2023 (4) TMI 720 - HC - SEBI

Petition to remove the name of the petitioners from the Promoter Group of Lumax Automotive Systems Limited and reclassify the petitioners as public group category - Regulation 24 of Delisting Regulations, 2009 Application - According to respondent No.3-Bombay Stock Exchange (BSE), the Fair Value along with the names of the promoters, as available on the BSE s records, was included in the Final Public Notice issued by the BSE - respondent No.3 that subsequently, the office of the Official Liquidator, New Delhi in terms of communication dated 24.01.2019, informed respondent No.3 that the petitioner-company was already wound up - HELD THAT - As seen that the main reason for issuance of the impugned notices is the application of Regulation 24 of Delisting Regulations, 2009 which admittedly did not have any application, therefore, this court finds it appropriate to set aside the impugned notices, as the same are based on wrong presumptions. Accordingly, the impugned notices qua the petitioners are set aside.The parties are at liberty to take appropriate recourse in accordance with the law, if so advised. If the respondent feels that notwithstanding the non-applicability of Regulation 24 of Delisting Regulations, 2009, they are still empowered to take any further action, the same can be done as per law.

Summary

Issues:
Challenge to impugned notices regarding promoter classification and delisting of a company.

Analysis:
1. The petitioners challenged the notices issued by respondent Nos.2 and 3, seeking to remove their names as promoters of a company and reclassify them as part of the public group. The respondents pointed out that the company in question was compulsorily delisted and its fair value was computed for delisting purposes.

2. Respondent No.3, the Bombay Stock Exchange, froze the demat accounts of the promoters as per Delisting Regulations, 2009, due to the positive fair value. However, it was later discovered that the company was already wound up, leading to corrective measures to unfreeze the promoters' demat accounts.

3. Respondent No.3 clarified that Regulation 24 of the Delisting Regulations, 2009 did not apply to the petitioners. Steps were taken to inform relevant parties about the non-application of Regulation 24, including issuing public notices in newspapers.

4. The petitioners argued that the impugned notices were based on incorrect facts and should be quashed in the interest of justice. However, respondent Nos.2 and 3 contended that since Regulation 24 did not apply, setting aside the notices was unnecessary.

5. The court found that the impugned notices were primarily based on the incorrect application of Regulation 24, leading to their decision to set aside the notices. The judgment allowed the parties to take further legal action if deemed necessary, despite the non-applicability of Regulation 24.

This detailed analysis highlights the legal intricacies and proceedings involved in the judgment, focusing on the challenges to the impugned notices and the subsequent resolution by the court based on the application of relevant regulations and corrective actions taken by the respondents.