9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (11) TMI 1802 - HC - SEBIGrant in principle approval for delisting of the equity shares refused - Is a decision of a Stock Exchange refusing to grant in principle approval to an application for voluntary delisting of shares from such Stock Exchange appealable under the provisions of Securities Contracts (Regulation) Act, 1956? - maintainability of petition - denial appealable under Section 21A(2) of the Securities Contracts (Regulation) Act, 1956 - Petitioners have statutory alternative remedy available - HELD THAT - Section 23L on the other hand relates to an appeal in respect of an order or decision of a recognised Stock Exchange or an adjudicating officer or by SEBI passed or taken under Section 4B or Section 23I(3) of the Act of 1956. These differences allow one to infer that they operate on different fields. Provisions of Section 23L are not attracted to an appeal against the decisions of the Stock Exchange taken in the delisting process. Such a decision would attract Section 21A(2) for the purpose of appeal. In the present case, the impugned writing of the Calcutta Stock Exchange contains its decision to refuse in principle approval of voluntary delisting of shares. The same is appealable under Section 21A(2) - The first issue is answered in the affirmative by holding that, a decision of a Stock Exchange refusing to grant in principle approval to an application for voluntary delisting is appealable under Section 21A(2) of the Securities Contracts (Regulation) Act, 1956. In the present case, there appears to be public shareholders and such shareholders are required to have an exit opportunity. In the facts of the present case, it appears that, the company has obtained the prior approval of the Board of Directors of the company in its meeting to apply for permission to delist from the Stock Exchange. It has received the prior approval of the shareholders of the company by special resolution passed through postal ballot, after disclosure of all material facts in the explanatory statement sent to the shareholders in relation to such resolution. The special resolution does not stand defeated by reason of the proviso to Regulation 8(1)(b) being satisfied. The company has made an application to the concerned Stock Exchange for in principle approval in terms of Regulation 8(1)(c). It is at this stage that, the Stock Exchange has refused the grant of in principle approval. Therefore, the question of the company proceeding any further under the Regulation 8 does not arise. It has been contended on behalf of the petitioners that, the exit opportunity contemplated under Chapter IV will become applicable only after the receipt of the in principle approval for delisting. Therefore, the company cannot be said to have defaulted in complying with Chapter IV of the delisting Regulations of 2009, at the present moment in the facts of the present case. According to the petitioners, the Calcutta Stock Exchange has exercised jurisdiction erroneously and therefore, notwithstanding the statutory appeal, the writ petition should be entertained. Notwithstanding the availability of alternative remedy including a statutory alternative remedy of appeal, a writ petition has been held to be maintainable so long, the impugned action is substantiated to be without jurisdiction, non-speaking, or is perverse or tainted with mala fides. Simplicitor on the ground that there exists, an alternative remedy, a writ petition cannot be said to be not maintainable - The second issue is answered by holding that, the present writ petition is maintainable in view of the availability of statutory alternative remedy. The petitioners have not established that, the impugned decision is without jurisdiction, or is perverse, or non-speaking or tainted with mala fides. No provision of any of the statutes or regulations governing the process of delisting is under challenge. In the facts of the present case, it cannot be said that, the Calcutta Stock Exchange has acted beyond the jurisdiction vested upon it in law. The impugned decision of the Calcutta Stock Exchange is amenable to appeal under Section 21A(2) of the Securities Contracts (Regulation) Act, 1956. The petitioners, therefore, have a statutory alternative remedy available to itself. The petitioners would be better placed to ventilate their grievance that, the materials produced before the Calcutta Stock Exchange were not appreciated correctly and that, a different view as that returned in the impugned decision is plausible and ought to be taken before the appellate authority. A Writ Court need not undertake the reappreciation of the evidence as an appellate authority and substitute the impugned decision with its own acting as an appellate authority. Third issue is answered in the negative and against the petitioners.
Issues Involved:
1. Is a decision of a Stock Exchange refusing to grant in principle approval to an application for voluntary delisting of shares from such Stock Exchange appealable under the provisions of Securities Contracts (Regulation) Act, 1956? 2. Is the writ petition maintainable? 3. Is the impugned decision of the Calcutta Stock Exchange without jurisdiction? 4. To what reliefs, if any, are the parties entitled to? Issue-wise Detailed Analysis: 1. Is a decision of a Stock Exchange refusing to grant in principle approval to an application for voluntary delisting of shares from such Stock Exchange appealable under the provisions of Securities Contracts (Regulation) Act, 1956? The impugned decision of the Calcutta Stock Exchange in refusing to grant in principle approval to delist the equity shares of the first petitioner is contended to be appealable under Section 21A of the Securities Contracts (Regulation) Act, 1956. Section 21A does not distinguish between voluntary and compulsory delisting of securities and allows a recognized stock exchange to delist securities after recording reasons. Sub-section (2) of Section 21A permits a listed company or an aggrieved investor to file an appeal before the Securities Appellate Tribunal against the decision of the recognized Stock Exchange within fifteen days from the date of the decision. Section 23L of the Act also provides for appeals to the Securities Appellate Tribunal but operates in a different field compared to Section 21A. The first issue is answered in the affirmative, holding that a decision of a Stock Exchange refusing to grant in principle approval to an application for voluntary delisting is appealable under Section 21A(2). 2. Is the writ petition maintainable? The writ petition is maintainable despite the availability of a statutory alternative remedy of appeal. The rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. A writ petition is maintainable if the impugned action is substantiated to be without jurisdiction, non-speaking, perverse, or tainted with mala fides. In this case, the petitioners have not established that the impugned decision is without jurisdiction, or is perverse, or non-speaking, or tainted with mala fides. Therefore, the second issue is answered by holding that the present writ petition is maintainable. 3. Is the impugned decision of the Calcutta Stock Exchange without jurisdiction? The Calcutta Stock Exchange is required by law to decide an application for voluntary delisting and has the jurisdiction to do so. The decision gives reasons and claims to have consulted with SEBI before informing the petitioners. It cannot be said that the impugned decision is vitiated by the breach of the principles of natural justice. The Stock Exchange has acted within its jurisdiction, and the impugned decision is amenable to appeal under Section 21A(2). The third issue is answered in the negative and against the petitioners. 4. To what reliefs, if any, are the parties entitled to? Since the impugned order is appealable and the petitioners have a statutory alternative remedy available, the merits of the case and the rival contentions of the parties need not be entered into. The writ petition is dismissed, and no order as to costs is made. The fourth issue is answered accordingly. Conclusion: W.P. No. 523 of 2017 is dismissed. No order as to costs. The petitioners are advised to pursue the statutory alternative remedy available to them.
|
