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TMI Blog2024 (1) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... kar, Bryan Pillai and Mr. Manas Kotak i/b Shardul Amarchand Mangala's & Co. ORAL JUDGMENT (PER G. S. KULKARNI, J.):- 1. This interim application is filed by the applicants/original petitioners in the above writ petition, which was disposed of by our orders dated 01 December, 2023. The prayers in this application are inter alia that this Court should restore the disposed of petition to its file, and hear the same finally. We note the prayers as made in the present application which read thus:- "a. Restore Writ Petition No. 530 of 2022 of the files of this Hon'ble High Court, and proceed to hear the same finally; b. Restrain BNL from taking any steps in pursuance of the Postal Ballot Notice dated September 22, 2022 (Exhibit B to the Writ Petition) and the Follow Up Announcement dated December 09, 2023 (Exhibit C to this Application); c. Direct BNL to disclose by way of an affidavit all actions and steps taken in pursuance of the Postal Ballot Notice dated September 22, 2022 (Exhibit B to the Writ Petition) and the Follow Up Announcement dated December 09, 2023 (Exhibit C to this Application); d. Grant interim and ad-interim reliefs in terms of prayer clause (b)." 2. For c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos. 3 to 9 and that the petitioners were the victims of BNL not being listed on a recognized stock exchange, which had severely affected their interest as investors in BNL and more particularly on the illegal and unrealistic pricing of the shares held by them in BNL. 7. The petitioners have also contended that BNL was 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% shareholdings, and it is on many such considerations, 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. According to the petitioners, the violations more particularly of the Minimum Public Sharing Norms (MPS) and violation of the promoter shareholding, as per the rules, regulations and norms of SEBI. 8. The case of the petitioners was also to the effect, that although SEBI had issued show cause notice dated 28 October 2020 to respondent No. 2 - BNL and respondent Nos. 3 to 9, however, before the show cause notice could be taken to its logical conclusion, respondent nos. 2 to 9 had moved an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to direct SEBI to produce copies of the Investigation Report, Show Cause Notices, minutes of meetings of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders and in such capacity, being part owners of the company to the extent of their shareholding, are persons who are alien/outsiders 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not be provided with such documents, is not acceptable. Once it is the entitlement of the petitioners in law to receive such 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." 10. The aforesaid order dated 23 October, 2023 passed by this Court was assailed by respondent nos. 2 and 9 before the Supreme Court in the proceedings of Special Leave Petition (Civil) Diary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 12. After the above orders were passed by the Supreme Court, the proceedings were taken up for hearing on 01 December, 2023 when on behalf of the SEBI, an affidavit dated 20 November, 2023 of Mr. Sachin Ashok Sonawane, Deputy General Manager was filed, to place on record an order dated 10 November, 2023 passed by the SEBI as addressed to respondent nos. 2 to 9, recording that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me infructuous and therefore, the writ petition ought to be disposed of. Such contention on behalf of the respondents was however opposed on behalf of the petitioners. The petitioners contended that prayer clauses (c) and (d) of the petition (supra), would nonetheless survive for adjudication. It was contended that the stand on behalf of the respondents that the petition is rendered infructuous, was not correct. The petitioners also urged that the approach of the respondents was ex facie collusive considering the sequence of events which had transpired from the inception. 14. This Court considering the rival contentions, passed an order dated 01 December, 2023 whereby the writ petition came to be disposed of, however maintaining the interim directions dated 23 October, 2023 by which the SEBI was directed to furnish documents to the petitioners. The relevant extract of the said order needs to be noted which reads thus:- "22. We may note that prayer clauses (a) and (b) of the petitions are in regard to the challenge to the settlement orders, which according to the petitioners were patently illegal being beyond the authority and power of the SEBI to accept any settlement. Prayer cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to the petitioners in relation to respondent Nos. 2 to 9. There has been persistent non-compliance of such orders passed by the Court, despite the Special Leave Petition of the SEBI being rejected, is too far to be imagined nay totally unacceptable. SEBI is a public body, it is required to act in public interest, it needs to comply with the orders passed by this Court, more particularly, when the orders have attained finality in the facts and circumstances of the present case, cannot be countenanced that SEBI would resort to such actions only when and / or, as may be, commanded by respondent Nos. 2 to 9. Such approach of the SEBI, in our opinion, would cause a dent to the confidence, the investors would repose in the SEBI, which needs to function solely to further the object and purpose, for which it is created by the Act of the Parliament. We are constrained to make such observations being quite astonished by the stand taken by SEBI from time to time, in relation to the present proceedings. Even assuming that the petitioners are not correct on their contentions on the different stands being taken by the SEBI, however, the SEBI needs to be consistent and firm in whatever it prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BI that the settlement orders cannot be revoked. The order dated 13 September 2023 reads thus: "1. Today the matter is placed before us on the backdrop of our order dated 5th September 2023. From what has been heard from the learned Counsel for the parties, it appears that the issues as raised in the petition cannot be resolved. The parties agree that the proceedings would be required to be now heard and decided. 2. We, accordingly, place the proceedings for hearing on 4th October 2023 at 2.30 p.m. to be followed on 5th October 2023 and 9th October 2023." 28. Now ultimately SEBI has revoked the settlement orders, by its order dated 10 November 2023. 29. To our mind, it appears to be not meaningless, that the SEBI from 23 October 2023 has not complied our order directing that the documents be furnished to the petitioners. As pointed out on behalf of the petitioners, SEBI has resorted to all possible efforts, not to comply with the order dated 23 October, 2023. Even after the Special Leave Petitions of BNL and Vineet Jain - respondent no.9 were dismissed by the Supreme Court, the documents were not furnished to the petitioners. SEBI thereafter assailed the orders dated 23 Oct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings in the context of the decision which may be taken by the SEBI on the show cause notice. We accordingly, propose to dispose of these petitions by the following order:- ORDER (I) The petitioners are entitled to the benefits of the order dated 23 October 2023 as confirmed by the Supreme Court, by rejection of the Special Leave Petitions of respondent Nos. 2 and 9 and thereafter, by rejection of the Special Leave Petition filed by the SEBI. (II) The order dated 23 October 2023 passed by this Court, be forthwith complied by SEBI. (III) All the contentions of the petitioners and of the respondents on issues in regard to prayer clauses (c) and (d) are expressly kept open to be agitated at appropriate time in appropriate proceedings. (IV) The petitions stand disposed of in the above terms. No costs. 32. At this stage, Mr. Bhatt, learned senior counsel appearing for the SEBI has prayed for stay of the order to the extent that it directs compliance of our order dated 23 October 2023 for the documents to be forthwith furnished by the SEBI to the petitioners. In the facts and circumstance of the case and more particularly for the reasons as set out in our order, we reject such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt. Three writ petitions were filed between respondent nos. 2 to 9 assailing the orders dated 10 November 2023 passed by SEBI, revoking the settlement orders dated 12 September, 2022 (supra). SEBI opposed the said petitions on the ground that the Delhi High Court lacked territorial jurisdiction to entertain and adjudicate the said writ petitions, as the entire cause of action has taken place within the jurisdiction of this Court. A learned Single Judge of the Delhi High Court disposed of the said writ petitions by a judgment and order dated 18 December, 2023 (Bharat Nidhi Ltd. vs. Securities and Exchange Board of India, Writ Petition (Civil) No. 15556 of 2023 and other petitions). The Delhi High Court held that integral, essential and material part of cause of action has arisen within the territorial jurisdiction of this Court, and accordingly the petitions were not entertained and were dismissed with liberty to the petitioners to approach the jurisdictional High Court keeping open all the contentions. 17. It is on the above backdrop, the present interim application has been filed praying that the writ petition be restored and heard on merits, along with other prayers, which we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce dated 9 December 2023 came to be issued by BNL inviting offers to buyback 30958 equity shares of the company aggregating upto 1.067% of the paid-up equity share capital of the company (BNL), constituting nearly 25% of the paid-up share capital and free reserves of the company at a price of Rs. 11,229/- per share, being the exit price. It is Mr. Seervai's contention that the buyback offer initially was made in pursuance of the postal ballot notice dated 22 September 2022 which was on the basis of the impugned settlement order. It is his submission that in view of the revocation of the settlement order, there was no legitimate basis or any necessity for such buyback offer to be made. It is submitted that such buyback offer was ultra vires the provisions of the Companies Act, 2013 as also the Settlement Regulations. 23. Mr. Seervai has next submitted that respondent Nos. 2 to 9 have fraudulently procured disposal of the writ petition. It is in fact a fraud practised by respondent Nos. 2 to 9 on the Court, which is abundantly clear from several facts, and most glaringly of the Court being kept in dark that respondent Nos. 2 to 9 having approached the Delhi High Court being aggrieve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh Vs. Narmada Bachao Andolan (2011) 7 SCC 1. 25. Mr. Seervai would thus submit, that this is a fit case wherein this Court, considering its authority and jurisdiction under Article 226, read with the provisions of Section 151 of the Code of Civil Procedure, ought to pass an order to restore the petition for adjudication on merits, so as to prevent injustice being caused to the petitioners. In support of such contention, Mr. Seervai has placed reliance on Padam Sen and Another vs. The State of U.P. AIR 1961 SC 218. 26. On the other hand, Mr. Dhond, learned senior counsel for respondent no. 2 in opposing the application, has made the following submissions: 27. At the outset, it is submitted that the petitioners do not have any cause of action whatsoever to seek restoration of the petition. It is submitted that the present application itself is premature, for the reason, that it is not the case that the order dated 10 November, 2023 passed by the SEBI revoking settlement, has been set aside, so that the original cause of action for the petitioners to pursue their case against the settlement order revives requiring adjudication of the writ petition. 28. It is next submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such context, drawing our attention to paragraphs 4 and 5 of the settlement order, it is submitted that the substantive proceedings are pending before the Delhi High Court on the valuation of the shares. It is, hence, submitted that the allegation of the petitioners against the private respondents of any forum shopping by instituting writ petitions before the Delhi High Court challenging the revocation of the settlement, is totally untenable. It is submitted that, in fact, it is the petitioners who are involved in forum shopping, in as much as the first petitioner's son had earlier filed proceedings before the Delhi High Court and thereafter the petitioners have filed the present proceedings before this Court. Mr. Dhond has submitted that Pina Shah, who was the petitioner in the companion petition (Writ Petition No. 447 of 2023), had approached the Delhi High Court by filing Intervention Application in Writ Petition (C) No. 10756 of 2019, which clearly indicates that the Court of appropriate jurisdiction was the Delhi High Court, in respect of the proceedings as initiated by respondent Nos. 2 to 9, and it is the petitioners, who are filing alternate proceedings and are guilty of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lmond on law of Torts to submit that this is a case wherein there is no material of any intention of these respondents to have an unfair advantage over the petitioners in the situation as it exists. It is, therefore, his contention that the interim application ought not to be entertained. It ought to be dismissed, much less any interim reliefs be not granted to the petitioners. 34. Lastly Mr. Dwarkadas would submit that the Court ought not to overlook that there is no prejudice whatsoever which is caused to the petitioners, inasmuch as, as on date, there is no change in circumstance, which had existed on the day this Court disposed of a writ petition, namely, that the revocation of the settlement order has continued to operate till date. It is further submitted that in any event, in so far as the reliefs which are sought by the petitioners in terms of prayer clauses (c) and (d) are concerned, this Court in the clear terms as set out in paragraph 31 of its order dated 01 December, 2023, as also in the operative part of the order has kept open all contentions of the petitioners to be agitated in the appropriate proceedings. It is, thus, his submission that today in view of there bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the effect that the aforesaid writ petition be restored to the file of this Court, to be heard finally. The second prayer is to restrain BNL from taking any steps in pursuance of the Postal Ballot notice dated 22 September, 2022 and the follow up announcement dated 9 December, 2023 by which the BNL floated buyback offer. The third prayer is consequential that BNL be directed to disclose by way of an affidavit all actions and steps taken in pursuance of the Postal Ballot Notice dated 22 September, 2022 and 9 December, 2023. 38. We may observe that insofar as the issue of Postal Ballot notice dated 22 September, 2022 is concerned, the same was subject matter of prayer clause (d) in the Writ Petition. The Postal Ballot Notice dated 22 September, 2022 was a fallout and consequence of the Settlement Order dated 12 September, 2022, which itself has stood revoked by SEBI on 10 November, 2023. In the said postal ballot notice, one of the agenda was approval of buyback of equity shares. It is for such reason that while disposing of the writ petition by our order dated 1 December 2023, insofar as prayer clause (d) is concerned, we had observed in paragraph 31 of our order that the said p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) of the Companies (Share Capital and Debentures) Rules, 2014, proposing to proceed with the buyback offer and to take steps towards finalisation of the buyback offer within the statutory prescribed timelines. The relevant extract of the said notice is required to be noted, which reads thus: "This follow up Public Announcement ("Fourth PA") is being issued by Bharat Nidhi Limited (the "Company"), pursuant to the offer to buyback 30,958 (Thirty Thousand Nine Hundred and Fifty Eight) equity shares of the Company aggregating up to 1.067% of the paid-up equity share capital of the Company, and constituting nearly 25% of the paid-up share capital and free reserves of the Company, at a price of Rs. 11,229/- (Rupees Eleven Thousand Two Hundred and Twenty Nine only) per equity share ("Exit Price") from the shareholders of the Company, in accordance with the relevant provisions of the Companies Act, 2013 and the rules made thereunder ("Buy-back Offer"), announced by the Company to comply with the settlement order issued by the Securities and Exchange Board of India ("SEBI") bearing No. SO / EFD-2/ SD/421/ September / 2022 dated September 2, 2022 (hereinafter referred to as the "Settlemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ack notice dated 22 September, 2022 and the subsequent public notice dated 09 December, 2023, can be rightly considered to be an issue, which can be agitated by the petitioners in appropriate proceedings, as and when the need so arises. In any event, any grievance of the petitioners on the buy-back of shares under the public notice dated 9 December 2023, as noted above, would be an independent cause of action. 42. Now we examine Mr. Seervai's contention that there was suppression on the part of respondent nos. 2 to 9, as also there is fraud practiced by them on the Court, by not disclosing the filing of the proceedings before the Delhi High Court challenging the revocation of the Settlement Order and by such suppression not only on 29 November, 2023 but also on 1 December, 2023 in securing disposal of the present petition. In this regard, we may observe that the revocation of the Settlement Order was an independent cause of action which had accrued to respondent nos. 2 to 9. Our order dated 1 December, 2023 cannot be construed to mean that the Court had affected, much less taken away the rights of any of the respondents to institute appropriate proceedings before the appropriate f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any deceit or per se any falsity in relation to the Court proceedings. They have not achieved any unfair advantage over the petitioners by mere filing of the proceedings before the Delhi High Court and by not informing to this Court of such fact, when it passed orders dated 1 December, 2023 disposing of the writ petition. Also there was no prejudice caused to the petitioners, as this Court in its order dated 1 December, 2023 had clearly observed that the substantive prayers of the petitioners namely on prayer clauses (a) and (b), which pertained to the challenge to the Settlement orders, were rendered infructuous in view of the revocation of Settlement order. Further in regard to prayer clauses (c) and (d), the same were kept open to be agitated by the petitioners at the appropriate time and in appropriate proceedings and in the context of the decision which may be taken by SEBI on the show cause notice, which was required to be decided in view of the Settlement Order dated 12 September, 2022 being revoked by SEBI. 45. It is thus difficult to accept Mr. Seervai's contention that despite the Court making observations as made in paragraph 31 and operative order III of its order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the contentions of the petitioners on prayer clauses (c) and (d) of the petition, being kept open and left to be agitated by the petitioners at appropriate time in appropriate proceedings in the context of the decision which may be taken by the SEBI, on the show cause notice. While making such observations, we also passed an order in terms of paragraph III of the operative order as noted hereinabove. Such observations and directions of this Court were accepted by the petitioners in totality. Having accepted the said order passed by this Court, it was not permissible for the petitioners to take a different position and contend that merely because respondent Nos. 2 to 9 had approached the Delhi High Court by way of Writ Petitions, the present petition would be required to be restored to the file and taken up for adjudication as the Court not being informed of such proceedings at the relevant time amounted to a fraud on the Court. We are afraid to accept such contention. Accepting such contention, would virtually amount to the Court reviewing the said orders passed by this Court, and without any prayer for review. To accept such contentions of the petitioners, we would be required t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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