BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI

                       Appeal No.  86 of 2011 
                             Date of decision: 25.4.2012 

HB Stockholdings Limited
Plot No. 31, Echelon Institutional
Area, Sector – 32,
Gurgaon – 122001.

                            ……Appellant 

Versus

1. Securities and Exchange Board of India
   SEBI Bhavan, Plot No. C-4A, G Block,
   Bandra Kurla Complex, Bandra (East),
   Mumbai – 400 051.
2. DCM Shriram Industries Ltd.
   Kanchenjunga Building, 6th Floor,
   Barakhamba Road,
   New Delhi – 110001.
3. Bombay Stock Exchange Limited
   Phiroze Jeejeebhoy Towers,
   Dalal Street,
   Mumbai – 400 001.
4. Divine Investments Pvt. Ltd.
   Diamond Press Building,
   8-E, Rani Jhansi Road,
   Jhandewalan Extension,
   New Delhi – 110055.
5. Gentech Chemicals Pvt. Ltd.
   Diamond Press Building,
   Second Floor,
   8-E, Rani Jhansi Road,
   Jhandewalan Extension,
   New Delhi – 110055.
6. Super Ware Pvt. Ltd.
   Diamond Press Building,
   8-E, Rani Jhansi Road,
   Jhandewalan Extension,
   New Delhi – 110055.
7. Quick Lithographers Pvt. Ltd.
   Diamond Press Building,
   8-E, Rani Jhansi Road,
   Jhandewalan Extension,
   New Delhi – 110055.

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8. Versa Trading Ltd.
   6th Floor, Kanchenjunga Building,
   18, Barakhamba Road,
   New Delhi – 110001.
9. Shri Tilak Dhar (Karta of Lala Bansi
   Dhar & Sons-HUF),
   Chairman and Managing Director,
   DCM Shriram Industries Ltd.
   R/o 27, Sardar Patel Marg,
   New Delhi – 110021.
10. DCM Hyundai Limited
    No. 2 (Ground Floor),
    Sri Ram Nagar,
    Prakash Nagar, Main Road,
    THIRUNINRAVUR,
    Tamil Nadu 602024.

…… Respondents
Mr. E. P. Bharucha, Senior Advocate with Mr. Tarun Dua, Mr. Arzan Balsara,
Advocates for the Appellant.
Mr. Kumar Desai, Advocate with Mr. Ajay Khaire, Advocate for Respondent no. 1.
Mr. P. N. Modi, Advocate with Mr. Ranjit Bhosale, Mr. Ravi chandra Hegde,
Mr. Khursheed Vajifdar, Advocates for Respondent no. 2.
Ms. Rachita Romani, Advocate for Respondent no. 3.
Ms. Neha Varhadi, Advocate with Ms. Tripti Gupta, Advocate for Respondents no. 4
to 10.
CORAM : P. K. Malhotra, Member & Officiating Presiding Officer
S. S. N. Moorthy, Member

Per : P. K. Malhotra, Member & Officiating Presiding Officer

The appellant before us is aggrieved by the order dated March 31, 2011
passed by the whole time member of the Securities and Exchange Board of India (for
short the Board) disposing of a complaint of the appellant. Allegation of the
appellant before the Board was that respondent 2, its promoters and directors
alongwith its subsidiary companies have played fra ud on the shareholders of the
company by issuing preferential warrants and underlying shares thereby
contravening various regulatory provisions. The appellant claims to be the largest
shareholder of respondent 2 in the categor y of public sharehol ders with current

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shareholding of the appellant said to be 24.98 per cent of the expanded issued and
paid up capital.

2. The Board looked into the complaints and, vide letter dated June 20, 2008,
   informed the appellant that respondent 2 had not committed violation of any of the
   provisions of the regulations under the Securi ties and Exchange Board of India Act,
   1992 (the Act). The said communication reads as under :-
   “Sub:- Your compliant in the matter of public offer for
   acquisition of 20.12% of equity share capital of DCM Shriram
   Industries Limited (DSIL) by HB Stockholdings Limited
   (acquirer) & Mr. H. C. Bhasin (PAC) in terms of SEBI
   (Substantial Acquisition of Shares & Takeovers) Regulations,
   1997 (Regulations).
   This has reference to your letters dt 02/01/2008, 04/01/2008,
   15/02/2008, 04/04/2008 & 11/04/2008 in the captioned matter.
   In this regard, we advise that your complaints have been examined
   in light of provisions of the Regulations & SEBI Act and no
   violation of the provisions of the Regulations or the SEBI Act, by
   the Target Company, DSIL, has been noticed.”
   Aggrieved by the said response, the appellan t preferred appeal be fore this Tribunal
   (Appeal No. 96 of 2008) which was disposed of on July 1, 2009 as under :-
   “ Arguments in this case had been partly heard on June 25,
3. The learned counsel appearing for the respondent Board at
   the outset had raised a prelimin ary objection that the impugned
   communication conveying to the a ppellant the decision of the
   Board that it found no merit in th e representation(s) was not an
   appealable order within the m eaning of Section 15T of the
   Securities and Exchange Board of India Act, 1992 and, therefore,
   the present appeal was not maintainable. We heard the counsel
   for the parties at some length on this objection. During the
   course of the arguments, it was put to Shri Shiraz Rustomjee
   learned counsel for respondent no. 1 whether the respondent
   Board would like to consider the memorandum of appeal and the
   response filed thereto by the respon dents before this Tribunal as
   their respective representations and pass a reasoned order. This
   suggestion was made keeping in view the fact that the impugned
   communication does not contain re asons. The learned cousnel
   for the respondent Board has sought instructions and states that,
   in the peculiar facts and circum stances of the present case, the
   respondent Board is agreed to consider the memorandum of
   appeal and the response of the respondents as their respective
   representations and pass a reason ed order. He has further
   clarified that in order to put an end to the issue, the Board shall
   not afford personal hearing to an y of the parties. We are in
   agreement with the learned cous nel for the respondent Board in
   this regard. However, the responent Board shall be free to seek
   any further clarification, if it deems necessary, from any of the
   parties. It goes without saying th at none of the parties before us
   in this appeal shall be entitiled to file any further representation

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before the respondent Board. Let the Board pass an appropriate
order in accordance with law expeditiously.
The Appeal stands disposed off as above. No costs.”
In compliance with the aforesaid order, th e Board passed a detailed order observing
that the allegations made by the comp lainant do not call for any regulatory
intervention by the Board. It is against th is order that the present appeal has been
filed.

3. At the outset, Mr. Kumar Desai, learned counsel for the Board raised a
   preliminary objection that the impugned or der passed by the Board is not an
   appealable order within the meaning of Section 15T of the Act and, therefore, the
   present appeal is not maintainable. It was submitted by him that every decision by
   the Board cannot be a subject matter of appeal. The Board receives hundreds of
   complaints every day which are inves tigated by it and action taken wherever
   violation of regulatory framework is notice d. The orders issued or decisions taken
   while disposing of such complaints and not affecting rights of the parties are not
   appealable under Section 15T of the Act. In support of hi s submission, learned
   counsel for the Board relied on the following decisions :-
4. Northern Projects Limited vs. Adj udicating Officer (Appeal no. 55 of 2011
   decided on 29.8.2011). (SAT)
5. B. P. Kanani vs. SEBI (Appeal no. 6 of 2000 decided on 31.8.2000). (SAT)
6. Jassbhai Motibhai Desai vs. Roshan Kumar AIR 1976 Supreme Court 578.
7. Adi Pherozshah Gandhi vs. H. M. Seervai (1970) 2 SCC 484.
8. Harinarayan G. Bajaj vs. SAT (2003) 42 SCL 548 Bom. (HC)
9. Mr. P. N. Modi, learned counsel for respondent 2 supported the stand taken
   by the respondent Board and also relied on the decision of this Tribunal in the case
   of BPL Limited vs. SEBI (Appeal no. 14 of 2001 decided on June 20, 2002). It was
   submitted by him that a person is aggrieve d by a decision only when it operates
   directly and injuriously upon his personal, pecuniary or proprietory rights. When a
   complaint is examined by the Board with regard to violation of regulatory
   framework and the Board, after examining the complaint, comes to the conclusion

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that there is no violation of regulatory framework, such an order cannot be said to
operate directly and injuriously upon the personal, pecuniary or proprietory rights of
the appellant. Therefore, the communication conveying decision of the Board while
disposing of a complaint which does not affect the personal, pecuniary or proprietory
rights of an individual is not an appealab le order within the meaning of Section 15T
of the Act. Counsel appearing for ot her respondents also adopted the same
arguments and submitted that the impugned order is not an appealable order. It was
also submitted that the issues raised by the appellant in his complaints are also
pending before the Company Law Board. Th e appellant had also filed Civil Suit
before the Delhi High Court raising the same issue which has been dismissed by that
Court. It is not a case that the appellant is without remedy. He is agitating the same
issue before the Company Law Board whic h has jurisdiction in the matter. The
appellant is indulging in forum shopping, a practice that needs to be curbed.

5. Mr. E. P. Bharucha, learned senior counsel appearing for the appellant,
   strongly argued in favour of the maintenan ce of appeal stating th at the appellant is
   holding as much as 24.9 per cent shares in the company and is substantially
   interested in the affairs of the company. The appellant is neither a busy body of
   meddlesome interloper nor act ing in the name of pro bono publico. The impugned
   order is affecting the rights of the appella nt. The Board has given its findings in the
   impugned order and thus, it becomes an a ppealable order. In support of his
   contention, learned senior counsel relied on the order passed by this Tribunal in the
   case of National Securities Depository Li mited (Appeal no. 207 of 2005 decided on
   September 29, 2006) and submitted that there is no limitation in Section 15T of the
   Act and it has to be interpreted in its wi dest term making every order passed by the
   Board appealable, whether it be in exerci se of its administrative, legislative or
   judicial/quasi judicial powers. He has also place d reliance on the order passed by
   this Tribunal in the case of Gammon I ndia Limited (Appeal no. 32 of 2007 decided
   on June 20, 2008) where on a complaint by a shareholder, the Board took action
   against the company and this Tribunal en tertained the appeal filed by the company
   on the decision taken by the Board on the basi s of the complaint of the shareholders.

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Learned senior counsel for the appellant also distinguished the cases cited by the
learned counsel for the respondents.

6. After hearing learned counsel for the parties, we consid er it necessary to
   deal with the issue of maintainability of the appeal before we go into the merits of
   the case. We have considered the riva l submissions and have also looked at the
   orders/decisions cited by counsel on both sides. The relevant part of Section 15T of
   the Act reads as under:-
   “15T. Appeal to the Securities Appellate Tribunal. – (1) Save
   as provided in sub-section (2), any person aggrieved,-

(a) by an order of the Board made, on and after the
commencement of the Securities Laws (Second
Amendment) Act, 1999, under th is Act, or the rules or
regulations made thereunder, or
(b) by an order made by an adjudicating officer under this
Act,

may prefer an appeal to a Secu rities Appellate Tribunal having
jurisdiction in the matter.
(2) No appeal shall lie to the Securities Appellate Tribunal from
an order made-
(a) by the Board on and after the commencement of the
Securities Laws (Second Amendment) Act, 1999;
(b) by an adjudicating officer,
with the consent of the parties.”
The words “an order” are not defined in the Act. Black ’s Law Dictionary (Sixth
Edition) defines the word “order” to m ean “ a mandate; prec ept; command or
direction authoritatively given; rule or regulation; direction of a court or judge made
or entered in the writing, and not include d in a judgment which determines some
point or directs some step in proceedings.” An order is primarily a decision which
has the effect of a command, whether called by such name or not and is
distinguishable from an advise or request by the nature of the consequence that may
flow from the non implementation of the same. Therefore, the words “an order”
used in the aforesaid provision are compre hensive enough to include every order or
decision taken by the Board which adversely affect th e rights of the parties
(emphasis supplied). We have also looked at the orders/decisions cited by learned

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counsel on both sides. In brief, the ratio on the issue under consideration in all these
orders/decisions is that orders which ar e merely procedural cannot be appealed
against and it is only those orders or decisions taken by the Board which adversly
affect the rights of the parties will fall w ithin the purview of an appealable order
under Section 15T of the Act. To ascert ain whether a communi cation or decision
amounts to an order within the meaning of the above noted provision, its substance
and not its form has to be seen. If a pa rticular direction, request or observation is
binding and has penal consequence for its violation, the same will have to be treated
as an order within the meaning of the a bove noted provision. It is immaterial
whether the communication through which the decision is conveyed is in the form of
a letter or order or a note. We are of the considered view that the orders/decisions of
this Tribunal in the case of NSDL and Gammon India Limited, referred to by the
learned senior counsel for the appellant, are of no help to him. After the NSDL
order, this Tribunal in the case of Bharat Jayantilal Patel vs. SEBI (Appeal no. 126 of
2010 decided on September 15, 2010) has cate gorically held that the words “an
order” appearing in Section 15T are comprehensive enough to include every order or
decision taken by the Board which adversely affect th e rights of the parties
(emphasis supplied). It has been categorically stated in the said order that procedural
orders which do not affect the substantive ri ghts of the parties are not appealable.
Similarly, in case of Gammon India Limited the appeal was preferred not by the
complainant but by the company against whom action was initiated by the Board on
the basis of complaint.

7. Let us have a look at the backgr ound in which the impugned order was
   passed by the Board. The appellant made certain complaints to the Board against
   respondent 2, its promoters and the promot er group in respect of allotment of
   warrants by the company to certain entitie s, who, according to the appellant, were
   the promoters/promoter group of the company or persons acting in concert with them
   and the subsequent allotment of shares to th em against the share warrants so issued.
   The Board passed a detailed order exam ining all the allegations made by the
   appellant against the respondents 2 to 10 and came to the conclusion that there is no
   violation of the regulatory fr amework or the provisions of the Act. The Board also

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noted that the procedure laid down in the Companies Act for allotment of warrants to
promoter groups on preferential basis was followed by the company. The said order
of the Board which was passed in complia nce with the directions given by this
Tribunal in its order dated July 1, 2009 in any way does not impinge on any right of
the appellant. The impugned order is merely a reply from the Board to the issues
raised by the appellant in its complaint. It is neither an order nor a decision of the
Board which adversely affects any right of th e appellant. In this view of the matter,
we are inclined to agree that the impugned order does not adversely affect the rights
of the appellant and hence not an appealable order within the meaning of Section
15T of the Act. We have also noted that this is not a case where the appellant is
without a remedy. The appellant is already pursuing its grievance on the same issue
in its petition filed before the Co mpany Law Board which is still under
consideration. The appellant has approached Delhi High Court also on the same set
of allegations and the suit filed by it ag ainst the respondents was dismissed by the
Court.

8. We, therefore, uphold the preliminar y objection raised by the respondents
   and hold that the appeal is not maintainable under Section 15T of the Act against the
   impugned order. Since we are rejecting the appeal on the preliminary objection
   raised by the respondents, we are not going into the merits of the case.
   In the result, the appeal is dismissed with no order as to costs. Sd/- P. K. Malhotra Member & Officiating Presiding Officer
   Sd/-
   S. S. N. Moorthy
   Member
   25.4.2012
   Prepared & Compared by
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