Supreme Court stays share relisting until NCLAT decides main appeal by July 31, 2025 under existing rules

The SC dismissed the appeal and directed that the main appeal be heard on 31.07.2025 with an appropriate decision thereafter. Until the final order is passed by the NCLAT in the main appeal, no relisting of shares by the National Stock Exchange shall occur, contrary to the NCLAT's earlier direction. If the NCLAT delays hearing the matter, the successful resolution applicant may approach the SC again.

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ISSUES:

Whether the adjudicating authority under the Insolvency and Bankruptcy Code (IBC) has the power to direct relisting of equity shares of a corporate debtor in insolvency proceedings, overriding SEBI Delisting Regulations.Whether Section 238 of the IBC provides an overriding effect over SEBI Act and Regulations in matters of relisting shares pursuant to a resolution plan.Whether the 10-year bar under Regulation 40(1)(b) of SEBI Delisting Regulations, 2021, can be set aside in the context of insolvency resolution and relisting.Whether fines, penalties, fees, or charges arising from acts or omissions prior to the insolvency commencement date can be demanded from the new management upon relisting.Whether relisting pursuant to a resolution plan should be treated as a fresh listing for all purposes, exempting compliance attributable to the period prior to insolvency commencement.What procedural steps and timelines are applicable for relisting shares under insolvency proceedings.Whether the SEBI Act, being a self-contained statute, is unaffected by the overriding provisions of the IBC.Whether the appellate tribunal's interim directions on relisting and status changes of the corporate debtor's shares are appropriate pending final adjudication.

RULINGS / HOLDINGS:

The adjudicating authority under the IBC can direct relisting of equity shares of the corporate debtor as part of the approved resolution plan, overriding the 10-year bar under Regulation 40(1)(b) of SEBI Delisting Regulations, 2021, based on the "overriding effect of Section 238 of the IBC."Section 238 of the IBC has an overriding effect over SEBI Act and Regulations in the context of insolvency resolution, permitting the relisting of shares without insisting on compliances attributable to the period prior to the Insolvency Commencement Date, except as expressly provided in the resolution plan.The respondents shall not insist upon payment of "fines, penalties, fees, or any other charges arising out of acts or omissions committed by the erstwhile management of the CD prior to the Insolvency Commencement Date."Relisting of shares shall be treated as a "part of fresh listing for all purposes," but without imposing additional burdens relating to past defaults.The entire relisting process must be completed within 30 days from the date of the order, with the respondents facilitating any necessary procedural compliance without imposing additional burdens.The appellate tribunal directed that the relisting be stayed pending final adjudication of the main appeal, subject to the final order, to avoid "grave prejudice" to the stock exchange.The appellate tribunal held that the order passed is "only under the facts and circumstances of the instant company appeal" and "will not create a precedent for other proceedings."

RATIONALE:

The Court applied the statutory framework of the Insolvency and Bankruptcy Code, 2016, particularly Section 238, which provides that the provisions of the IBC shall have an overriding effect over other laws inconsistent with it.The Court relied on the principle that the resolution plan approved by the adjudicating authority under the IBC is binding and must be implemented, including directions for relisting shares as part of the resolution process.The Court acknowledged the interplay between SEBI Delisting Regulations (2021) and earlier regulations, noting the existence of a savings clause preserving actions validly taken under prior regulations applicable at the time of delisting.The Court recognized the SEBI Act as a self-contained statute but held that Section 238 of the IBC can override SEBI regulations in the insolvency context to facilitate resolution and revival of the corporate debtor.The appellate tribunal emphasized the need to balance regulatory compliance with the insolvency framework, ordering a stay on relisting until the main appeal is heard to prevent administrative difficulties and prejudice to the stock exchange.No dissent or doctrinal shift was indicated; the Court refrained from detailed observations pending final hearing of the main appeal.

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