BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI
Appeal No. 59 of 2008
Along with
Misc. Application No. 48 of 2008
Date of decision : 20.8.2008
Keerthi Industries Ltd. …… Appellant
Versus
Bombay Stock Exchange Limited …… Respondent
Ms. Preeti Salaskar Advocate for the Appellant.
Dr. Mrs. Poornima Advani Advocate with Ms. Sejal Shah Advocate for the Respondent.
Coram : Justice N.K. Sodhi, Presiding Officer
Arun Bhargava, Member
Utpal Bhattacharya, Member
Per : Justice N.K. Sodhi, Presiding Officer (Oral)
Having heard the learned counsel for the parties we are of the view that this appeal must fail because there is no cause of action fo r the appellant to feel aggrieved against any action of the Bombay Stock Exchange (BSE).
2.The appellant is a public limited company whose shares are listed on BSE. Trading in the scrip was suspended on 24.9.2005 which has now been revoked by the impugned communication dated March 5, 2008. BSE has revoked the order of suspension on certain conditions and one of the conditions imposed is that the appellant company should cancel the allotment of 20 lac shares issued by it in October 2002 to its promoters on a preferential basis. BSE found that at the time of the allotment, the appellant company had withheld some material information from its shareholders inasmuch as it did not disclose the particulars/details of those to whom the allotment was to be made. BSE found that clause 13.1A of the DIP Guidelines had not been complied with by the appellant company.
3.When this appeal came up for hearing before us on 1.5.2008 the learned counsel for the appellant informed us that the appellant company would convene another extraordinary general meeting of its sharehol ders and after furnis hing the detailed particulars of the allottees, it shall get its action of allotment ratified. We are informed by the learned counsel for the appellant that the subsequent EGM has ratified the action of the company in allotting 20 lac shares to its promoters. In the normal course, BSE would have permitted the shares to be listed subject to the compliance of other conditions enumerated in the impugned communication. What has now transpired is that with the allotment of 20 lac shares to the promoters, the public sh areholding in the appell ant company has fallen below 25 per cent. It is the requirement of clause 40A of the listing agreement executed between the appellant and BSE that the former shall at all times maintain the level of public shareholding atleast upto 25 per cent. In other words, it is the requirement of the listing agreement that a minimum of 25 per cen t public shareholding has to be maintained in the appellant company to en able it to remain listed on a continued basis. Since the public shareholding has fallen below 25 per cent, it is not possible for BSE to permit listing of the preferentially allotted shares. The a ppellant will have to find ways and means to
raise the public shareholding to atleast the level of 25 per cent before listing could be allowed. As and when that happens, it will be open to the appellant to approach the BSE with a fresh application to get those shares allotted. As of now the public shareholding is below the minimum level required and, theref ore, there is no cause of action for the appellant.
In the result, the appeal fails and the same is dismissed leaving it open to the appellant to apply afresh as and when it is able to bring up its public shareholding up to the minimum prescribed level. No costs.
Sd/- Justice N.K. Sodhi Presiding Officer Sd/- Arun Bhargava Member Sd/- Utpal Bhattacharya Member 20.8.2008
ddg/-