Court upholds SEBI circulars protecting investors of Exclusively Listed Companies, dismisses writ petition challenging their legality.

The court upheld the validity of the SEBI circulars dated 10.10.2016 and 01.08.2017, determining them to be reasonable and proportionate in protecting investors of Exclusively Listed Companies. It also affirmed the legality of the BSE order dated 30.04.2018, finding it compliant with the SEBI circulars. The court dismissed the writ petition, ruling against the petitioner's arguments challenging the circulars and the BSE order, emphasizing the adequacy of opportunities for representation and hearing provided in the process.

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Issues Involved:
1. Validity of SEBI circulars dated 10.10.2016 and 01.08.2017.
2. Legality of the BSE order dated 30.04.2018.
3. Alleged violation of principles of natural justice.

Summary:

1. Validity of SEBI Circulars:
The petitioner challenged the SEBI circulars dated 10.10.2016 and 01.08.2017 as arbitrary and illegal. The court found that these circulars are a part of a structured scheme by SEBI to protect investors of Exclusively Listed Companies (ELCs) on de-recognized/non-operational stock exchanges. The circulars provide a framework for ELCs to either get listed on a nationwide stock exchange or provide an exit option to shareholders. The court held that the circulars are not arbitrary and are reasonable and proportionate to the transgressions of the promoters/directors. The court also found that the circulars provide adequate opportunities for representation and hearing.

2. Legality of BSE Order:
The petitioner contended that Rishabh Ispat Ltd. was not an ELC and therefore, the SEBI circulars and the BSE order dated 30.04.2018 do not apply. The court found no evidence to support the claim that Rishabh Ispat Ltd. was delisted before the de-recognition of DSE. The court held that Rishabh Ispat Ltd. was indeed an ELC and thus subject to the SEBI circulars. The BSE order, which restricted the petitioner and others from accessing the securities market and holding directorships in listed companies, was found to be in compliance with the SEBI circulars and valid.

3. Violation of Principles of Natural Justice:
The petitioner argued that the BSE order violated principles of natural justice as no opportunity for hearing was provided. The court found that sufficient opportunity was given through the SEBI circulars and the BSE letter dated 20.10.2016, which sought compliance from Rishabh Ispat Ltd. The court also rejected the argument that the petitioner's resignation as Director on 05.03.2018 exempted her from the BSE order dated 30.04.2018. The court stated that accepting such an argument would frustrate the purpose of the SEBI circulars.

Conclusion:
The court upheld the validity of the SEBI circulars dated 10.10.2016 and 01.08.2017 and found no infirmity in the BSE order dated 30.04.2018. The writ petition was dismissed as it lacked merit.

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