2022 (5) TMI 1510 - BOMBAY HIGH COURT] 25571 of 2021 filed by the Plaintiff. The voting results of the said meeting had been placed in the sealed envelope pursuant to order dated 10th May, 2022. The contention of the Mr. Mustafa Doctor that the voting has not taken placed in accordance with said SEBI’s circular can be considered on the opening of the sealed envelope containing the voting results. The order of the Supreme Court dated 30th August, 2022 holds that the SEBI’s circular has retroactive application and voting would have to be as per the ISIN wise voting. The sealed envelope containing the voting results of the meeting held on 13th May, 2022 shall be opened and made available to the Advocates for the parties in order to assist the Court as to whether the requisite majority as required in accordance with the circular of SEBI dated 13th October, 2020 has been achieved during the course of the meeting. The voting results shall not be publicised prior to such determination. This shall be without prejudice to the rights and contentions of the parties in the present proceedings. Issues:1. Disclosure of voting results of a meeting of Debenture Holders.2. Applicability of SEBI Circular dated 13th October, 2020.3. Retroactive application of SEBI Circular and ISIN wise voting.4. Court's consideration of Supreme Court's order dated 30th August, 2022.5. Comparison with Supreme Court's order dated 10th August, 2022.Analysis:1. The judgment concerns an Interim Application seeking orders to disclose the voting results of a meeting of Debenture Holders held on 13th May, 2022, pursuant to previous court orders. The results were directed to be kept in a sealed envelope as per court orders.2. The Applicant sought relief while stating reservations about the applicability of the SEBI Circular dated 13th October, 2020. However, the court noted that the Supreme Court had upheld the validity of the SEBI Circular on 30th August, 2022, rendering the Applicant's statement obsolete.3. The Senior Counsel for SEBI opposed the relief, citing the Supreme Court's ruling that the SEBI Circular operates retroactively and mandates ISIN wise voting. The court acknowledged the need to consider the Supreme Court's order before disclosing the voting results in accordance with the circular.4. The court considered the arguments presented, particularly referencing the Supreme Court's order dated 10th August, 2022, which allowed disclosure of voting results in a similar case to assess compliance with the SEBI Circular. The court found merit in this approach and decided to open the sealed envelope to determine if the requisite majority as per the circular had been achieved.5. Ultimately, the court passed an order similar to the Supreme Court's previous ruling, directing the opening of the sealed envelope containing the voting results. The results were to be shared with the parties' Advocates to assess compliance with the SEBI Circular, without publicizing the results prematurely and preserving the parties' rights and contentions in the ongoing proceedings. The Interim Application was disposed of accordingly.