TaxTMI 
TaxTMI 
2023 (12) TMI 186
X X X X Extracts X X X X
X X X X Extracts X X X X
....dapurkar and Mr. Manas Kotak i/b Shardul Amarchand Mangaldas & Co. For the Respondent No. 7 & 8 in WP/530/2023 : Mr. Rahul Narichania, Sr. Adv. a/w Mr. Ameya Gokhale, Mr. Vaibhav Singh, Ms. Radhika Indapurkar and Mr. Manas Kotak i/b Shardul Amarchand Mangaldas & Co., For the Respondent No. 9 in WP/530/2023 : Mr. Janak Dwarkadas, Sr. Adv. a/w Mr. Ameya Gokhale, Mr. Vaibhav Singh, Ms. Radhika Indapurkar and Mr. Manas Kotak i/b Shardul Amarchand Mangaldas & Co. For the Respondent No. 7, 8 & 9 in WP/447/2023 : Mr. Ameya Gokhale, Mr. Vaibhav Singh, Ms. Radhika Indapurkar and Mr. Manas Kotak i/b Shardul Amarchand Mangaldas & Co., ORAL ORDER (PER G. S. KULKARNI, J.) 1. Today the proceedings are before us on the backdrop of our detailed order dated 23 October 2023 by which we had directed the SEBI to provide documents to the petitioners as prayed for in prayer clause (g) of the petition. 2. Such order was assailed by respondent Nos. 2 - Bharat Nidhi Ltd. (for short, "BNL") and by respondent No. 9 - Vineet Jain before the Supreme Court. Such Special Leave Petitions [(Civil) Diary No. 45529 of 2023, Bharat Nidhi Ltd. Vs. Ashok Dayabhai Shah & Ors.] and [(Civil) Di....
X X X X Extracts X X X X
X X X X Extracts X X X X
....have contended that BNL was earlier listed on the Delhi Stock Exchange and after the same ceased to be functional, BNL had sought listing of its shares at the Calcutta Stock Exchange which is also not functional. It is stated that BNL is now on the Dissemination Board of the National Stock Exchange. 7. On such conspectus, the case of the petitioners is to the effect that there is a severe prejudice caused to the petitioners due to several illegalities committed by BNL, at the instance of the majority shareholders who are respondent Nos. 3 to 9. The petitioners have contended that they are the victims of BNL not being listed on a recognized stock exchange, which has severely affected their interest as investors in BNL. The petitioner contend that BNL is a majority shareholder of a reputed company known as Bennett, Coleman & Co. Ltd. (for short 'BCCL') in which BNL and respondent Nos. 3, 4, 7 to 9 had approximately 68% shareholding. It is also the case of the petitioners that there are several reasons for BNL to resort to such illegalities of suppression, to the prejudice of the petitioners and of the nature as complained by them, namely, the violations of the Minimum Public Shari....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsequential compliances with securities laws, including but not restricted to compliance with MPS Norms by Respondent Nos. 2 to 9. (d) That this Hon'ble Court be pleased to declare as illegal and void, all actions taken by the Respondents (by themselves, or through their subordinate officers, servants and agents) pursuant to the Impugned Settlement Order, including the 2022 Postal Ballot Notice (Exhibit B); (d1) That, in respect of Respondent No. 2, this Hon'ble Court be pleased to declare that by virtue of Regulation 28(1) of the Settlement Regulations the Impugned Settlement Order stands statutorily and automatically revoked; (d2) That this Hon'ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other writ, order or direction under Article 226 of the Constitution of India, ordering and directing SEBI to restore the regulatory proceedings against Respondent No. 2 with respect to which the Impugned Settlement Order was passed (and conclude the same expeditiously). (e) That pending the hearing and final disposal of the present Petition this Hon'ble Court be pleased to stay the effect and operation of the Imp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n Regulation 29 is only for such information not to be released, "to the public". By no stretch of imagination, can it be said that the petitioners in the present case, who are minority shareholders and in such capacity, being part owners of the company to the extent of their shareholding, are persons who are alien/outsiders to the company (BNL), moreover they are integral to the company, having an inextricable concern and interest in the functioning and management of the company. Thus the word 'public' as used in Regulation 29 can in no manner be made attributable to shareholders of BNL like the petitioners. This apart, if such contention as urged on behalf of the respondents that the petitioners are 'public' and therefore, they are not entitled to receive information by the applicability of Regulation 29, if accepted, the same yardstick and parameters become applicable to respondent Nos. 3 to 9, who are also shareholders of BNL, who are hence not a different class, than that of the petitioners. The petitioners as also respondent Nos. 3 to 9 belong to the same species as shareholders. It thus cannot be countenanced that some shareholders can take shelter under Regulation 29 to ple....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts in that regard. Such documents therefore have all relevancy as law would contemplates in the present lis between the parties. Thus, the impression of respondent Nos. 2 to 9 that the petitioners should not be provided with such documents, is not acceptable. Once it is the entitlement of the petitioners in law to receive such documents, they need to be furnished such documents, unless furnishing of these documents would stand prohibited in law, which is certainly not a situation in the present facts. 30. We may also add that the regulations are framed under the SEBI Act, 1992. The avowed object and intention of the Act is to protect the interests of investors in securities and to promote the development of, to regulate the securities market. Thus, all actions which are taken by the SEBI and through the various bodies as constituted under the Act and the regulations are required to act considering the paramount interest of the investors. For such reasons as well, we do not find as to why the petitioners ought not to be entitled to the documents. We do not find that there is any impediment whatsoever in law or otherwise for the documents, as demanded, to be supplied to the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as been submitted that the petition before the High Court is rendered infructuous. 3. Mr C A Sundaram, senior counsel appearing on behalf of the respondent, on the other hand, submits that the petition as such has not been rendered infructuous since, in particular, prayer clauses (c) and (d) of the petition would survive for determination. 4. This Court is apprised of the fact that the proceedings are listed tomorrow (29 November 2023) before the High Court of Judicature at Bombay. Hence, it is not necessary for this Court to entertain the Special Leave Petition at this stage, particularly bearing in mind what has been observed in paragraphs 2 and 3 of the earlier order dated 6 November 2023, which read as follows: "2. Since the impugned orders of the High Court are purely of an interlocutory nature, we are not inclined to entertain the Special Leave Petitions under Article 136 of the Constitution. 3. However, the parties would be at liberty to pursue their remedies in accordance with law on all counts after the final judgment of the High Court." 5. Should it become necessary for SEBI to raise the issue of interpretation of Regulation 29....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n, MBD House, 6, Bahadur Shah Zafar Marg, New Delhi 110002 6345/2021 Sanmati Properties Limited Gulab Bhawan, MBD House, 6, Bahadur Shah Zafar Marg, New Delhi 110002 Ref: Settlement Order No. SO/EFD-2/SD/421/SEPTEMBER/2022 dated September 12, 2022 in the matter of Bharat Nidhi Limited in respect of Settlement Application nos. 6348, 6353, 6332, 6338, 6342, 6344, 6341 and 6345 of 2021 Sir, 1. This is to inform you that the Settlement Order dated September 12, 2022 under reference, stands revoked and withdrawn in terms of Regulation 28 of the SEBI (Settlement Proceedings) Regulations, 2018, for failure to comply with the Settlement Order. 2. You may also note that upon revocation, no amount paid under the SEBI (Settlement Proceedings) Regulations, 2018 shall be refunded and the Board shall restore or initiate the proceedings, with respect to which the Settlement Order was passed. Regards, Sd/- Kajio Mao Deputy General Manager" (emphasis supplied to para. 1) 16. On such development and position being taken by SEBI, Mr. Bhatt would submit that nothing further survives for adjudication in the present p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oked by the SEBI. It is his submission that the petitioners as minority shareholders have an independent legal right to have all the documents touching the affairs of the BNL and relevant to the issues as raised by the petitioners. It is submitted that such order passed by the Court was also certainly in aid of the reliefs as prayed by the petitioners, which includes prayer clause (c) and (d), which very well survive. 20. Mr. Joshi has next submitted that the approach of the respondents is ex-facie collusive. This, according to Mr. Joshi, can be seen from the fact that initially on 5 September 2023 the SEBI had sought an adjournment to consider as to whether a decision can be taken to withdraw the impugned settlement orders, and when such decision was not taken to withdraw the settlement order, the Court as per its order dated 13 September 2023 had proceeded to hear the present proceedings. He submits that it is during the course of the hearing, this Court passed a substantive order dated 23 October 2023, directing the SEBI to furnish the documents to the petitioners. It is submitted that some meaning would have to be given to some of these events, and more particularly, being a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ject matter of the show cause notice, and any plea in opposition as may be urged by BNL and respondent Nos. 3 to 9 (the majority shareholders), would fall for consideration in the adjudication of the show cause notice. This would, however, not mean that the petitioners in their capacity as shareholders, would be dis-entitled or would cease to have any locus to have information / documents in regard to such affairs of BNL and to seek compliance of the Rules and Regulations and the norms of the SEBI by respondent No. 2 and those controlling BNL. 24. In our opinion, considering the fact that the settlement order itself has been revoked, the SEBI now needs to resort to a lawful course of action, to adjudicate the show cause notice, so as to reach to a conclusion, whether respondent Nos. 2 to 9 have violated the provisions of the Act, Rules and Regulations, as alleged in the show cause notice and the complaints of the petitioners. We are thus of the opinion that in the facts and circumstances of the case, it would be appropriate that the SEBI expeditiously takes forward the show cause notice and comes to an appropriate conclusion, in accordance with law, in regard to the allegations ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ccording to the mood of the passing moment. That must be deprecated." 26. The present case appears to be not different from what has been observed by us in relation to the actions of the SEBI, further discussion on this aspect would fortify our observations. 27. We may observe that when the final hearing of the present proceedings was to commence on 5 September 2023, SEBI had taken a position that the impugned settlement orders can be reconsidered as there was a change in the Whole Time Members (WTM) of SEBI, and accordingly, the proceedings can be put to an end. We had accordingly passed the following order:- 1. We had placed this matter for final hearing today at 2.30 p.m. 2. Mr. Seervai, learned Senior Counsel for the Petitioners, has commenced his arguments. At the midst of the hearing Mr. Bhatt, learned Senior Counsel for the Respondent No. 1-SEBI, has stated before us that there was a change in the Whole Time Members (WTM) of the SEBI. He states that SEBI would now be in a position to take a decision as to whether the settlement order in question (Exhibit- "A") has stood revoked. Mr. Bhatt would contend that if the settlement order stands revoked, in s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rom the plea of interpretation of Regulation 29 of the 2018 Regulation. 30. Be that as it may, considering all these circumstances, we are of the clear opinion that the entitlement of the petitioners to our order dated 23 October 2023, would certainly subsist and the petitioners need to be provided such documents by the SEBI. Moreover, not providing such documents, merely on the ground of the subsequent development that the settlement orders now stands revoked, would completely be an untenable proposition and contrary to our orders dated 23 October 2023, as confirmed by the Supreme Court. Although respondent Nos. 2 to 9 in their business interest may overlook the solemnity of the orders passed by this Court, however, SEBI in its public character cannot take the same approach. In these circumstances, the order dated 23 October 2023 cannot be rendered nugatory. The SEBI is required to holistically consider such orders and not merely in the context of the settlement proceedings, as such order considers the substantive rights of the petitioners, who are shareholders of respondent No. 2 - BNL, having equal rights to that of respondent nos. 3 to 9. SEBI cannot have different yardstick....