BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Appeal No. 219 of 2012
Date of decision: 08.02.2013 - Victor Fernandes
B-604 Gill-Haze Apts, Lourdes Colony
Orlem, Malad West, Mumbai 400064. - Sangeeta Fernandes
B-604 Gill-Haze Apts, Lourdes Colony
Orlem, Malad West, Mumbai 400064.
Versus
- National Stock Exchange of India Limited
Exchange Plaza, Plot no. C/1,
G Block, Bandra-Kurla Complex,
Bandra (E), Mumbai 400 051. - ICICI Securities Limited
ICICI Centre, H.T. Parekh Marg,
Churchgate, Mumbai 400 020. - RBS Equities (India) Limited
5th Floor, 4 North Avenue,
Maker Maxity, Bandra-Kurla Complex,
Bandra (East), Mumbai 400 051. - Network18 Media & Investments Limited
503, 504 and 507, 5th floor,
Mercantile House, 15, Kasturba Gandhi Marg,
New Delhi 110 001. - TV18 Broadcast Limited
503, 504 and 507, 5th floor,
Mercantile House, 15, Kasturba Gandhi Marg,
New Delhi 110 001. - Mr Raghav Bahl
E-36, Sector 30,
Noida 201 301 Uttar Pradesh. - Mr Manoj Mohanka
9, Lovelock Place,
4th Floor, Flat No 4C,
Kolkata 700 019, West Bengal. - Mr Hari Bhartia
2 Amrita Shergill Marg,
New Delhi 110 003 Delhi. 2 - Securities and Exchange Board of India
SEBI Bhavan, Plot No. C4- A, ‘G’
–
–
th floor,
Mercantile House, 15, Kasturba Gandhi Marg,
New Delhi
st Floor,
414, Senapati Bapat Marg,
Lower Parel, Mumbai –
st Floor,
414, Senapati Bapat Marg,
Lower Parel, Mumbai –
–
–
–
–
–
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- Reliance Industries Limited
3rd Floor, Maker C hambers IV,
222, Nariman Point,
Mumbai –
th floor,
Mercantile House, 15, Kasturba Gandhi Marg,
New Delhi
rd Floor, Maker Chambers IV,
222, Nariman Point,
Mumbai –
…Respondents
Offg .)
Per : P. K. Malhotra
This matter is listed for admission today. Counsel for the parties agreed that
the matter can be taken up for orders on maintainability of this appeal. With the
consent of the appellants and counsel for the respondents, the appeal is taken up for
hearing on the issue of maintainability.
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- The appellants are investors and shareholders of Network 18 Media and
Investments Limited. They are aggrieved by the decision of the National Stock
Exchange of India Ltd. (NSE), in granting listing and trading approval of the equity
shares issued by respondent no. 4 pursuant to its rights issue which closed for
subscription on October 4, 2012. The grievance of the appellants is that they had
made multiple representations to various entities entrusted with the responsibility of
protecting interest of shareholders and investors, complaining about violation of
various rules and regulations by respondents no. 4 and 5 relating to the said rights
issue. However, the concerned entities have failed to take action necessary to protect
the interest of investors. This is what the appellants contend in para 4(ao) of the
appeal:-
“4(ao). SFebruy VF writa al thi ty five
letters to SEBI, NSE, BSE, ICICI, RBS, MM and HB, bringing to
their attention the issues plaguing Network 18 and TV18 and relating
to, inter alia, serious corporate governance failures, inadequate and
misleading disclosures and rampant non-compliance with various
regulations governing the capital markets (refer Enclosure F-11 for a
Schedule of Documents sent to/available with each of these
Respondents). No action has been taken by any of these entities to
resolve the prejudice, harm and loss caused and continually being
caused to the Appellants as well as other investors. Besides one
inadequate reply each sent by NSE and SEBI to VF which
demonstrated that these entities had not independently evaluated the
issues placed before them, SEBI, NSE and BSE have failed to take
the necessary actions arising from the issues placed before them by
VF, SEBI, NSE and BSE have failed to protect the interests of
investors.”
- At the outset, Shri Sooli Cooper, learned senior counsel appearing on behalf
of respondent no. 3, raised objection with regard to maintainability of the appeal. He
has drawn my attention to para 3 of the appeal where it is stated that the appellants
are aggrieved by the decision of NSE to grant listing and trading approval to the
equity shares issued by respondent no. 4. However, there is no prayer in the appeal
for setting aside or quashing the circular dated October 15, 2012 issued by NSE
granting the listing permission. The appellants had participated in and subscribed to
the rights issue and having obtained shares thereunder, cannot challenge the order
which make those vary shares tradeable in the stock market. According to learned
senior counsel, the appellants cannot have any grievance against the order that
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permits the shares they have subscribed to, to be traded and listed in the stock market.
The appellants grievance neither arise nor flow from the impugned order. The
grievance of the appellants, according to the learned senior counsel, is related to
corporate governance, manner of functioning of respondent no. 4 and alleged
acquisition of control by certain other entities. None of these are matters having
anything to do with the grant of listing of rights issue in accordance with laid down
norms. Learned senior counsel further contended that the nature of reliefs claimed by
the appellants go beyond the jurisdiction of this Tribunal. To illustrate, he stated that
the appellants have sought restriction on respondent no. 3 from carrying on business
in any intermediary role in the capital market and debarring the merchant banker from
accessing the capital market. According to him, none of these reliefs are relatable to
the impugned order. The other reliefs sought for in the appeal also do not emanate
from the impugned order. On the contrary, the appellants, in their rejoinder, have
specifically stated that the appellants have not made any prayer for cancellation of the
rights issue. If that be so, the appeal is not maintainable under Section 23L of the
Securities Contracts (Regulation) Act, 1956 (for short the Act), since the appellants
cannot be termers’ under the son.
- Arguments advanced by Shri Sooli Cooper, learned senior counsel were also
adopted by learned counsel appearing on behalf of respondent no. 2, 4 to 11, 14 to 19,
21 & 22.
- Appellant no. 1 who appears in persons for himself as well as for appellant
no. 2, vehemently argued that the appeal filed by the appellants fall within the ambit
of Section 23L of the Act. According to him, the issuer has not complied with the
provision of equity listing agreement. According to the appellants, respondent no. 1
knowingly violated the securities laws and it has not independently examined the
issues brought to its notice by the appellants. The appellants letter dated February 15,
2012 list the violations of multiple securities laws including terms and conditions of
the listing agreement and these allegations have not been considered. It was,
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therefore, contended that the appeal is maintainable and the Tribunal should hear the
appeal on merits and grant the prayers as prayed for.
- I have considered the rival submissions and perused the documents available
on record. Sub-section (1) of Section 23L of the Act int erali a provides that any
person aggrieved by the order or decision of the recognized stock exchange may
prefer an appeal before the Securities Appellate Tribunal. The case of the appellants
is that they are aggrieved by the decision of NSE to grant listing and trading approval
to the equity shares issued by respondent no. 4 under the rights issue. Surprisingly,
the appellants have not made any prayer for setting aside or cancellation of the
permission granted by NSE for listing of the said rights issue. How can the
appellants be said to be aggrieved when the appellants have participated and have
been benefited from the said rights issue and no prayer is made for setting aside or
cancellation of the said rights issue. Learned senior counsel for respondent no. 3 as
well as counsel representing the other respondents have rightly relied upon the
decision of the Apex Court in the case of Jasbhai Motibhai Desai vs. Roshan
Kumar, Haji Bashir Ahmad & Ors. [AIR (1976) SC 578] which lays down the test
to determine whether the person is aggrieved or not. The relevant extract from the
said Supreme Court judgment reads as under:-
“ Whether the applicant is a person whose legal right has been
infringed? Has he suffered a legal wrong or injury, in the sense, that
his interest recognized by law, has been prejudicially and directly
affected by the act or omission of the authority, complained of? Is he
a person who has suffered a legal grievance , ergainst
decision has been pronounced which has wrongfully deprived him of
something or wrongfully refused him something, or wrongfully
affected his title to something? Has he a special and substantial
grievance of his own beyond some grievance or inconvenience
suffered by him in common with the rest of the public? Was he
entitled to object and be heard by the authority before it took the
impugned action? If so, was he prejudicially affected in the exercise
of that right by the act of usurpation of jurisdiction on the part of the
authority? Is the statute, in the context of which the scope of the
words aed” is being considered, a social welfare
measure designed to lay down ethical or professional standards of
conduct for the community? Or is it a statute dealing with private
rights of pduals?
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- This has been followed by this Tribunal in a large number of orders including
in the case of Bharatbhai Baldev Shah & Ors. vs. SEBI & Ors. (Appeal no. 142 of
2008 decided on October 6, 2009). The appellants have failed to show how the
listing permission granted by NSE by the impugned circular has affected their legal
rights or caused legal wrong or injury to the appellants. The appellants ’ grievance
does not flow from the impugned circular of NSE. I also noticed that it is not a case
where the various representations addressed by the appellants to the Securities and
Exchange Board of India or to the intermediaries with regard to said issue were not
considered. It is a matter of record that said representations were examined and
appropriate response given to the appellants. In case the appellants were not satisfied
with the response/reply received by them to their representations, it may have been a
cause of grievance and the appellants could have availed appropriate remedy against
those responses. In the garb of challenging the circular dated October 15, 2012 of
NSE granting listing permission of rights issue of respondent no. 4, the appellants are
in effect challenging decision of some of the respondents on its various
representations which were duly considered and response sent to the appellants. The
appellants are now seeking multiple reliefs against various respondents which are in
the nature of a direction not covered within the scope of Section 23L of the Act.
I am, therefore, of the considered view that the appeal filed under Section 23L
of the Act against the circular dated October 15, 2012 of NSE is not maintainable.
Since the appeal is being dismissed as ‘ not ntainable’, not cey go
into the merits of the case. No costs.
Sd/-
P. K. Malhotra
Member &
Presiding Officer ( Of fg .) 08.02.2013
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