BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Appeal No. 193 of 2010
Date of decision: 1.8.2011 JVL Agro Industries Limited
(Formerly known as Jhunjhunwala Vanaspati Ltd.)
Jhunjhunwala Bhawan, Nati Imli,
Varanasi – 221001.
……Appellant
Versus
Bombay Stock Exchange Limited
Phiroze Jeejeebhoy Towers,
Dalal Street,
Mumbai – 400 001.
…… Respondent
Mr. Somasekhar Sundaresan, Advocate with Mr. Ravich andra S. Hedge and
Ms. Farah Karachiwala, Advocates for the Appellant.
Mr. Faraz Alam Sagar, Advocate with Mr. Hilaur Vaswani, Advocate
for the Respondent.
CORAM : Justice N. K. Sodhi, Presiding Officer
P. K. Malhotra, Member
S.S.N. Moorthy, Member
Per : Justice N. K. Sodhi, Presiding Officer (Oral)
Whether in the facts and circumstances of this case, the appellant failed to
comply with Regulation 74(1) of the Securities and Exchange Board of India
(Issue of Capital and Disclosure Requi rements) Regulations, 2009 (hereinafter
referred to as the Regulations) is the s hort question arising for our consideration
in this appeal. Facts giving rise to this appeal are as under:
- The appellant is a public limited comp any having its registered office at
Varanasi in the State of Uttar Pradesh. Its shares are listed on the Bombay Stock
Exchange Ltd. (BSE), Delhi Stock Excha nge and Uttar Pradesh Stock Exchange.
Among the three exchanges on which the ap pellant is listed, BSE is the only
exchange having nationwide trading term inals. On May 11, 2010 a meeting of 2
the board of directors of the appellant was held in which they recommended to the
shareholders preferential allotment of 40 lacs warrants to promoters as well as
non-promoters at an issue price of190 convertible into e quivalent number of equity shares of the face value of10 at a premium of ` 180 each. The minutes
of this meeting were sent to BSE on the same day i.e. on May 11, 2010. An extra
ordinary general meeting of the sharehol ders of the appellant company was held
on June 9, 2010 to consider the recomm endation of the board of directors
recommending preferential allotment to promoters and non-promoters. A special
resolution under Section 81( 1A) of the Companies Act, 1956 was passed and a
copy of the same was immediately sent to BSE on the same day. Clause 24(a) of
the Listing Agreement which has a statutor y force requires that a listed company
before issuing further shares or securiti es must obtain ‘in-pr inciple’ approval for
listing of those shares/securities from th e exchange having nationwide trading
terminals. In accordance with this cl ause, the appellant applied on June 15, 2010
to BSE for the in-principle approval for the listing of 40 lacs convertible warrants.
The application alongwith the relevant doc uments was dispatched from Varanasi
to BSE by post under a certificate of posti ng a copy of which is on the record. It
is the case of the appella nt that through its consul tants it continuously on
telephone followed up with BSE to confirm the status of its application and the
documents. The appellant learnt that the application had not been received by
BSE and, therefore, on July 6, 2010 it once again sent a copy of the application
alongwith the relevant documents for the in-principle approval of BSE. According
to Regulation 74 of the Secu rities and Exchange Board of India (Issue of Capital
and Disclosure Requirements) Regula tions, 2009 (for short the Regulations)
allotment pursuant to a special resolution has to be completed within a period of
15 days from the date of passing of such resolution. The first proviso to this
Regulation provides that where any application for exemption from the
applicability of the takeover regulations or any approval or permission by any
regulatory authority or the Central Government fo r allotment is pending, the
period of 15 days is counted from the date of the order on such application or the 3
date of approval or permission as the case may be. If the allotment is not
completed within 15 days from the date of special resolution, a fresh special
resolution has to be passed and the relevant date for determining the price of
specified securities under chapter VII of the regulations is taken with reference to
the date of the later special resoluti on. By its letter dated July 26, 2010 BSE
observed that the appellant had failed to comply with Regulation 74 (1) of the
Regulations and that it will now have to comply with Regulation 74(2) under
which a fresh special resolution will have to be passed. BSE did not examine the
application on merits. It is against this communication that the present appeal has
been filed. - We have heard the learned counsel for the parties who have taken us
through the record. In the present case if the application sent by the appellant on
June 15, 2010 had been received by BSE, there would have been no problem.
However, this application did not reach BSE though it was sent by the appellant
by post under a certificate of posting. It is clear from the record that the appellant
had been pursuing the application with BS E and it is only then that it discovered
that the earlier application had not reached it. Even if the subsequent application
dated July 6, 2010 is taken to be slightly belated, we are satisfied that there was
no ulterior motive with the appellant in delaying the matter. On the contrary, it
was in the interest of the appellant to ge t in-principle approval at the earliest so
that the allotment could be made par ticularly when it was in favour of the
promoters. There is no reason why they should have delayed the allotment in their
own favour. Moreover, the slight delay in the application has caused no prejudice
either to the investors or to the secu rities market. Learned counsel for the
respondent drew our attention to Regul ation 109 of the Regulations whereunder
the Securities and Exchange Board of India (the Board) has the power to relax the
strict enforcement of the Regulations. He also cited the or der of the Supreme
Court in Securities and Exchange Board of India v. S. Kumars Nationwide Ltd.
and another Civil Appeal No. 2049 of 2010 decided on November 26, 2010 to
contend that the appellant should approach the Board to seek relaxation. Without 4
examining the contentions raised by eith er party and without going into the
question whether the provisions of the Re gulations are mandatory in nature, and
exercising our powers unde r Rule 21 of the Securi ties Appellate Tribunal
(Procedure) Rules, 2000 we direct BSE to consider th e application filed by the
appellant on merits and in accordance with law making it clear that it shall not be
rejected only on the ground that it was filed belatedly. Rule 21 enables this
Tribunal to make such orders or give su ch directions as may be necessary or
expedient to secure, among others, the ends of justice. We also direct that this
order of ours shall not be treated as a precedent as we have issued the aforesaid
direction having regard to the peculiar facts and circumstances of this case.
The appeal stands disposed of as above with no order as to costs. Sd/-
Justice N. K. Sodhi
Presiding Officer Sd/-
P.K. Malhotra
Member Sd/-
S.S.N. Moorthy
Member
01.08.2011
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