2019 (3) TMI 884 - AT - SEBI

Tribunal Allows Appeal Challenging Delisting & Fair Value Computation

Synergy Cosmetics (Exim) Limited Versus BSE Limited

The Tribunal held that the appeal filed under Section 23L of the Securities Contracts (Regulation) Act, 1956 was maintainable, allowing the appellant to ... Condonation of delay - delay of 73 days - Delisting of securities - principle of a specific remedy - filing an appeal against the decision of a stock exchange - period of limitation - Appeal to Securities Appellate Tribunal - mandation of filing the appeal within the stipulated period - delay of 73 days in filing the appeal - sufficient cause - HELD 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. 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 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. 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 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. 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. There is a delay of 73 days in filing the appeal - 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. 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 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 . See Ram Nath Sao alias Ram Nath Sahu & Ors. Vs. Gobardhan Sao & Ors [2002 (2) TMI 1280 - SUPREME COURT] Issues Involved:1. Maintainability of the appeal under Section 23L of the Securities Contracts (Regulation) Act, 1956 (SCRA) versus Section 21A.2. Condonation of delay in filing the appeal.Detailed Analysis:1. Maintainability of the Appeal:The appellant, a listed company whose securities were delisted, challenged the compulsory delisting and the computation of the fair value of the shares at Rs. 9.07 per equity share. The respondent argued that the appeal should have been filed under Section 21A of the SCRA, which provides a specific provision for filing an appeal against delisting within fifteen days, extendable by one month for sufficient cause. The respondent contended that Section 23L, being a general provision, cannot override the specific provision of Section 21A, based on the principle of 'generalia specialibus non derogant.'Tribunal's Analysis:- The Tribunal examined the provisions of Section 21A and Section 23L. Section 21A provides a specific timeline for filing an appeal against delisting, while Section 23L offers a broader provision for appeals against decisions of the stock exchange or SEBI, with a 45-day filing period extendable for sufficient cause.- The Tribunal noted that both Section 21A and Section 23L were inserted simultaneously by the Securities Laws (Amendment) Act, 2004, and that Rule 2(b) of the Securities Contracts (Regulation) (Appeal to Securities Appellate Tribunal) Rules, 2000, includes appeals under both sections.- The Tribunal held that the principle of specific provisions overriding general provisions does not apply when there are multiple remedies available. The doctrine of election allows the appellant to choose between filing under Section 21A or Section 23L. The Tribunal found no conflict between the two provisions, allowing the appellant to file under Section 23L.- The Tribunal further noted that the Securities and Exchange Board of India (Delisting of Equity Shares) Regulation, 2009, provides for the determination of fair value by an independent valuer, which can be appealed under Section 23L.Conclusion on Maintainability:The Tribunal concluded that the appeal filed under Section 23L is maintainable, as the appellant has the option to choose this provision for filing an appeal against the delisting decision.2. Condonation of Delay:The appellant filed the appeal with a delay of 73 days, citing reasons such as the time taken to find a specialized lawyer, collect necessary documents, and financial difficulties.Tribunal's Analysis:- The Tribunal considered the reasons provided by the appellant, noting that the registered office is in Ahmedabad, and the time taken to compile documents and find legal representation was reasonable.- The Tribunal referred to the Supreme Court's decision in Ram Nath Sao alias Ram Nath Sahu & Ors. Vs. Gobardhan Sao & Ors, which emphasized that 'sufficient cause' should be liberally construed to advance substantial justice when no negligence or inaction is attributable to the party.Conclusion on Condonation:The Tribunal found the reasons for the delay to be adequate and satisfactory, and thus, condoned the delay of 73 days in filing the appeal.Order:The application for condonation of delay is allowed, and the appeal is listed for admission on 28.02.2019.