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TaxTMI 
TaxTMI 
2019 (3) TMI 1236
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....orporate Insolvency Resolution Process. BEFORE THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH CP No. 1718/IBC/NCLT/MB/MAH/2017 2. The Petitioner has submitted Form-5 as prescribed under the rules. In the requisite Form, under the Head "Particulars of Operational Debt" the total amount in default is stated as Rs.8,85,526/-, as on 01.04.2014. (A) Background of the Case : 3. The claim of the Operational Creditor is with regard to the outstanding 'Annual Listing Fees' owed by the Corporate Debtor to the Operational Creditor. The Operational Creditor is a Stock Exchange duly recognized by the Central Government/Securities and Exchange Board of India (SEBI) to provide platform for listing of securities of companies and trading of securities of such listed companies. 4. The Corporate Debtor entered into 'Listing Agreement dated 30.11.1993' with the Operational Creditor, in accordance with which the Operational Creditor provided services relating to listing of securities of the Corporate Debtor on Operational Creditor's platform. 5. In the Petition Prima Facie it is alleged that the Corporate Debtor has defaulted in making Payment of Listing Fees as per Clause 38 of the Lis....
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.... a well set procedure for recovery of its fees. It has its own Rules & Regulations to recover the outstanding listing fees including suspension of equity shares and freezing of promoter shareholding. The Corporate Debtor's shares have already been suspended by SEBI, as per the Standard Operating Procedure due to non-payment of listing fees. Hence, SEBI (through BSE Ltd.) does not fall within the ambit of Operational Creditor. 11. Further, the Corporate Debtor has placed reliance upon Hon'ble NCLAT's Orders in the matters of Jindal Steel & Power Ltd. V. DCM International Ltd. [Company Appeal (AT) (Insolvency) No. 288/2017]; Satish Mittal V. Ozone Builders & Developers Pvt. Ltd. [CP No. 75 of 2017] and Pawan Dubey & Anr V. J.B.K. Developers Pvt. Ltd. [CP No. 40 of 2017] to substantiate the above said contention that the regulatory dues are out of the ambit of "operational debt". (D) Rejoinder by the Operational Creditor: 12. The Operational Creditor states that the shares of the Corporate Debtor were suspended due to non-compliance with Regulation 33 of LODR Regulations as per the procedure set out in the Circular No. CIR/CFD/CMD/12/2015 dated 30.11.2015 and not because of n....
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....or's contention to this effect is that it has provided service to the Corporate Debtor in effect that a platform has been provided for trading of securities of the Corporate Debtor by listing the same, holds some water. But on the other hand, it must not be forgotten that the Operational Creditor being an entity registered under SEBI is under an obligation to follow the Regulations prescribed by SEBI for recovery of its dues. To this effect it is ascertained that SEBI being a regulatory body of the Operational Creditor, the dues above said are not the 'operational' dues or 'contractual' dues. Rather they come under the ambit of 'Regulatory' dues as they can be recovered only under the set guidelines prescribed by SEBI. 17. Further, this Bench is relying upon the Report of the Insolvency Law Committee which suggests that Regulatory Dues are not to be covered under the Operational Debt. The relevant extracts are given here below: "1.16 It was suggested to the Committee that the definition of 'operational debt' under the Code must be widened to include dues payable to regulators. This would ensure that such dues are granted the protection discussed in points (i) and (ii) a....
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....availability of finance, reduce the cost of capital, promote entrepreneurship and lead to faster economic growth. The government also will be the beneficiary of this process as economic growth will increase revenues. Further, efficiency enhancement and consequent greater value capture through the proposed insolvency regime will bring in additional gains to both the economy and the exchequer" 1.20 The Committee after due deliberation, unanimously agreed that regulatory dues need not be included in the definition of "operation debt". 18. To sum up, this intricate question is to be answered in a systematic manner, albeit, in the light of the above discussion, therefore, for that reason the first step is to examine the SEBI Regulations, 2015 wherein vide Regulation 14 it is prescribed that the listed entity (Asahi Infrastructure & Projects Ltd., in this case Corporate Debtor) shall pay all such fees or charges as applicable to the Recognised Stock Exchanges (BSE in this case Operational Creditor), in the manner specified by the Board (SEBI) or the recognised Stock Exchange. The next important step is as specified in Circular No. CIR/CFD/CMD/12/2015 dated 30.11.2015 which sa....
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.... of the date of the notification of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A Listing Agreement, although executed between "issuing company" and stock exchange, but the entire procedure and payments are regularised under (Listing Obligations and Disclosure Requirements) Regulations, 2015 governed and regularised by SEBI. In this case, this procedure was duly followed, therefore in accordance to the said regulations a listing agreement was executed on 30.11.1993, between issuing company i.e. Asahi Infrastructure & Projects Ltd., on one hand, and on the other hand, Stock Exchange of Bombay (BSE). This inter-se agreement is subject to control and supervision of SEBI. The next step for due consideration is the Report of the Insolvency Law Committee dated 26.03.2018 where an observation is made that the Regulators i.e. SEBI has wide ranging powers to enforce their orders and recover dues. The Law Commission has given an example of Section 24 (2) of SEBI Act, 1992 that if any person fails to pay penalty imposed or fails to comply with any of directions shall be punishable with imprisonment etc. The Hon'ble Law Commission has also concluded in Para 1.20 t....