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TMI Blog2023 (12) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to provide documents to the petitioners as prayed for and directed that the documents, subject matter of prayer clause (g) of the petition be provided to the petitioners. This Court [ 2023 (10) TMI 1173 - BOMBAY HIGH COURT] observed, that by no stretch of imagination, could it be said that the petitioners in the present case, who were minority shareholders and in such capacity, being part owners of the company (BNL), to the extent of their shareholding, were not outsiders / alien to the company, and that they were integral to the company, having an inextricable concern and interest in the functioning and management of the company. Special Leave Petition of respondent no. 2 - BNL and respondent No. 9-Vineet Jain was dismissed by the Supreme Court, as also a decision being taken by the SEBI to assail our order dated 23 October, 2023 before the Supreme Court, what has happened at SEBI s end in regard to the SEBI s proceedings against BNL, is not only interesting but quite intriguing. HELD THAT:- On perusal of the show cause notice, a copy of which is produced for perusal of the Court on behalf of the SEBI, we find that non-compliance interalia of the Rules and Regulation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Considering all these circumstances, we are of the clear opinion that the entitlement of the petitioners to our order dated 23 October 2023, would certainly subsist and the petitioners need to be provided such documents by the SEBI. Moreover, not providing such documents, merely on the ground of the subsequent development that the settlement orders now stands revoked, would completely be an untenable proposition and contrary to our orders dated 23 October 2023, as confirmed by the Supreme Court. Although respondent Nos. 2 to 9 in their business interest may overlook the solemnity of the orders passed by this Court, however, SEBI in its public character cannot take the same approach. In these circumstances, the order dated 23 October 2023 cannot be rendered nugatory. The SEBI is required to holistically consider such orders and not merely in the context of the settlement proceedings, as such order considers the substantive rights of the petitioners, who are shareholders of respondent No. 2 BNL, having equal rights to that of respondent nos. 3 to 9. SEBI cannot have different yardstick between shareholders. We therefore, direct that our order dated 23 October 2023, which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n WP/530/2023 : Mr. Janak Dwarkadas, Sr. Adv. a/w Mr. Ameya Gokhale, Mr. Vaibhav Singh, Ms. Radhika Indapurkar and Mr. Manas Kotak i/b Shardul Amarchand Mangaldas Co. For the Respondent No. 7, 8 9 in WP/447/2023 : Mr. Ameya Gokhale, Mr. Vaibhav Singh, Ms. Radhika Indapurkar and Mr. Manas Kotak i/b Shardul Amarchand Mangaldas Co., ORAL ORDER (PER G. S. KULKARNI, J.) 1. Today the proceedings are before us on the backdrop of our detailed order dated 23 October 2023 by which we had directed the SEBI to provide documents to the petitioners as prayed for in prayer clause (g) of the petition. 2. Such order was assailed by respondent Nos. 2 Bharat Nidhi Ltd. (for short, BNL ) and by respondent No. 9 Vineet Jain before the Supreme Court. Such Special Leave Petitions [(Civil) Diary No. 45529 of 2023, Bharat Nidhi Ltd. Vs. Ashok Dayabhai Shah Ors.] and [(Civil) Diary No. 45770 of 2023 (Vineet Jain Vs. Ashok Dayabhai Shah)] were dismissed by the Supreme Court by an order dated 6 November 2023. 3. Thereafter respondent no. 1-SEBI had filed a Special Leave Petition before the Supreme Court [Petition(s) for Special Leave to Appeal (C) Nos. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal Stock Exchange. 7. On such conspectus, the case of the petitioners is to the effect that there is a severe prejudice caused to the petitioners due to several illegalities committed by BNL, at the instance of the majority shareholders who are respondent Nos. 3 to 9. The petitioners have contended that they are the victims of BNL not being listed on a recognized stock exchange, which has severely affected their interest as investors in BNL. The petitioner contend that BNL is a majority shareholder of a reputed company known as Bennett, Coleman Co. Ltd. (for short BCCL ) in which BNL and respondent Nos. 3, 4, 7 to 9 had approximately 68% shareholding. It is also the case of the petitioners that there are several reasons for BNL to resort to such illegalities of suppression, to the prejudice of the petitioners and of the nature as complained by them, namely, the violations of the Minimum Public Sharing Norms (MPS) and violation of the promoter shareholding, as per the SEBI norms. 8. As noted above, SEBI considering such illegalities had issued a show cause notice dated 28 October 2020 to respondent No. 2 - BNL and respondent Nos. 3 to 9, however, before the show cause not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficers, servants and agents) pursuant to the Impugned Settlement Order, including the 2022 Postal Ballot Notice (Exhibit B); (d1) That, in respect of Respondent No. 2, this Hon ble Court be pleased to declare that by virtue of Regulation 28(1) of the Settlement Regulations the Impugned Settlement Order stands statutorily and automatically revoked; (d2) That this Hon ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other writ, order or direction under Article 226 of the Constitution of India, ordering and directing SEBI to restore the regulatory proceedings against Respondent No. 2 with respect to which the Impugned Settlement Order was passed (and conclude the same expeditiously). (e) That pending the hearing and final disposal of the present Petition this Hon ble Court be pleased to stay the effect and operation of the Impugned Settlement Order (Exhibit A); (f) That pending the hearing and final disposal of the present Petition this Hon ble Court be pleased to stay the 2022 Postal Ballot Notice (Exhibit B); (g) That pending the hearing and final disposal of the present Petition, this Hon ble Court be pleased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs to the company (BNL), moreover they are integral to the company, having an inextricable concern and interest in the functioning and management of the company. Thus the word public as used in Regulation 29 can in no manner be made attributable to shareholders of BNL like the petitioners. This apart, if such contention as urged on behalf of the respondents that the petitioners are public and therefore, they are not entitled to receive information by the applicability of Regulation 29, if accepted, the same yardstick and parameters become applicable to respondent Nos. 3 to 9, who are also shareholders of BNL, who are hence not a different class, than that of the petitioners. The petitioners as also respondent Nos. 3 to 9 belong to the same species as shareholders. It thus cannot be countenanced that some shareholders can take shelter under Regulation 29 to plead confidentiality of settlement information, against a group of other shareholders, so as to bring about an effect that information in relation to settlement be not supplied to such persons of their own class who are similarly situated. No shareholder can take a position that he cannot disclose any information on the affa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h documents, they need to be furnished such documents, unless furnishing of these documents would stand prohibited in law, which is certainly not a situation in the present facts. 30. We may also add that the regulations are framed under the SEBI Act, 1992. The avowed object and intention of the Act is to protect the interests of investors in securities and to promote the development of, to regulate the securities market. Thus, all actions which are taken by the SEBI and through the various bodies as constituted under the Act and the regulations are required to act considering the paramount interest of the investors. For such reasons as well, we do not find as to why the petitioners ought not to be entitled to the documents. We do not find that there is any impediment whatsoever in law or otherwise for the documents, as demanded, to be supplied to the petitioners. 11. Thus, on the aforesaid observations we had directed that the documents, subject matter of prayer clause (g) of the petition be provided to the petitioners. 12. As noted above, our order dated 23 October 2023 was initially assailed before the Supreme Court by respondent no. 2-BNL in the proceedings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. 4. This Court is apprised of the fact that the proceedings are listed tomorrow (29 November 2023) before the High Court of Judicature at Bombay. Hence, it is not necessary for this Court to entertain the Special Leave Petition at this stage, particularly bearing in mind what has been observed in paragraphs 2 and 3 of the earlier order dated 6 November 2023, which read as follows: 2. Since the impugned orders of the High Court are purely of an interlocutory nature, we are not inclined to entertain the Special Leave Petitions under Article 136 of the Constitution. 3. However, the parties would be at liberty to pursue their remedies in accordance with law on all counts after the final judgment of the High Court. 5. Should it become necessary for SEBI to raise the issue of interpretation of Regulation 29 at a future date, that issue is kept open to be agitated. 6. The Special Leave Petitions are accordingly dismissed. 7. Pending applications, if any, stand disposed of. 14. It is on the above conspectus, the proceedings are before us today. However, after the Special Leave Petition of respondent no. 2 - BNL and respondent No. 9-Vineet J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gulab Bhawan, MBD House, 6, Bahadur Shah Zafar Marg, New Delhi 110002 6345/2021 Sanmati Properties Limited Gulab Bhawan, MBD House, 6, Bahadur Shah Zafar Marg, New Delhi 110002 Ref: Settlement Order No. SO/EFD-2/SD/421/SEPTEMBER/2022 dated September 12, 2022 in the matter of Bharat Nidhi Limited in respect of Settlement Application nos. 6348, 6353, 6332, 6338, 6342, 6344, 6341 and 6345 of 2021 Sir, 1. This is to inform you that the Settlement Order dated September 12, 2022 under reference, stands revoked and withdrawn in terms of Regulation 28 of the SEBI (Settlement Proceedings) Regulations, 2018, for failure to comply with the Settlement Order. 2. You may also note that upon revocation, no amount paid under the SEBI (Settlement Proceedings) Regulations, 2018 shall be refunded and the Board shall restore or initiate the proceedings, with respect to which the Settlement Order was passed. Regards, Sd/- Kajio Mao Deputy General Manager (emphasis supplied to para. 1) 16. On such development and position being taken by SEBI, Mr. Bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red inconsequential, merely for the reason, that the settlement order stands revoked by the SEBI. It is his submission that the petitioners as minority shareholders have an independent legal right to have all the documents touching the affairs of the BNL and relevant to the issues as raised by the petitioners. It is submitted that such order passed by the Court was also certainly in aid of the reliefs as prayed by the petitioners, which includes prayer clause (c) and (d), which very well survive. 20. Mr. Joshi has next submitted that the approach of the respondents is ex-facie collusive. This, according to Mr. Joshi, can be seen from the fact that initially on 5 September 2023 the SEBI had sought an adjournment to consider as to whether a decision can be taken to withdraw the impugned settlement orders, and when such decision was not taken to withdraw the settlement order, the Court as per its order dated 13 September 2023 had proceeded to hear the present proceedings. He submits that it is during the course of the hearing, this Court passed a substantive order dated 23 October 2023, directing the SEBI to furnish the documents to the petitioners. It is submitted that some meanin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that non-compliance interalia of the Rules and Regulations of SEBI are subject matter of the show cause notice, and any plea in opposition as may be urged by BNL and respondent Nos. 3 to 9 (the majority shareholders), would fall for consideration in the adjudication of the show cause notice. This would, however, not mean that the petitioners in their capacity as shareholders, would be dis-entitled or would cease to have any locus to have information / documents in regard to such affairs of BNL and to seek compliance of the Rules and Regulations and the norms of the SEBI by respondent No. 2 and those controlling BNL. 24. In our opinion, considering the fact that the settlement order itself has been revoked, the SEBI now needs to resort to a lawful course of action, to adjudicate the show cause notice, so as to reach to a conclusion, whether respondent Nos. 2 to 9 have violated the provisions of the Act, Rules and Regulations, as alleged in the show cause notice and the complaints of the petitioners. We are thus of the opinion that in the facts and circumstances of the case, it would be appropriate that the SEBI expeditiously takes forward the show cause notice and comes to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey defended the various Writ petitions filed against them by their employees according to the mood of the passing moment. That must be deprecated. 26. The present case appears to be not different from what has been observed by us in relation to the actions of the SEBI, further discussion on this aspect would fortify our observations. 27. We may observe that when the final hearing of the present proceedings was to commence on 5 September 2023, SEBI had taken a position that the impugned settlement orders can be reconsidered as there was a change in the Whole Time Members (WTM) of SEBI, and accordingly, the proceedings can be put to an end. We had accordingly passed the following order:- 1. We had placed this matter for final hearing today at 2.30 p.m. 2. Mr. Seervai, learned Senior Counsel for the Petitioners, has commenced his arguments. At the midst of the hearing Mr. Bhatt, learned Senior Counsel for the Respondent No. 1-SEBI, has stated before us that there was a change in the Whole Time Members (WTM) of the SEBI. He states that SEBI would now be in a position to take a decision as to whether the settlement order in question (Exhibit- A ) has stood revoked. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders, being urged by the SEBI before the Supreme Court, apart from the plea of interpretation of Regulation 29 of the 2018 Regulation. 30. Be that as it may, considering all these circumstances, we are of the clear opinion that the entitlement of the petitioners to our order dated 23 October 2023, would certainly subsist and the petitioners need to be provided such documents by the SEBI. Moreover, not providing such documents, merely on the ground of the subsequent development that the settlement orders now stands revoked, would completely be an untenable proposition and contrary to our orders dated 23 October 2023, as confirmed by the Supreme Court. Although respondent Nos. 2 to 9 in their business interest may overlook the solemnity of the orders passed by this Court, however, SEBI in its public character cannot take the same approach. In these circumstances, the order dated 23 October 2023 cannot be rendered nugatory. The SEBI is required to holistically consider such orders and not merely in the context of the settlement proceedings, as such order considers the substantive rights of the petitioners, who are shareholders of respondent No. 2 BNL, having equal rights to that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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