TaxTMI 
TaxTMI 
2022 (7) TMI 1443
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....es i/b K. Ashar & Co. for the Respondent. Mr. P. N. Modi, Senior Advocate with Ms. Fereshte Sethna, Mr. Abhishek Tilak and Mr. Ameya Pant, Advocates i/b DMD for the Appellant. Per: Justice Tarun Agarwala, Presiding Officer 1. Eight (8) appeals have been filed against four orders. The impugned orders flow from the consequences of the loan agreement dated July 21, 2009 and call option agreements dated July 21, 2009. Since the matter is interlinked in one way or the other, all the eight appeals are being decided together. Appeal No. 293 of 2018 has been filed by Vishvapradhan Commercial Pvt. Ltd. ("VCPL" for convenience) against the order dated June 26, 2018 passed by the Whole Time Member ("WTM" for convenience) of the Securities and Exchange Board of India directing VCPL to make an open offer in terms of Regulation 44 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and Regulation 32 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 ("SAST Regulations, 2011" for convenience) SAST Regulations, 2011. 2. Appeal Nos. 294, 295 and 296 of 2019 has been filed by Dr. Prannoy Roy ("PR"), Radhika Roy ("RR") and RRPR Hold....
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....arge its liability to ICICI Bank Limited. Simultaneously, two call option agreements dated July 21, 2009 were also executed for 1,63,05,404 equity shares of NDTV representing 26% of NDTV shares. The call option agreement between RRPR and Shyam Equities Private Limited ("SEPL" for convenience) in terms of which SEPL had the right to purchase 11.01% equity shares of NDTV from RRPR at a call option price of Rs. 214.65 per share. Another call option agreement of the same date was executed between RRPR and Subhgami Trading Private Limited ("STPL" for convenience) in terms of which STPL had a right to purchase 14.99% equity shares of NDTV from RRPR at a call option price at Rs. 214.65 per share. Needless to say here, SEPL and STPL are associates of VCPL. Another loan was taken by the promoters from VCPL on January 25, 2010 for Rs. 53.85 crores. 8. The terms of the loan agreement are as follows:- (i). The tenure of the loan is 10 years. (ii). The loan shall not carry any interest. (iii). RRPR will issue a convertible warrant to VCPL, convertible into equity shares aggregating to 99.99% of the fully diluted equity share capital of RRPR at the time of conversio....
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....PR. (xii). The following matters relating to NDTV would require prior written consent of VCPL:- (a) Issue any equity securities of NDTV which results in aggregate valuation of NDTV being less than Rs. 1346 Cr. (valuation at which lender has put money into the company). (b) Merger, amalgamation or consolidation of NDTV with any other entity. (c) Cause NDTV to take any steps towards bankruptcy, insolvency or reorganization, arrangement, adjustment, winding up, liquidation etc. (d) Buyback of equity securities, reduction or alteration of share capital of NDTV. (e) Take any action to issue any equity securities or enter into any agreement as a result of which the promoters cease to be in sole control of NDTV. 9. The terms of the call option agreements are as under:- i) SEPL and STPL have a right to purchase either by themselves or through nominees 11.01.% and 14.99% equity shares of NDTV respectively from RRPR at a call option price of Rs. 214.65 per share. ii) For a period of 5 years the promoters would only sell their shares after taking consent from the call option holders. If, the call option is exercised, t....
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....at the loan agreement was a façade in the form of a loan transaction and was executed in order to shroud the true nature of the transaction, namely, to acquire indirect control of NDTV. The WTM rejected the contention of VCPL that the loan transaction was an asset-recourse lending arrangement. The WTM contended that the loan had an inbuilt agreement to purchase the company's stock at a fixed price over and above the prevailing current market price. Further, a perusal of clause 6 of the loan agreement indicated that even without exercising the conversion option of equity share capital of RRPR, VCPL had a right to purchase the shares of RRPR at par value. Further, the conversion of warrants even after the tenure of the loan indicated that VCPL had in fact acquired control over the company. The WTM held that the exercise of the right to convert warrants into the shares of RRPR was not dependent on the repayment of the loan and, whether or not the loan was repaid, VCPL could validly seek conversion of the warrants withheld with RRPR and, consequently, concluded that VCPL was indirectly holding 26% shares of NDTV. The WTM, thus, concluded that it was not a simple case of a secure....
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....learned counsel for the respondent. 17. It was urged and contended by the learned senior counsel for VCPL that Prannoy Roy and Radhika Roy required money to repay their borrowings availed from ICICI Bank Limited to the extent of Rs. 375 crores which carried an interest @ 19% per annum against which they had encumbered their entire shareholding and also provided personal guarantees. For the aforesaid purpose, a commercial loan was provided by VCPL. While granting the loan, certain collateral securities and protective rights were taken, namely, exercise of the warrant conversion option to acquire 99.99% equity shares of RRPR resulting in indirect acquisition of 26% equity shares. The same would also result when VCPL exercises the purchase option to purchase all the equity shares of RRPR held by Radhika Roy and Prannoy Roy. In addition, VCPL through its affiliates could directly purchase 26% equity shares of NDTV at a price of Rs. 214.65 per shares by paying Rs. 350 crores to RRPR which amount could be utilized by RRPR to repay the loan to VCPL. If, VCPL was interested in the media business of NDTV it could acquire 26% equity shares of NDTV at Rs. 214.65 per share irrespective of t....
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....rpreted in a business like manner and that the WTM has committed a manifest error in reading between the lines and drawing conclusions that the loan transaction was nothing else but a facade in the form of a loan transaction in order to shroud the true nature of the transaction, namely, to acquire control of NDTV. 20. In support of his contention the learned counsel has placed reliance upon the decision of this Tribunal in Subhkam Ventures (India) Pvt. Ltd. vs. SEBI (2010) SCC Online SAT 35, the decision of the WTM in Victor Fernandes vs. Network 18, dated 15 November 2019 which was affirmed by this Tribunal by its judgement dated September 28, 2021 in Appeal No. 618 of 2019 and, the decision of the Supreme Court in Arcelormittal India Private Limited vs. Satish Kumar Gupta & Ors. (2019) 2 SCC 1. 21. On the other hand, Shri Gaurav Joshi, the learned senior counsel for the respondent contended that under the garb of a loan agreement, VCPL had acquired voting rights in NDTV in as much as the loan did not carry any interest and that the loan was repayable at the end of 10 years. It was further contended that the conversion of warrants was not dependent on the loan agreement and ....
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....h are extracted hereunder:- "acquirer" 2(1)(b) "acquirer" means any person who, directly or indirectly, acquires or agrees to acquire shares or voting rights in the target company, or acquires or agrees to acquire control over the target company, either by himself or with any person acting in concert with the acquirer; "control" Regulation 2(1)(c) "control shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner." Acquisition of control "Regulation 12. Irrespective of whether or not there has been any acquisition of shares or voting rights in a company, no acquirer shall acquire control over the target company, unless such person makes a public announcement to acquire shares and acquires such shares in accordance with the regulations: Provided that nothing contained herein shall apply to any change in control which takes place in pursuance to a....
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.... (3) The public announcement referred to in regulation 12 shall be made by the merchant banker not later than four working days after any such change or changes are decided to be made as would result in the acquisition of control over the target company by the acquirer." 23. From a perusal of the aforesaid provisions, it is clear that an acquirer is a person who acquires control over the target company either directly or indirectly. The word "control" as defined under Regulation 2(1)(c) includes the right to appoint majority of the directors or to control the management or policy decisions directly or indirectly, individually or in concert by virtue of the shareholding or management rights or shareholding agreements or voting agreements or in any other manner. Regulation 12 prescribes that no acquirer shall acquire control unless such person makes a public announcement to acquire shares. Regulation 14 prescribes that such public announcement should be made within four working days. 24. From the aforesaid, it is clear that the meaning and import of the term "control" as defined in Regulation 2(1)(c) of the SAST Regulations, 1997 is of vital importance. The term "control" was c....
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....ty of directors, it is obvious that he would be in control of the company but that is not the only way to be in control. If an acquirer were to control the management or policy decisions of a company, he would be in control. This could happen by virtue of his shareholding or management rights or by reason of shareholders agreements or voting agreements or in any other manner. The test really is whether the acquirer is in the driving seat. To extend the metaphor further, the question would be whether he controls the steering, accelerator, the gears and the brakes. If the answer to these questions is in the affirmative, then alone would he be in control of the company. In other words, the question to be asked in each case would be whether the acquirer is the driving force behind the company and whether he is the one providing motion to the organization. If yes, he is in control but not otherwise. In short control means effective control." 25. The Supreme Court while considering the expression "control" in Section 29(A)(c) of the Insolvency and Bankruptcy Code, 2016 ("IBC 2016" for convenience) held:- "49. The expression "control" is defined in Section 2(27) of the Compani....
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....f their shareholding or management rights or shareholders agreements or voting agreements or in any other manner." This definition is an inclusive one and not exhaustive and it has two distinct and separate features: (i) the right to appoint majority of Directors or, ii) the ability to control the management or policy decisions by various means referred to in the definition. This control of management or policy decisions could be by virtue of shareholding or management rights or shareholders agreement or voting agreements or in any other manner. This definition appears to be similar to the one as given in Black's Law Dictionary (Eighth Edition) at page 353 where this term has been defined as under: "Control - The direct or indirect power to direct the management and policies of a person or entity, whether through ownership of voting securities, by contract, or otherwise; the power or authority to manage, direct, or oversee." Control, according to the definition, is a proactive and not a reactive power. It is a power by which an acquirer can command the target company to do what he wants it to do. Control really means creating or control....
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.... of the SAST Regulations, 1997. 28. The respondent contended that the definition of "control" under the SAST Regulations is an inclusive definition. Its wide sweep will bring within its ambit direct as well as indirect matters through which control can be acquired and exercised in a target company. It was urged, that in order to assess whether control has been acquired, the actual control that the acquirer is able to exercise in the indirectly acquired company through intermediary company is to be considered. It was urged, that the expression "control" in Justice P.N. Bhagwati Committee Report, 1997 found it prudent to define the word in an inclusive and wide sense in order for it to cover a wide array of real life situation where control of a listed company has changed. It was urged, that the legislative intent was not to provide a straitjacket definition of control keeping in mind the dynamics of the securities market and, therefore, the definition of control was kept open ended and SEBI was granted a discretion to determine change of control on a case to case basis. In support of his submission, reliance was made in the decision of Ashwin K. Doshi vs. SEBI in Appeal No. 44 of....
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.... Civil Appeal No(s). 3371 of 2010 dated November 16, 2011. 30. It was thus urged, that the order of this Tribunal in Shubhkam cannot be treated as a binding precedent and that the question on the interpretation of the expression "control" was left open qua the SAST Regulations. 31. The submission of the respondent in this regard is patently erroneous and cannot be accepted. The definition of "control" as defined in Regulation 2(1)(c) of the SAST Regulations, 1997 has been held to be an inclusive one and not exhaustive in Shubhkam which has been approved by the Supreme Court in Arcelormittal India Private Limited. The extent of the expression "control" as given in Shubhkam, namely, positive and not negative has been approved by the Supreme Court in rcelormittal India Private Limited meaning positive control. In short, the Supreme Court has concluded that the expression "control" means effective control. 32. No doubt, when SEBI challenged the order of Shubhkam before the Supreme Court, the Supreme Court while disposing of the appeal by its order dated November 16, 2011 had clarified that the order of this Tribunal in Shubhkam will not be treated as a precedent and the questi....
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.... case to grant an injunction. The Delhi High Court after perusing various clauses of the agreement prima facie came to a conclusion that it was not a case for grant of an interim injunction. In our view, the observations made by the Delhi High Court are only prima facie observations and, in any case, it is not helpful in view of the Supreme Court decision in Arcelormittal's case. 35. Consequently, we are of the opinion that it is not necessary for us to further analyse the term "control" beyond what has been laid down by the Supreme Court. In this background, we have to now examine whether the appellant in the facts and circumstances of the present case had acquired positive control over the target company so as to trigger Regulation 12 of the SAST Regulations, 1997. 36. We have carefully gone through each and every clause of the loan agreements and we find that there is a commercial rationale behind the entire arrangement. Admittedly, Prannoy Roy and Radhika Roy, being promoters of NDTV, required money to pay the loan availed from ICICI Bank Limited. Through this agreement, we find that if the share price of NDTV exceeds Rs. 214.65 per equity share, then VCPL could exercise ....
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.... the prevailing market price at Rs. 130 per share and, therefore, it leads to a conclusion that the transaction was one of acquisition of control and was not a loan is misconceived and cannot be accepted. We find that at one stage the price of the share went high at Rs. 482 per share. The tenure of the loan was for a period of 10 years. There was a reasonable expectation that the price of NDTV shares would go up and, consequently, the value of the collateral would increase. The bargain in the agreement indicates that if the share price exceeded the strike price of Rs. 214.65 per share, VCPL could exercise the option and release the loan. Thus, a shortfall in the collateral at the beginning of the loan tenure could not be a reason to conclude that the transaction was one for acquisition of control. In our opinion, the transaction has to be considered from a commercial rationale and has to be interpreted in a business like manner. 39. The finding that the warrant conversion option is not dependent on the repayment of the loan and that it does not lapse even on the repayment of the loan and, hence, it is a perpetual warrant conversion option is patently erroneous. In our opinion, t....
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....at an amendment requires an affirmative vote from the VCPL is only indicative of the fact that it wants to protect its investment and that the basic structure of the company (i.e. NDTV) is not altered without its knowledge and approval. By no stretch of logic, can such an affirmative vote confer positive or effective control over day to day working of the company. Similarly, issuance of equity securities, buyback of securities, reduction or alteration of share capital, creation of any encumbrance on equity share of RRPR could result in diluting the rights of VCPL in relation to the collateral and may hamper the ability of the promoters of NDTV to perform their obligations under the loan agreement and call option agreements. Similarly, borrowing or raising funds may jeopardize RRPR's ability to repay the loan extended by VCPL. Similarly, setting up a subsidiary is not in the interest of VCPL as it may allow RRPR to divert its money. Therefore, previous approval is required from VCPL. Such fetters placed is only to protect the interest of VCPL and does not indicate any direct or indirect control. 42. The aforesaid clauses as spelt out in the previous paragraphs does not make VCPL ....
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.... hereby agree that until such time as the Investor equity shareholding in the Company does not fall below 10% of the paid equity share capital of the Company, the affirmative vote of the Investor Director shall be required in a meeting of the Board (or any committee thereof) in respect of any of the following matters: (a) any amendment of the Memorandum and/or Articles of the Company; (b) any consolidation, subdivision or alteration of any rights attached to any share capital of the Company or any of its subsidiaries, any capital calls on shareholders; (c) any redemption, retirement, purchase or other acquisition by the Company of any Shares of the Company; (d) approval of the Annual Business Plan and any deviation, revisions therefrom; (e) the sale or disposition by the Company of any its assets, except for sales of assets: (i) which are in the ordinary course of business; or (ii) if outside the ordinary course of business, which, during any Fiscal year of the Company, have a fair market value of less than Rupees One Crore only; (f) the making of any loan or advance by the Company to any Shareholder or any thi....
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....any or business or to acquire or sell shares, debentures, bonds or other securities/instruments in any company; (v) to settle, compromise or abandon any legal or arbitration proceedings, claims, actions or suits relating to the Company involving sums exceeding Rupees One Crore in respect of anyone such claim, action or suit or cumulatively exceeding Rupees One Crore in respect of claims, actions and/or suits in a Fiscal Year;" Having carefully gone through each and every sub-clause of clause 9, we are of the view that it means what it says. The various sub-clauses are meant only to protect the interest of the acquirer (appellant) and the investment made by it. When we look to the affirmative voting rights of the appellant as ensured by this clause, it becomes more than clear that it does not want the target company to undergo any paradigm shift from its present position without the appellant's knowledge and approval. We are in agreement with the learned counsel for the appellant that the protective provisions under clause 9 are meant to ensure standards of good corporate governance and to protect the interests of the shareholders including that of the appellant fr....
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....its own investment and the interests of the shareholders in general. Amendment of articles and memorandum of association of a company does not fall within the scope of its day to day corporate activity. The mere fact that any such amendment requires an affirmative vote from the appellant is again indicative of the fact that it wants to protect its investment and that the basic structure of the company is not altered without its knowledge and approval. By no stretch of logic, can such an affirmative vote confer control over the day to day working of the company. Sh. Kumar Desai learned counsel laid great emphasis on sub-clause (n) to contend that no key officer of the target company like Chief Executive Officer, Chief Finance Officer, Company Secretary or of equivalent designation could be appointed without the affirmative vote of the appellant and this, according to him, vests significant control in the appellant. Here again, we are unable to agree with Sh. Desai. It is true that the affirmative vote of the appellant is required for the appointment of any of these key officers but even this provision does not mean that the appellant can get its candidate appointed. Affirmative vote....
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.... the loan agreement does not give any discretion to the promoters of NDTV with respect to exercise of their voting rights in NDTV as they would have exercised their voting rights prior to entering into the loan agreement and, therefore, Clause 20 of the loan agreement indicates indirect control over NDTV is patently misconceived. In our opinion, Clause 20 is an assurance clause. It only means that the voting rights of the promoters of RRPR and NDTV should be exercised to enable VCPL and the option holders to exercise their rights in terms of the agreement. It is not a case through which VCPL has acquired voting rights or control over RRPR or NDTV. Clause 20 is only to protect VCPL rights under the agreements. In any case, we are of the firm view that this clause does not result in VCPL acquiring direct control over RRPR or indirect control over NDTV. 46. The finding in the impugned order that the borrowers and promoters have in fact ceded their voting rights atleast, by 26% covered in the loan agreement and another 26% covered in the call option agreement upon the execution of these agreements is patently erroneous. The finding that upon the execution of these agreements the exe....
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....complaint alleged that on the basis of SUA and ZOCD, RIL had failed to disclose various events relating to IMT under Clause 36 of the listing agreement. 50. The clauses of the agreements was analysed as under:- (i) Under the terms and conditions of the ZOCD agreement, no interest was payable by the holding companies on the ZOCD subscribed by IMT. It was only an investment made IMT. (ii) Clauses 5.5 and 5.6 - it appears that the ZOCD agreement was entered into by IMT to provide funds to the holding companies in the form of loan so that the holding companies may subscribe to the rights issue of NW18 and TV18. As on date of execution of the ZOCD agreement, IMT had only one trustee viz. Nirlab Consultancy Pvt. Ltd. The said trustee company was wholly owned and controlled by Raghav Bahl and his wife. The 6 holding companies were also wholly owned by Raghav Bahl and his wife. Therefore, IMT was ultimately controlled by Raghav Bahl who was also in control of NW18 at the time of ZOCD Agreement. In these circumstances, under the ZOCD agreement, there was no change in control of the 6 holding companies and even indirectly of the Target Co. (iii) Clause 2.1 of th....
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....rtain negative stipulations relating to conduct of business of 6 holding companies. Such clauses are used in regular loan agreement. (viii). Further, as specified in Regulation 2(1)(e) of the SAST Regulations, SEBI has uniformly regarded the following 2 indicia to denote control: i. Right to appoint majority of directors; ii. Right to control policy of management decision of Target Co. (ix). On analyzing various clauses of ZOCD and the nature of the rights granted to IMT, it is noted that the aforesaid indicia of control are absent. It is also found that the various clauses of ZOCD agreement are predominantly in the nature of granting protective rights for the investment made by IMT (Respondent No. 2). (x). Pursuant to the examination of all the relevant documents, it had been concluded by SEBI that IMT had indirectly acquired joint control over NW18 not by way of the ZOCD Agreement dated February 27, 2012, but even before that by way of the Single Unit Agreement dated November 23, 2011 whereby IMT along with the holding companies of NW18 and other promoters of NW18 had agreed to act as a single unit in managing the matters of NW18 and a....
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....irs of NW 18 by RIL arising out of the ZOCD. The underlying (existing) shareholding based on which the rights issue subscription took place continued to be in the hands of Raghav Bahl and related entities, as on date of the ZOCD. Moreover, the ZOCDs did not carry any voting rights and the ZOCD agreement did not stifle the voting rights of the Raghav Bahl entities in any manner with respect to the conduct of the affairs of NW18. It can thus be asserted that there was no effective change in control of NW18 as a result of the execution of the ZOCD agreement. In the background of the facts and circumstances of this case, I am not inclined to accept the argument of the complainant that the option of conversion available with IMT entitled it to exercise indirect control over the target company to the exclusion of Raghav Bahl group of companies, on the strength of its holding extending to 1.89%, at the time of allotment of ZOCDs. It is relevant to mention that in the case of IMT, any conversion of ZOCDs would require the concurrence of Raghav Bahl of NMPL/DCPL as its Trustee. Hence, as affirmed in the affidavit referred to above, IMT was ultimately under the control of Raghav Bahl, at the....
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....he conversion option contained in ZOCD Agreement to receive equity shares of the target company, the said amounted to the indirect acquisition of shares of the target company. The learned WTM considered the same. He observed that the ZOCDs were in the nature of convertible into equity shares at any time, and only upon conversion of the same IMT would have been able to hold more than 99.99% shares of the diluted equity of the promoter company of NW18 etc. This option however was not exercised at any time before making the public announcement as detailed (supra) and, thus, the ZOCD Agreement itself did not entail into any indirect control of IMT or RIL in NW18 and, therefore, no disclosure was required to be made. 14. In our view, the reasoning of the learned WTM cannot be faulted with. The ZOCD Agreement was in the nature of investment by IMT in the holding companies ofTV18, NW18. Said ZOCD Agreement had given right to IMT, the subscriber of the ZOCDs to convert ZOCDs into equity in a given period. The control of TV18 and NW18, continued with Mr. Raghav Bahl and his entities. IT had no say in the voting rights etc. and, therefore, the conclusion of the learned WTM cannot be....
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....ments, we are of the opinion, that various clauses are meant to protect the interest of VCPL and the investment made by it. The transaction in the agreement is an amalgamation of rights. It is a loan transaction with an option to acquire 26% equity shares of NDTV as consideration for the provision of the loan. However, the transaction does not justify as being a control transaction. The transaction does not acquire direct or indirect control of NDTV. The intent and language of the loan agreement and call option agreements read with the SAST Regulations makes it clear that there is no direct or indirect control of NDTV by VCPL. The transaction structure does not lead to a conclusion that VCPL has acquired direct or indirect control over NDTV. 57. We are further of the opinion that the impugned order does not establish how each of the rights, either individually or collectively have led VCPL to acquire indirect control over NDTV. No evidence has come to light to indicate that VCPL is exercising control over the management or policies of NDTV. In the absence of any evidence, the impugned order passed by the WTM cannot be sustained. In our view, the combined reading of the agreement....
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....ngs. It was also contended that Clause 49(I)(D) of the Listing Agreement came into effect only in the year 2014 and, therefore there was no requirement to make a disclosure of an event happening before 2014. It was contended that at the relevant time the only requirement on the company was to have a Code of Conduct and that there was no requirement for the appellants to disclose the loan agreements to the Board of the company. The appellants vehemently denied that there was any fault on their part nor was any fraud committed by them. 62. The WTM, after considering the material evidence on record, held that the present proceedings were initiated on the basis of the complaint received on August 26, 2017 based on which the show cause notice was issued in the year 2018. Hence there is no delay, quite apart there is no period of limitation prescribed in initiating proceedings under the SEBI Act, Rules and Regulations. The WTM after considering various clauses of the loan agreement came to a conclusion that it was not a loan agreement but under the garb of the loan agreement the acts of the appellants amounted to commissions of a fraud upon the shareholders. The WTM held that upon a s....
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....by the appellants to transfer their substantial stake in NDTV was fraudulent and was violative of 12A(a) to (b) of the SEBI Act read with Regulation 3(a) to (d) of the PFUTP Regulations also cannot survive since we have already held that there was no direct or indirect control over NDTV by VCPL. Further, the finding that the loan agreements were material and price sensitive information in nature on account of de facto control of VCPL is again erroneous as we have already held that there was no de facto control of VCPL on NDTV. 67. The only question that remains to be considered is, whether the appellants failed to disclose the loan agreement under Clause 49 of the listing agreement. It was contended by the appellants that Clause 49 (I)(D) of the listing agreement came into effect from the year 2014 and, therefore there was no requirement to make a disclosure in respect of the loan agreements made earlier in the year 2009. This contention is erroneous in as much as we find that vide SEBI Circular dated February 21, 2000 Clause 49 was introduced as under:- "Clause 49 - Corporate Governance The company agrees to comply with the following provisions: I. Bo....
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.... expected to comply with all applicable Laws, Rules and Regulations and engage in and promote honest and ethical conduct which is free from fraud or deception. Further, the Board members were required to make full disclosure of all facts and circumstances before making any investment or business arrangement which might create or appear to create a conflict of interest. Admittedly, the loan agreement is nothing else but an investment which was required to be disclosed under the Code of Conduct. Such nondisclosure, however, in our opinion is neither fraudulent nor found to be an unfair trade practice. Without going into the contention as to whether the loan agreement created a conflict of personal interest with the interest of NDTV, we are satisfied that the appellants were required to disclose the loan agreement under the Code of Conduct in terms of Clause 49(I)(D) of the listing agreement especially when PR and RR were the Chairman and Managing Director of NDTV respectively. 69. Considering the aforesaid violation of the Code of Conduct, the order of the WTM restraining them from accessing the securities market or from accepting any position of a Director is totally out of conte....
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....sclosure either in 2009-2010 when the loan agreement was executed or even in 2015 the when same was discussed in the Board's minutes of August 05, 2015. It was contended that the loan agreement executed by the promoters with VCPL was not a material event to be disclosed under Clause 36(7) of the listing agreement and that such requirement only became mandatory w.e.f. August 07, 2019. 73. The AO after analyzing various clauses of the loan agreement came to a conclusion that the loan agreement with VCPL transferred substantial stakes in NDTV owned by the promoter at a pre-negotiated price as consideration and that the promoters gave up 30% of their voting rights which was a material as well as a price sensitive information which was required to be disclosed to the stock exchange. The AO further found that NDTV became aware of this loan agreement on August 05, 2015 when the matter was discussed by the Board of Directors and such information was required to be disclosed under Clause 36 of the listing agreement. 74. We have heard Shri P.N. Modi, the learned senior counsel for the appellant and Shri Shyam Mehta, the learned senior counsel for the respondent. 75. As we have alrea....
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....information which includes but not restricted to; * Issue of any class of securities. * Acquisition, merger, de-merger, amalgamation, restructuring, scheme of arrangement, spin off of setting divisions of the company, etc. * Change in market lot of the company's shares, sub-division of equity shares of the company. * Voluntary delisting by the company from the stock exchange(s). * Forfeiture of shares. * Any action which will result in alteration in the terms regarding redemption/cancellation/retirement in whole or in part of any securities issued by the company. * Information regarding opening, closing of status of ADR, GDR or any other class of securities to be issued abroad. * Cancellation of dividend/rights/bonus, etc. * The above information should be made public immediately." 77. A perusal of Clause 36 of the listing agreement provides for a company to inform the exchange on immediate basis of all events which will have a bearing on the performance/ operations of the company as well as price sensitive information. In the instant case, the AO has found that the information relating to VCPL ....
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.... crore rupees. 23-I (1) For the purpose of adjudging under sections 23A, 23B, 23C, 23D, 23E, 23F, 23G and 23H, the Securities and Exchange Board of India shall appoint any officer not below the rank of a Division Chief of the Securities and Exchange Board of India to be an adjudicating officer for holding an inquiry in the prescribed manner after giving any person concerned a reasonable opportunity of being heard for the purpose of imposing any penalty. (2) While holding an inquiry, the adjudicating officer shall have power to summon and enforce the attendance of any person acquainted with the facts and circumstances of the case to give evidence or to produce any document, which in the opinion of the adjudicating officer, may be useful for or relevant to the subject-matter of the inquiry and if, on such inquiry, he is satisfied that the person has failed to comply with the provisions of any of the sections specified in sub-section (1), he may impose such penalty as he thinks fit in accordance with the provisions of any of those sections. 81. In Suzlon Energy Limited this Tribunal has held that Section 23E has nothing to do with the violation of Clause 36 of the....