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TMI Blog2010 (2) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the path of revival and the conditions of the scheme have to be kept in force till June 2011, it is appropriate for the BIFR to decide the matter at the earliest preferably within a period of three months from the date of receipt of the copy of this order. It is needless to state that when the BIFR decides the issue, the question of limitation need not be insisted. Further, in order to expedite matters, the petitioner as well as the respondents are directed to forward one copy of the petition filed by the first respondent dated February 27, 2009, along with the copy of this order to the BIFR. - W.P. NO. 12248 OF 2009 - - - Dated:- 25-2-2010 - T.S. SIVAGNANAM, J. M. Krishnappan for the Petitioner. R. Senthilkumar for the Respondent . JUDGMENT T.S. Sivagnanam, J. By consent, the main writ petition itself is taken up for final disposal. The prayer in the writ petition is for issue of a writ of mandamus to direct the respondents to implement the order of the BIFR dated January 22, 2007, in paragraphs 10( i ), ( ii ), ( iii ) of the sanctioned scheme as well as the proceedings dated February 16, 2009, in paragraph 12( c ) and the clarification dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company has turned positive, the Board discharges the company from the purview of the SICA and the BIFR, and the Board also issues the following further directions : ( i ) The IDBI would stand relieved from its responsibility as the MA to the Board. ( ii ) The un-implemented provisions of the SS-07, as may be there, would be implemented by the concerned agencies, and their implementation would be monitored by the company. ( iii ) All the reliefs and concessions in terms of SS-07, as modified by the Board's order dated May 11, 2007, will be in force till the end of revival period up to June, 2011. ( iv ) The 'special director', appointed by the BIFR, on the company's board of directors (BoD) would stand discharged with immediate effect. ( v ) The company would complete the necessary formalities with the concerned Registrar of Companies (RoC), as may be required." 4. The grievance of the petitioner is that in spite of the specific directions issued by the BIFR in clause No. 10 of the scheme directing that the equity capital of the company is to be reduced by 50 per cent. by reducing the face value of the shares from Rs. 10 to Rs. 5 without following the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections of the BIFR, as it is judicial discipline for the authorities to comply with such directives. In support of the said contention, learned senior counsel placed reliance on the decision of the honourable Supreme Court in CIT v. Ralson Industries Ltd. [2007] 288 ITR 322; [2007] 2 SCC 326 and Union of India v. P.V. Subedar Devassy PV, AIR 2006 SC 909. 7. Per contra, Mr. Suresh, learned counsel for the first respondent would contend that the reading of section 32 of the Act reveals that the provisions of the Act and any rules or schemes shall not have effect notwithstanding anything inconsistent therewith contained in any other law except the provisions of the Foreign Exchange Regulation Act, 1973, Urban Land (Ceiling and Regulation) Act, 1976 or in the memorandum of articles of an industrial company or in any other instrument having effect by virtue of any law other than the Act. By emphasising the words "other instrument", learned counsel would submit that in terms of the Securities Contracts (Regulation) Act, 1956, section 21 of such Act states that where securities are listed on the application of any person in a recognised stock exchange, such person shall compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to such exemption and more particularly, when the SEBI Act and Regulations are enactments, enacted after the SICA came into force. Learned counsel would further submit that in any event, the power to dispense with the procedures required to be followed for the purpose of reduction of the existing equity capital and such other matters cannot be done away with by a directive issued by the BIFR under a scheme of rehabilitation. In support of his contention, learned counsel placed reliance on the decision of this court in Pentamedia Graphics Ltd. v. Bombay Stock Exchange [2008] 145 Comp. Cas. 327 . 10. I have heard learned counsel for the parties and perused the materials available on record. 11. Though elaborate arguments have been advanced and the question as to whether the directives issued by the BIFR would have a binding effect on the respondents and the effect of section 32 of the SICA, whether the BIFR is justified, in granting exemption in favour of the petitioner from the provisions of the Companies Act, the SEBI Act and the regulations, in my view these issues need not be considered at this stage of the matter for the following reasons : Admittedly, the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the BIFR and the SICA. Therefore, this could not have been achieved, but for the various concessions which were directed to be considered and in fact granted by the various Departments. Subsequently, the BIFR by order dated April 2, 2009, has recorded that all the reliefs and concessions in terms of a sanctioned scheme, as modified by the Board's order dated May 11, 2007, will be in force till the end of the revival period up to June, 2011. Thus, the scheme appears to have worked well and continues to help the company to come out of its sickness. 13. Bearing all these issues in mind, yet, I am of the view that the respondents ought to have been heard by the BIFR before issuing such a positive direction. One issue which has been raised by the respondents is whether the BIFR could issue such positive direction granting exemption from the various statutory provisions under clause 10 of the scheme. It is the submission of learned counsel for the respondents that they are governed under the statute and the statute prescribes certain procedures and these procedures have been brought about in the interest of the trading public and to avoid various other difficult situations and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd articles of association, advertisement, listing agreement, application for securities from public, kept open for three days; at least 25 per cent. of the issued capital offered to the public to be allotted fairly and unconditionally. The listing agreement enumerates number of clauses touching on every aspect of dealing with public money by a company going in for listing. It must be noted that the stock exchanges are there as the regulatory bodies to monitor the business in the capital market. Hence, they are the authority to regulate all the matters connected with the business of the stock exchange. These stock exchanges regulate and control the business of buying and selling or dealing in securities. With a regulatory mechanism like a stock exchange, it goes without saying that compliance of the regulation for listing is a mandatory one for anyone desiring to have their shares listed . . . 38. The Explanation appended to sub-clause ( g ) gives what are included in securities laws. In the context of sub-clause ( g ), one cannot view sub-clause ( f ) as a mere requirement without a purpose. If sub-clause ( g ) is to have some relevance for its existence, sub-clause ( f ) must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirement for granting a scheme, at the same time, it must be noted that any scheme approved containing a clause for listing before an exchange must necessarily comply with the mandate of the securities laws, rules and regulations and guidelines made under the Acts and the listing agreement. Hence, even after the sanction of the scheme, it is open to the stock exchange to insist on compliance of its regulations as a condition for listing, and in the event of any violation thereof, reject an application. By such rejection, the scheme, per se, does not become bad or the order of this court granting sanction violated. It must be noted that when the court grants an approval to the scheme, it is on the satisfaction that the arrangement or the compromise is not violative of the provisions of the Companies Act and is not against public interest. But where in the process of implementing the scheme as approved by the court, an authority, in exercise of its statutory power or a regulation, finds that the implementation of a clause in the scheme as approved may not be implemented for violation of the securities laws and thus, the public interest would suffer, I do not think any objection co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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