TaxTMI 
TaxTMI 
2025 (1) TMI 1454
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..... Pawan Singh (Noticee No. 1) who were the non-executive Chairman and Managing Director & Chief Executive Officer, respectively, of PTC India Financial Services Ltd (PFS for short). 2. The brief facts of the case are: PTC India Ltd., (PTC for short) is a joint venture public sector company in which four central public enterprises are joint venture partners. The promoters of the PTC are NTPC NTPC - National Thermal Power Corporation Ltd., PFC PFC - Power Finance Corporation Ltd., Powergrid Powergrid - Powergrid Corporation India Ltd. and NHPC NHPC - Natural Hydro Power Corporation Ltd.. PFS is a 100% subsidiary of PTC. Mr. Rajib Kumar Mishra is the Chairman and MD MD - Managing Director of PTC. In that capacity, he is also non-executive Chairman of PFS since November 8, 2021. Dr. Pawan Singh is the MD & CEO of PFS since October 3, 2018. 3. On January 19, 2022, three IDs IDs - Independent Directors (Independent Directors) of PFS, namely, Mr. Santosh B. Nayar, Mr. Thomas Mathews and Mr. Kamlesh Shivji Vikamsey resigned from the Board of PFS and a copy of the resignation letter was forwarded to the SEBI. The following allegations of violation of corporate governance norms wer....
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....o. 1 ran the company as per his wishes, disregarding the concerns raised by the independent directors. 6. By the impugned order, appellant has been restrained from holding any position in any listed company, etc. for a period of six months and also levied with a penalty of Rs. 10 lakh under Section 15HB of the SEBI Act. 7. We have heard Mr. Akhilesh Pandey, learned Advocate for the appellants, Mr. Chetan Kapadia, learned Senior Advocate for the respondent and perused the records. 8. SEBI has filed a brief note of the arguments indicating the violations against Shri Pawan Singh and Shri Rajib Mishra. The appellant is alleged to have violated Regulations 4(2)(f)(iii)(3), 4(2)(f)(iii)(6), 4(2)(f)(iii)(8), 4(2)(f)(iii)(12), 4(2)(f)(iii)(13), 4(2)(f)(iii)(14) of LODR Regulations, 2015 and Clauses 5 (iii), (vi), (vii), (xii), (xiii), (xv) of Code of Conduct of PFS read with Regulation 26(3) of the LODR Regulations on account of following issues. 9. Issue No.1: In response to the communications received from the Independent Directors; (i) Not acceding to the request for independent legal advice to the independent directors in relation to appointment of Mr. Ratnesh; (ii) Not provi....
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....ing meeting of NRC, the appellant was not a member of NRC and so had no role to play. The RoC addressed this issue and did not hold the appellant responsible on this account. The respondent in its impugned order is silent as to how the appellant turned down the request for convening the Board and Committee meetings. He further submitted that the Registrar of Companies (RoC) had examined the issue and exonerated the Appellant of the charge of having failed to discharge the obligation under Section 149 of the Companies Act. 12.02 Shri Kapadia, learned Senior Advocate for the SEBI, contended that the appellant had failed in his duty by not supporting the efforts made by the Independent Directors to seek external legal advice in terms of Section 149 of the Companies Act despite repeated requests. The appellant had failed to provide documents pertaining to the appointment and joining of Mr. Ratnesh as well as the correspondence between PTC/PFS and Mr. Ratnesh, to the Independent Directors. The appellant had failed to ensure that a woman Independent Director was appointed when the nomination of Ms. Renu Narang was withdrawn from the PFS board due to which NRC became dysfunctional. Reque....
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.... 1 and not to the Appellant. Secondly, the independent directors went ahead and decided to appoint an Advocate themselves and obtain legal advice. The gap between their initial request and their decision to appoint an Advocate is about 8 days which cannot be considered as undue delay. Thirdly, the appellant had instructed the HR department of PTC to give the information sought by the independent directors. Fourthly, Ms. Renu Narang was withdrawn by NTPC. Fifthly, RoC had addressed the issue with regard to conducting meeting of NRC and not held the appellant responsible. In view of the undisputed facts recorded hereinabove, we find that the above three charges in Issue No.1 made against the Appellant are not substantiated. 13. Issue No.2 Re: Providing no information or limited / incomplete information to the Board; 13.01 The allegations under this heading pertain to two issues. Firstly not-placing of information pertaining to appointment and joining of Mr. Ratnesh and secondly not providing notice of Board meeting scheduled on January 22, 2022 to all Directors and failure to include agenda items in the notice. 13.02 The allegation regarding not-placing of documentation pertaining....
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....ange the composition of the Board. Therefore, SEBI contention that SEBI's instructions also included not making any change in the audit committee also, is without any merit and liable to be rejected. 14.04 Hence, we hold that the charge in Issue No.3 is also baseless. 15. Issue No.4 Re: Functioning of the Audit Committee. 15.01 The charge under this issue is that the Audit Committee Meetings of PFS were held at a very short notice and agenda items were included at last minute, adequate and complete information was not provided to the Audit Committee and minutes of the meetings were recorded in a manner which did not depict the true and correct picture of the deliberations of the Committee. SEBI's case is that these issues had been flagged by the Chairman of the Audit Committee but the Appellant had failed to take any corrective steps to remedy the situation. The appellant along with Noticee No.1 had caused impediment in proper functioning of the audit committee. 15.02 Appellant's defence is, the Chairman of the Audit Committee in his email dated May 26, 2022 had raised these issues qua the Noticee No. 1. Further, the Companies Act, 2013 permits holding of meeting at a short not....