TaxTMI 
TaxTMI 
2017 (8) TMI 456
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.... Agarwal, Advocate i/b Manilal Kher Ambalal & Co. And Mr. Vikram Nankani, Senior Advocate with Mr. Tomu Francis, and Mr. Vivek Shah, Advocate ORDER: 1. These two appeals are filed by the appellants to challenge the communication issued by SEBI on 07.08.2017 to the three stock exchanges viz; Bombay Stock Exchange Limited ("BSE" for convenience), National Stock Exchange of India Limited ("NSE" for convenience) & Metropolitan Stock Exchange of India Limited, as well as the two orders both dated 07.08.2017 passed by BSE & NSE in compliance with the directions contained in the SEBI communication dated 07.08.2017. 2. Impugned communication of SEBI dated 07.08.2017 addressed to the three stock exchanges reads thus:- "Subject: Database of listed Shell Companies SEBI is in receipt of a letter no. F. No. 03/73/2017-CL-II dated June 09, 2017 from the Ministry of Corporate Affairs (MCA) on the above captioned matter, vide which MCA has identified a list of 331 companies as suspected shell companies for initiating necessary action as per SEBI laws/ regulations. Copy of the list of 331 companies is enclosed herewith. 1. In this regard exchanges are advised to ....
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....s. They submit that the impugned communication dated 07.08.2017 is an administrative direction issued to three stock exchanges and therefore this Tribunal has no jurisdiction to entertain the appeals filed by the appellants under Section 15T of the SEBI Act to challenge the administrative decision of SEBI dated 07.08.2017. 4. We see no merit in the preliminary objection raised by SEBI. In the case of NSDL (Supra) the Apex Court after considering the scope of the expression 'administrative orders' held that in that case the administrative circular issued by SEBI was referable to Section 11(1) of SEBI Act and hence falls outside the appellate jurisdiction of this Tribunal. 5. In the present case, the directions issued by SEBI to the three exchanges under the impugned communication are:- a) Identify as to whether any of the 331 companies suspected to be the shell companies by the MCA vide its letter dated 09.06.2017 are listed on their exchanges. b) If so, move the securities of those listed companies under Stage VI of GSM with immediate effect so that the said securities are not permitted to trade on daily basis but are permitted to trade once in a month under....
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....impugned communication. Since the impugned communication which is approved by the WTM of SEBI seeks to suspend the trading in the securities of the appellants, on day to day basis the impugned communication is in effect referable to a quasi judicial order passed under Section 11(4) of SEBI Act and not an administrative order passed under Section 11(1) of the SEBI Act. Accordingly, we see no merit in the preliminary objection raised by SEBI. 8. Mr. Dwarkadas and Mr. Sancheti, Learned Senior Advocates appearing on behalf of respective appellant submitted that SEBI has issued the impugned communication on 07.08.2017, without giving an opportunity of hearing to the appellants and the same is ex-facie, arbitrary, unreasonable, whimsical and is issued without application of mind. It is submitted that without investigating into the suspicion entertained by MCA that 331 companies could be shell companies, SEBI could not have issued the impugned communication without giving an opportunity of hearing to the appellants who are covered under the list of 331 companies. It is submitted that by no stretch of imagination SEBI could consider the appellants as suspected shell companies especially....
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....to produce auditors certificate giving detailed information in respect of the items specified therein. In view of the above letter issued by SEBI, it is submitted that if the appellants submit auditor's certificate containing requisite information, then appropriate order would be passed in case of the appellants. 11. During the course of arguments, counsel for SEBI submitted that SEBI would consider the representations made by the appellants either on 09.08.2017 or on 10.08.2017 in the morning. Accordingly, hearing of these appeals were adjourned till 2:15 p.m. on 10.08.107 i.e. today. Counsel for SEBI were called upon to take instruction as to when the letter of MCA dated 09.06.2017 was placed before the Chairman of SEBI or the Board and when decision was taken to issue the impugned communication dated 07.08.2017. 12. Today when both appeals are taken up for hearing it is submitted that the WTM of SEBI has heard the appellants and the order is awaited subject to the appellants furnishing additional information sought by the WTM of SEBI. Since the delay in disposal of the representation is causing serious prejudice to the appellants we proceed to consider the plea of the appe....