9911796707
TMI Blog2003 (11) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... cquired shares of M/s. I. Trigger Technologies Private Limited, M/s. Web Net Technologies Private Limited, M/s. Linux Solutions Private Limited and M/s. System Telecom and Data Services Private Limited on a stock swap basis in July, 2002. Therefore, those companies became wholly owned subsidiaries of the petitioner-company; the valuation report in respect of the aforesaid acquisition was given by chartered accountants and the valuation was done on discounted cash flow method which is a widely accepted method of valuation. The petitioner convened the extraordinary general meeting on August 27, 2002, for the purpose of allotment of equity shares of the petitioner-company to the members of the said four companies towards the stock swap and in consideration of the purchase of shares entered into an agreement. The notice of convening of the EGM contains all the necessary disclosures required to be made in respect of preferential allotment of shares as per the SEBI (Disclosures and Investors) Guidelines, 2000. At the EGM, the petitioner-company approved the allotment of 3,63,27,271 equity shares of Rs. 2 each at a premium of Rs. 9 to the promoters of the aforesaid four companies and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voke only the jurisdiction of the Mumbai High Court; non-joinder of the SEBI which is the regulatory authority is fatal; the alternative remedy against the order of the Appellate Tribunal was not exhausted and hence the writ petition is not maintainable. The petitioner is adopting a different yardstick for valuation of the four companies. Hence, it has not acted fairly in the interest of investors of the petitioner s company. The allotment of shares made by the petitioner is not in accordance with the resolution passed in the EGM held on August 27, 2002. As per the notice of the EGM received by the respondent, the proposed allottees are some companies, but the details submitted by the petitioner for listing the shares are shown to be allotted to a different set of persons. The notice convening the EGM of the petitioner did not contain all the disclosures required under the law for preferential allotment as per the SEBI (Disclosure and Investor Protection) Guidelines, 2000. The identity of the persons proposed to be allotted were not disclosed in the original notice. The notice furnished to this court contains alterations which goes to show that the petitioner is not bona fide in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to dispose of the application within the period fixed in the statute. The return of the paper cannot be considered as an order by the Securities Appellate Tribunal. Therefore, the petitioner can approach this court. The objection taken with respect to valuation has been done only as an afterthought. The notice sent regarding the EGM contains all the necessary particulars and information. The respondent has deliberately kept the listing pending for extraneous reasons. The respondent oversteps its role while granting listing of shares. 5. Learned counsel appearing for the petitioner submitted, the respondent is amenable to writ jurisdiction of this court as it is an authority for the purpose of article 226 of the Constitution of India, though it is not considered as State or instrumentality of the State under article 32 of the Constitution of India. It will be included in other authorities having regard to its statutory duty and exercise of power of public notice. 6. In support of his contention , he relied upon the judgment of the Madhya Pradesh High Court in Rajendra Rathor v. M.P. Stock Exchange [2000] 102 Comp. Cas. 300 1 ; where it has been held that by virt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the jurisdiction of this court and the petitioner s registered office is located within the jurisdiction of this court and persons whose favour the shares are allotted are also within the jurisdiction of this court, this court has jurisdiction to entertain the writ petition, since the cause of action has arisen within the jurisdiction of this court. The stock exchange has got the power to list the shares coupled with duty to disclose of any made to list within the statutory prescribed time. There is no necessity for reminders are further representation to be made by the respondent. Since the respondent has abdicated its power to grant or refuse the listing within the statutory period, the respondent cannot grant or refuse listing after the prescribed period was over. In support of the contention, he relied upon the judgment of the Supreme Court in Nandyal Co-op. Spg. Mills Ltd. v. K.V. Mohan Rao [1993] 2 SCC 654, 656, wherein the Supreme Court has held as follows: "If no arbitrator had been appointed in terms of the contract within 15 days from the date of receipt of the notice, the administrative head of the appellant had abdicated himself of the power to appoint arbit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the respondent submitted that the respondent is not an authority of the Government and, therefore, not amenable to the writ jurisdiction. In support of his contention, he relied upon the judgment in Satish Nayak v. Cochin Stock Exchange Ltd. AIR 1995 Ker. 373, and also on an unreported judgment in W.P. No. 19509 of 1994 and the case in A. Vaidyanathan . v. Union of India [2000] 101 Comp. Cas. 224 1 (Mad.). Further counsel contended that in the light of the judgment of this court in A. Vaidyanathan v. Union of India [2000] 101 Comp. Cas. 224 1 (Mad.), since that decision is binding on this court that has to be followed in preference to other decisions. Since this court has held in that case that stock exchange is not amenable to the writ jurisdiction, the writ petition is not maintainable. 11. Learned counsel further contended that the contentions raised by the petitioner involves disputed questions of facts in respect of notice of the EGM in which the proposed allottees are different from the persons to whom subsequently the shares were allotted. The discrepancy sought to be explained in the reply affidavit does not indicate that it was a revised notice. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per section 7 of the Act, every recognised stock exchange shall furnish to the Central Government, the annual report containing particulars prescribed by the Central Government. It also has the power of restricting voting rights under section 7A. The Central Government has got power to make rules under section 8 with respect to the governing bodies of the stock exchanges. Therefore, this regulatory power of the Central Government over the stock exchange makes it an authority under the control of the Government of India within the meaning of article 12 of the Constitution of India. Therefore, the stock exchange falls within the definition of the State under article 12 of the Constitution of India. Therefore, the writ petition lies against stock exchanges. 15. Section 22A of the Securities Contracts (Regulation) Act, provides for an appeal when the request was refused by the stock exchanges or omission or failure to pass an order on the request of listing of securities. The Securities Appellate Tribunal may after giving opportunity to both sides pass an order according to law. When the stock exchange has omitted to pass an order or failure to pass order, an appeal lies to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected the higher authorities (the State Government and the Central Government) to consider the question and pass appropriate orders. Therefore in this case also at the most this court can pass an order to consider the case of the petitioner and pass orders on the merits. It cannot grant the relief of mandamus as prayed for. In a matter like this, namely, listing of shares, a mandamus cannot be issued as it involves complicated questions of fact which can be considered only by the concerned authorities. 17. When the shares are listed in a stock exchange, the public gets the right and opportunity to deal with those shares. Considering the fact that there were some irregularities committed by a number of persons due to which large number of people lost their entire investment, the SEBI, therefore, interfered to safeguard the interest of the investors and to see that the public at large do not get affected. In order to safeguard the interest of thousands and thousands of people, it is necessary for the stock exchange to ascertain the permissibility of the shares for trading. Therefore, there is duty caused on the SEBI as well as the Madhya Pradesh Stock Exchange to be satisfied ..... X X X X Extracts X X X X X X X X Extracts X X X X
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