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Issues: (i) Whether SEBI had maintainability to challenge the impugned order as a person aggrieved under Section 13 of the Commercial Courts Act, 2015; (ii) Whether the SEBI circular dated 13 October 2020 could apply retrospectively to defaults committed and an inter-creditor agreement executed before that date; (iii) Whether the SEBI circular could override the debenture trust deeds so as to require ISIN-wise voting for approval of the settlement and resolution plan.
Issue (i): Whether SEBI had maintainability to challenge the impugned order as a person aggrieved under Section 13 of the Commercial Courts Act, 2015.
Analysis: SEBI had been impleaded in the interim application, had been asked to furnish clarification, had filed an affidavit, and had been heard before the impugned orders were passed. Its participation was not formal or incidental; it was directly engaged in the proceedings and the order under challenge affected the mechanism governing the proposed vote. The expression "any person aggrieved" in Section 13 is of wide amplitude and is not defeated merely because SEBI was not a party to the original suit.
Conclusion: Maintainability was upheld in favour of SEBI, but this issue did not alter the final result of the appeal.
Issue (ii): Whether the SEBI circular dated 13 October 2020 could apply retrospectively to defaults committed and an inter-creditor agreement executed before that date.
Analysis: The circular was stated to operate with immediate effect and contained no express or implied retrospective mandate. The default had occurred, and the inter-creditor agreement had been executed, before the circular came into force. A delegated instrument affecting substantive rights is presumed to be prospective unless retrospective operation is clearly authorised. The court also applied the settled distinction between substantive and procedural change and held that the circular could not be used to alter past transactions or revive a different voting framework for a completed contractual and resolution structure.
Conclusion: The circular was held not to operate retrospectively and could not govern the pre-existing default and inter-creditor arrangement.
Issue (iii): Whether the SEBI circular could override the debenture trust deeds so as to require ISIN-wise voting for approval of the settlement and resolution plan.
Analysis: The debenture trust deeds themselves prescribed the manner of convening meetings and passing a special resolution for compromise or arrangement. Regulation 15(7) of the SEBI (Debenture Trustees) Regulations, 1993 contemplated approval of debenture holders but did not displace the contractual voting mechanism in the trust deeds on the facts of this case. The SEBI circular was confined to the process for consent in relation to enforcement of security and entering into an inter-creditor agreement, not to a compromise or settlement already being placed before debenture holders under the trust deeds. The supplementary trust deed and SEBI's clarification could not enlarge the circular's scope or retrospectively alter the contractual voting framework.
Conclusion: ISIN-wise voting under the SEBI circular was not required, and the meeting was to be conducted in accordance with the debenture trust deeds.
Final Conclusion: The appeal failed, and the orders of the single judge were not interfered with on the substantive questions raised by SEBI.
Ratio Decidendi: A delegated circular operates prospectively unless retrospective effect is clearly authorised, and it cannot be read to override pre-existing contractual voting mechanisms in debenture trust deeds where the circular itself is confined to a different regulatory situation.
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