2017 (11) TMI 2008 - AT - SEBI

Maintainability of appeal against circulars issued to the stock exchanges in relation to all the companies exclusively listed on de-recognized/ non-operational stock exchanges - orders under regulation 28(2) of the Delisting Regulations - Exit route for the shareholders of the companies exclusively listed on de-recognized/ non-operational stock exchanges - Order seeking direction SEBI to ensure that the companies listed exclusively on regional stock exchanges get listed either on the Bombay Stock Exchange or on the National Stock Exchange automatically - HELD THAT - Merely because SEBI has referred the orders passed under regulation 28(2) of the Delisting Regulations as circulars cannot be a ground to deny the appellant his right to file an appeal against the said circulars which are in fact orders passed under the Delisting Regulations. In our opinion, the argument advanced on behalf of the appellant is wholly misconceived. Impugned circulars issued by SEBI contain administrative directions given by SEBI to the stock exchanges in relation to all companies which are exclusively listed on de-recognized / non-operational stock exchanges. Since the directions contained in the said circulars are not restricted to any particular company but are generally applicable to all the companies exclusively listed on de-recognized/ non-operational stock exchanges, it is abundantly clear that the impugned circulars are nothing but the administrative circulars issued in the interest of the investors in the securities market. None of the companies to whom the directions contained in the impugned circulars apply have deemed it appropriate to challenge the impugned circulars and the appellant who is an investor in those companies has deemed it appropriate to challenge the impugned circulars. Assuming that the appellant has any grievance against the impugned circulars, in view of the decision of the Apex Court in case of NSDL 2017 (3) TMI 1061 - SUPREME COURT proper course to be adopted by the appellant is to take appropriate steps in judicial review proceedings and not by way of an appeal before this Tribunal. Argument of the appellant that the impugned circulars constitute orders under regulation 28(2) of the Delisting Regulations is totally frivolous to say the least. By circular dated 22.05.2014 SEBI directed the stock exchanges to give various options specified therein to the companies exclusively listed on de-recognized/ non-operational stock exchanges to get listed on the nationwide exchanges. In view of the representation made by some of the companies exclusively listed on derecognized/ non-operational exchanges, SEBI issued circular dated 17.04.2015 thereby giving extension of time to all the companies exclusively listed on de-recognized non-operational stock exchanges to get listed on nationwide stock exchanges. Thus, the appellant is wholly unjustified in arguing that the impugned circulars constitute orders under regulation 28(2) of the Delisting Regulations. Conduct of the appellant in pursuing the appeal by raising such frivolous grounds inspite of the decision of the Apex Court in NSDL (Supra) is reprehensible. The appeal is dismissed with costs quantified at ₹ 10,000/- to be paid by the appellant.

Summary

Issues:
Challenge to circulars issued by SEBI, Exit route for shareholders of companies listed on de-recognized stock exchanges, Maintainability of the appeal, Nature of impugned circulars, Applicability of previous tribunal decisions, Classification of impugned circulars as administrative or quasi-judicial, Argument regarding orders under Delisting Regulations.

Analysis:
1. The appeal challenges two circulars issued by SEBI in 2014 and 2015, seeking an order for companies listed on regional stock exchanges to get listed on major stock exchanges automatically. The appellant, an investor, argues that the circulars do not provide an exit route for shareholders of companies exclusively listed on de-recognized stock exchanges.

2. SEBI raised a preliminary objection on the maintainability of the appeal, citing a decision by the Apex Court that reversed a previous Tribunal decision. The appellant argued that the impugned circulars are orders under the Delisting Regulations, not mere circulars, and relied on a previous Tribunal decision to support this contention.

3. The Tribunal found the appellant's argument misconceived, stating that the impugned circulars are administrative directions applicable to all companies exclusively listed on de-recognized stock exchanges. It noted that none of the affected companies challenged the circulars, and the proper course for the appellant, if aggrieved, would be judicial review proceedings, not an appeal before the Tribunal.

4. The Tribunal distinguished a previous case where SEBI's communication was deemed quasi-judicial due to its serious consequences on specific companies. In contrast, the impugned circulars in this case were general and did not prejudicially affect any particular company. The appellant's reliance on the previous Tribunal decision was deemed misplaced.

5. The appellant's argument that the impugned circulars constitute orders under the Delisting Regulations was dismissed as frivolous. The circulars directed stock exchanges to provide options for companies to get listed on major exchanges, and the appellant's pursuit of the appeal on such grounds, despite the Apex Court decision, was criticized.

6. Consequently, the Tribunal dismissed the appeal and ordered the appellant to pay costs to SEBI within four weeks. The judgment emphasized the administrative nature of the impugned circulars and the lack of merit in the appellant's arguments regarding their classification and applicability under the Delisting Regulations.