TaxTMI 
TaxTMI 
2024 (1) TMI 734
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....a/w Mr. Vaibhav Singh, Ms. Radhika Indapurkar, Bryan Pillai and Mr. Manas Kotak i/b Shardul Amarchand Mangala's & Co. ORAL JUDGMENT (PER G. S. KULKARNI, J.):- 1. This interim application is filed by the applicants/original petitioners in the above writ petition, which was disposed of by our orders dated 01 December, 2023. The prayers in this application are inter alia that this Court should restore the disposed of petition to its file, and hear the same finally. We note the prayers as made in the present application which read thus:- "a. Restore Writ Petition No. 530 of 2022 of the files of this Hon'ble High Court, and proceed to hear the same finally; b. Restrain BNL from taking any steps in pursuance of the Postal Ballot Notice dated September 22, 2022 (Exhibit B to the Writ Petition) and the Follow Up Announcement dated December 09, 2023 (Exhibit C to this Application); c. Direct BNL to disclose by way of an affidavit all actions and steps taken in pursuance of the Postal Ballot Notice dated September 22, 2022 (Exhibit B to the Writ Petition) and the Follow Up Announcement dated December 09, 2023 (Exhibit C to this Application); d. Gr....
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.... committed by the BNL, at the instance of the majority shareholders who are respondent Nos. 3 to 9 and that the petitioners were the victims of BNL not being listed on a recognized stock exchange, which had severely affected their interest as investors in BNL and more particularly on the illegal and unrealistic pricing of the shares held by them in BNL. 7. The petitioners have also contended that BNL was 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% shareholdings, and it is on many such considerations, 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. According to the petitioners, the violations more particularly of the Minimum Public Sharing Norms (MPS) and violation of the promoter shareholding, as per the rules, regulations and norms of SEBI. 8. The case of the petitioners was also to the effect, that although SEBI had issued show cause notice dated 28 October 2020 to respondent No. 2 - BNL and respondent Nos. 3 to 9, however, before the show caus....
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....r 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 Impugned Settlement Order (Exhibit A); (f) That pending the hearing and final disposal of the present Petition this Hon'ble Court be pleased to stay the 2022 Postal Ballot Notice (Exhibit B); (g) That pending the hearing and final disposal of the pre....
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....lation 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 plead con....
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.... 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 petit....
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....n 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 at a future date, that issue is kept open to be agitated. 6. The Special Leave Petitions are accordingly dismissed. 7. Pending applications, if any, stand disposed of." 12. After the above orders were passed by the Supreme Court, the proceed....
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....tions, 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) 13. On the aforesaid orders being passed by the SEBI revoking the settlement order, respondent Nos. 2 to 9 as also the SEBI, contended that the substantive prayers in the petition being prayers (a) and (b) had become infructuous and therefore, the writ petition ought to be disposed of. Such contention on behalf of the respondents was however opposed on behalf of the petitioners. The petitioners contended that prayer clauses (c) and (d) of the petition (supra), would nonetheless survive for adjudication. It was contended that the stand on behalf of the respondents that the petition is rendered infructuous, was not correct. The petitioners also urged that the approach of the respondents was ex facie collusive considering the sequence of events which had transpired from the inception. 14. This Court considering the rival contentions, passed an order dated 01 December, 2023 whereby the writ petition came to be disposed of, however maintaining the interim direction....
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....regard to respondent Nos. 2 to 9 in the show cause notice. 25. However, there is some substance in what has been urged on behalf of the petitioners as noted by us above on the question of petitioners entitlement to the documents as per our orders dated 23 October, 2023. It is quite intriguing to note the approach of the SEBI, as clearly seen from the events which had transpired, and from the obstinate stand taken by the SEBI in not furnishing the documents to the petitioners in relation to respondent Nos. 2 to 9. There has been persistent non-compliance of such orders passed by the Court, despite the Special Leave Petition of the SEBI being rejected, is too far to be imagined nay totally unacceptable. SEBI is a public body, it is required to act in public interest, it needs to comply with the orders passed by this Court, more particularly, when the orders have attained finality in the facts and circumstances of the present case, cannot be countenanced that SEBI would resort to such actions only when and / or, as may be, commanded by respondent Nos. 2 to 9. Such approach of the SEBI, in our opinion, would cause a dent to the confidence, the investors would repose in the SEB....
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....in such event, further adjudication of the present petition would not be called for. 3. We are of the opinion that it would be appropriate to know the stand of the SEBI. Depending as what the SEBI informs the Court on the adjourned date of hearing, further course of action on the proceedings can be decided. 4. Accordingly, stand over to 13th September 2023 at 2.30 p.m. (emphasis supplied) However, on the adjourned date of hearing, that is, on 13 September 2023, the Court was informed by SEBI that the settlement orders cannot be revoked. The order dated 13 September 2023 reads thus: "1. Today the matter is placed before us on the backdrop of our order dated 5th September 2023. From what has been heard from the learned Counsel for the parties, it appears that the issues as raised in the petition cannot be resolved. The parties agree that the proceedings would be required to be now heard and decided. 2. We, accordingly, place the proceedings for hearing on 4th October 2023 at 2.30 p.m. to be followed on 5th October 2023 and 9th October 2023." 28. Now ultimately SEBI has revoked the settlement orders, by its order dated 10 ....
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....ot have different yardstick between shareholders. We therefore, direct that our order dated 23 October 2023, which has attained finality, needs to be forthwith complied by SEBI. 31. However, on the issue whether the Court should adjudicate prayer (c) and (d) of the petitions, taking an overall view of the matter, and that, now the show cause notice is required to be taken forward, we are of the opinion that in so far as such reliefs are concerned, the same needs to be kept open to be agitated by the petitioners at the appropriate time in appropriate proceedings in the context of the decision which may be taken by the SEBI on the show cause notice. We accordingly, propose to dispose of these petitions by the following order:- ORDER (I) The petitioners are entitled to the benefits of the order dated 23 October 2023 as confirmed by the Supreme Court, by rejection of the Special Leave Petitions of respondent Nos. 2 and 9 and thereafter, by rejection of the Special Leave Petition filed by the SEBI. (II) The order dated 23 October 2023 passed by this Court, be forthwith complied by SEBI. (III) All the contentions of the petitioners and of the ....
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....cuments would not fall for interference in these proceedings. In the future, if any case arises before the Court bearing on a demonstrable prejudice to the Board or to the applicant within the meaning of Regulation 29, that issue would be adjudicated upon on its own merits. 4. The period of compliance is extended by a period of two weeks from today. 5. Subject to the aforesaid, the Special Leave Petitions are dismissed. 6. Pending application, if any, stands disposed of." 16. However, something else also transpired at respondent nos. 2 to 9's end, namely respondent nos. 2 to 9 deciding to file writ petitions before the Delhi High Court. Three writ petitions were filed between respondent nos. 2 to 9 assailing the orders dated 10 November 2023 passed by SEBI, revoking the settlement orders dated 12 September, 2022 (supra). SEBI opposed the said petitions on the ground that the Delhi High Court lacked territorial jurisdiction to entertain and adjudicate the said writ petitions, as the entire cause of action has taken place within the jurisdiction of this Court. A learned Single Judge of the Delhi High Court disposed of the said writ petitions by a judgmen....
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.... of respondent nos. 2 to 9, to be lodged before the Delhi High Court, were affirmed. It is submitted that filing of the writ petition by respondent Nos. 2 to 9 before the Delhi High Court, was an attempt to impede the adjudication of the show cause notice issued by SEBI to respondent no. 2, as also on the other hand, being deceptive before this Court, creating an impression that respondent Nos. 2 to 9 were agreeable in the adjudication of the show cause notice issued by the SEBI, as the settlement order had stood revoked. 22. It is submitted by Mr. Seervai that not only such suppression was made by respondent Nos. 2 to 9 before this Court but further a fresh public notice dated 9 December 2023 came to be issued by BNL inviting offers to buyback 30958 equity shares of the company aggregating upto 1.067% of the paid-up equity share capital of the company (BNL), constituting nearly 25% of the paid-up share capital and free reserves of the company at a price of Rs. 11,229/- per share, being the exit price. It is Mr. Seervai's contention that the buyback offer initially was made in pursuance of the postal ballot notice dated 22 September 2022 which was on the basis of the impugned se....
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....e effect that if the petitioners and the Court were to be informed on 1 December 2023 that respondent Nos. 2 to 9 had challenged the revocation of the settlement order passed by SEBI before the Delhi High Court, in such event, it was certainly open to the petitioners as also to this Court to take a different view of the matter rather than disposing of the petition. Hence, such conduct on the part of the respondents of suppression and forum shopping (by approaching the Delhi High Court) is a fraud on the Court. In supporting such contentions, Mr. Seervai has placed reliance on the decision of the Supreme Court in S. P. Chengalvaraya Naidu Vs. Jagannath (1994)1 SCC 1, and State of Madhya Pradesh Vs. Narmada Bachao Andolan (2011) 7 SCC 1. 25. Mr. Seervai would thus submit, that this is a fit case wherein this Court, considering its authority and jurisdiction under Article 226, read with the provisions of Section 151 of the Code of Civil Procedure, ought to pass an order to restore the petition for adjudication on merits, so as to prevent injustice being caused to the petitioners. In support of such contention, Mr. Seervai has placed reliance on Padam Sen and Another vs. The State o....
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....ttlement order, the petitioners were not aware as to what would be the outcome of the present petition, which was heard on 29 November, 2023 and closed for orders to be pronounced on 01 December, 2023. It is thus submitted that there was no question of any fraud in as much as respondent no. 2 and the said private respondents always had the legal right to question the decision of the SEBI to revoke the settlement order dated 12 September 2022. 31. In so far as respondent no. 2 and other private respondents approaching the Delhi High Court is concerned, it is submitted that these are parties who belong to Delhi. It is submitted that all prior proceedings are filed by them before the Delhi High Court. In such context, drawing our attention to paragraphs 4 and 5 of the settlement order, it is submitted that the substantive proceedings are pending before the Delhi High Court on the valuation of the shares. It is, hence, submitted that the allegation of the petitioners against the private respondents of any forum shopping by instituting writ petitions before the Delhi High Court challenging the revocation of the settlement, is totally untenable. It is submitted that, in fact, it is th....
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....ies (Share Capital and Debentures) Rules, 2014, such buy-back offer was made and it was taken forward, which now stands concluded in view of the shareholders having tendered shares and payment having received by them. It is, therefore, his submission that all contentions in regard to the buy-back which accrue to the petitioners, being expressly kept open by this Court, the petitioners can agitate such contentions before the appropriate forum in independent proceedings. 33. Mr. Dwarkadas would support Mr. Dhond's contention that there was no fraud whatsoever played by respondent Nos. 2 to 9 on this Court. He has drawn our attention to the meaning of the concept of "deceit" by referring to the extract of Salmond on law of Torts to submit that this is a case wherein there is no material of any intention of these respondents to have an unfair advantage over the petitioners in the situation as it exists. It is, therefore, his contention that the interim application ought not to be entertained. It ought to be dismissed, much less any interim reliefs be not granted to the petitioners. 34. Lastly Mr. Dwarkadas would submit that the Court ought not to overlook that there is no prejudi....
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....Seervai's contention that the dishonesty of respondent Nos. 2 to 9 is clear from the fact that already a position was taken by them on 10 November 2023 that respondent Nos. 2 to 9 would approach the Delhi High Court and the same was not informed to this Court on 29 November 2023, when the arguments on the petition were heard and thereafter on 1 December 2023, when the orders were passed. It is, hence, submitted that the prayer as made in the application be granted. Analysis 36. We have extensively heard the learned senior counsel for the parties. We have also perused the record. 37. At the outset, we may observe that the substantive prayers made by the applicants (original petitioners) in this application is to the effect that the aforesaid writ petition be restored to the file of this Court, to be heard finally. The second prayer is to restrain BNL from taking any steps in pursuance of the Postal Ballot notice dated 22 September, 2022 and the follow up announcement dated 9 December, 2023 by which the BNL floated buyback offer. The third prayer is consequential that BNL be directed to disclose by way of an affidavit all actions and steps taken in pursuance of the Postal Ba....
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....ed by SEBI. (III) All the contentions of the petitioners and of the respondents on issues in regard to prayer clauses (c) and (d) are expressly kept open to be agitated at appropriate time in appropriate proceedings. (IV) The petitions stand disposed of in the above terms. No costs. (emphasis supplied) 39. Thus, by virtue of such orders passed by us, at the stage the proceedings stand as on date, in our opinion, there is no cause of action for the petitioners to assert adjudication on any issue on the postal ballot notice dated 22 September 2022. 40. We now discuss in so far as respondent no. 2 issuing a fresh buyback notice dated 09 December, 2023, under the provisions of Section 68 of the Companies Act, 2013 read with Rule 17(10)(d) of the Companies (Share Capital and Debentures) Rules, 2014, proposing to proceed with the buyback offer and to take steps towards finalisation of the buyback offer within the statutory prescribed timelines. The relevant extract of the said notice is required to be noted, which reads thus: "This follow up Public Announcement ("Fourth PA") is being issued by Bharat Nidhi Limited (the "Company"), pursuant to ....
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....petitioners had consciously chosen to do nothing till, the filing of this application on 19 December, 2023. It is submitted that in the meanwhile on 15 December, 2023, online payment of Rs. 34,76,27,382/- was made to the shareholders who had opted to accept the buyback offer on a proportionate basis. Such payment pertained to 144 shareholders holding 30,958 shares, who had validly tendered their shares, which were lying in an Escrow Account, after respondent no. 2 accepted the bids as received on a proportionate basis under the buyback offer. The relevant averments in the affidavit in that regard are contained in paragraph 8 of the affidavit. From such case as pleaded on behalf of respondent no. 2, it is quite clear that by restoring the Writ Petition and simplicitor adjudicating on a prayer on buyback notice dated 22 September, 2022 and the subsequent public notice dated 09 December, 2023, can be rightly considered to be an issue, which can be agitated by the petitioners in appropriate proceedings, as and when the need so arises. In any event, any grievance of the petitioners on the buy-back of shares under the public notice dated 9 December 2023, as noted above, would be an indep....
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....acts. In this regard we find that there is much substance in Mr. Seervai's contention on the conduct of respondent nos. 2 to 9. 44. The question, however, is whether such conduct of respondent nos. 2 to 9 can be labelled as fraudulent and/or of some deceit in the context of the Court being persuaded to pass the orders dated 1 December, 2023. We are not persuaded to accept such contention of Mr. Seervai that respondent nos. 2 to 9 having not informed the Court of its intention to file proceedings before the Delhi High Court to challenge SEBI's order revoking the Settlement Order, could be termed or elevated to be any fraud on the Court. This for reasons more than one. First reason would be and as rightly contended by Mr. Dhond and Mr. Dwarkadas that respondent nos. 2 to 9 by such act have not practiced any deceit or per se any falsity in relation to the Court proceedings. They have not achieved any unfair advantage over the petitioners by mere filing of the proceedings before the Delhi High Court and by not informing to this Court of such fact, when it passed orders dated 1 December, 2023 disposing of the writ petition. Also there was no prejudice caused to the petitioners, as th....
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..... We are thus afraid as to what can be the adjudication in the Writ Petition on such notice and actions as taken thereunder by the BNL. Even in this regard, it would not be appropriate for the Writ Court to adjudicate such issues on exit option, being a matter purely between the shareholders and the company (BNL) and more particularly when the primary challenge in the writ petition was to the settlement order and the consequences falling from such order, which itself has ceased to exist. 48. One of the most significant aspect in declining reliefs to the petitioners on the present application, would also be on the ground that the petitioners were fully aware of the fall out of the order dated 1 December 2023 passed by this Court, as categorically contained in the observations as made in paragraph 31 in regard to the contentions of the petitioners on prayer clauses (c) and (d) of the petition, being kept open and left to be agitated by the petitioners at appropriate time in appropriate proceedings in the context of the decision which may be taken by the SEBI, on the show cause notice. While making such observations, we also passed an order in terms of paragraph III of the operativ....