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TMI Blog2025 (1) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... res, thus entitled for exemption from compliance with the corporate governance provisions - HELD THAT:- It is settled that words of a statute are understood in their natural and ordinary sense; and sentences are construed according to their grammatical meaning. It is also settled that if the enacting portion of a Section is not clear, a proviso appended to it may give an indication as to its true meaning. Contention of the appellant is that in order to get the exemption from compliance with corporate governance provisions, the entity has to satisfy both conditions, namely, that the equity share capital should not exceed Rs.10 crores and net worth not exceed Rs.25 crores. We see force in this argument because a plain reading of the proviso m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent No.1 and Shri Sumit Rai, learned Advocate for respondent No.2. 3. The issue involved in these appeals is applicability of Regulation 23 of SEBI (LODR) Regulations Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 to appellant Company. 4. Brief facts of the case are, Appellant is a Company registered under the Companies Act, 1956. It is engaged in manufacturing of auto products like control cables, gear shifters etc. 5. The NSE National Stock Exchange of India Ltd. vide email dated January 11, 2022 called upon the appellant to clarify with regard to disclosure of Related Party Transactions as required under Regulation 23(9) of the LODR Regulations for the quarter ended Septemb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase are appellant is a listed entity. As per averments in paragraph No.6.6 of the appeal, appellant s net worth as on 31.3.2021 was Rs.31.36 crores. 11. Appellant s solitary contention is that the paid-up share capital is less than Rs.10 crores. Hence, the appellant is entitled for exemption from compliance with the corporate governance provisions. Regulation 15(2) reads as follows: 15(2) The compliance with the corporate governance provisions as specified in regulations 17, [17A,] 18, 19, 20, 21,22, 23, 24, [24A,] 25, 26, 27 and clauses (b) to (i) [and (t)] of sub-regulation (2) of regulation 46 and para C , D and E of Schedule V shall not apply, in respect of (a) [a] listed entity having paid up equity share capital not exceeding rupees t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h should not exceed Rs.25 crores. In support of this contention, he has placed reliance on Durrani Abdullah Khan vs. State of Maharashtra Durrani Abdullah Khan vs. State of Maharashtra decided on May 5, 2017, (2017) 4 AIR Bom R 300. wherein in paragraph No.14 it is stated as under: 14. The word and is normally conjunctive and word or is normally disjunctive. The word and is required to be given its literal meaning. It is only if the use of word and conjunctively produces unintelligible or absurd result, then the Court has the power to read the word 'or' as 'and' and vice versa to give effect to the intention of the legislature. The interpretation has to depend on the text and the context. The words normally are be read in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17. The contention of the appellant is that in order to get the exemption from compliance with corporate governance provisions, the entity has to satisfy both conditions, namely, that the equity share capital should not exceed Rs.10 crores and net worth not exceed Rs.25 crores. We see force in this argument because a plain reading of the proviso makes it clear that the exemption shall continue to remain applicable till the equity share capital or the net worth of the entity reduces below the specified threshold. This means when the Regulations become applicable to a listed entity, they shall continue to remain applicable till either the equity share capital falls below 10 Crores or net worth reduces to less than 25 Crores. Thus, by reading ..... X X X X Extracts X X X X X X X X Extracts X X X X
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