BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Date of Hearing : 15.07.2019
Date of Decision : 19.07.2019
Appeal No. 319 of 2017
Cairn UK Holdings Ltd.
with its registered office at
50 Lothian Road,
Edinburgh EH3 9BY.

…. 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. Vedanta Ltd.
with its office at
1st Floor, Wing C, Unit No. 103,
Corporate Avenue, Atul Projects,
Chakala, Andheri (East),
Mumbai – 400 093.

…Respondents
Mr. Pesi Modi, Senior Advocate with Mr. Neville Lashkari,
Mr. Uday Walia, Mr. Shahezad Kazi, Mr. Gibran Naushad,
Advocates i/b S & R Associates for the Appellant.
Mr. Mustafa Doctor, Senior Advocate with Mr. Vivek Shah,
Advocate i/b ELP for the Respondent No. 1.
Ms. Fereshte Sethna, Advocate with Mr. Adhiraj Malhotra,
Mr. Lokesh Aidasani, Ms. Divya Hirawat, Mr. Sagar Sarin,
Mr. Shreyas Taparia, Advocates i/b DMD Advocates for the
Respondent No. 2.

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CORAM : Justice Tarun Agarwala, Presiding Officer
Dr. C. K. G. Nair, Member
Justice M. T. Joshi, Judicial Member
Per : Justice Tarun Agarwala, Presiding Officer
1.

The appellant held various oil and gas assets / businesses /
production sharing agreements in India, through its foreign
subsidiary companies. The appellant decided to transfer these assets
to an Indian holding company and, therefore, Cairn India Ltd.
(hereinafter referred to as, ‘Cairn India’) was incorporated after
which the appellant transferred the shares of its foreign subsidiary
companies, to Cairn India in consideration whereof Cairn India
allotted its shares to the appellant. In 2010-11, Cairn India became a
subsidiary of Vedanta Ltd.

2.

The appellant filed a complaint with SEBI on April 13, 2017 in
connection with non-payment of dividend which was due to the
appellant by Cairn India amounting to Rs. 340.64 crores. The said
complaint was registered on the SCORES platform of Securities and
Exchange Board of India (hereinafter referred to as, SEBI’). It was
alleged that the dividend was due and payable and was not paid
despite the fact that there was no attachment or order of any court or
authority. It was contended that the non-payment of the dividend
was in clear violation of Section 127 of the Companies Act, 2013
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(hereinafter referred to as, ‘Companies Act’) as well as under Section
24 of the Companies Act and therefore, it was within the SEBI’s
jurisdiction to take action against the said company as it was also in
violation of the Regulation 4(2)(c) of the Securities and Exchange
Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (hereinafter referred to as, ‘LODR Regulations’).
The appellant, therefore, prayed in its complaint that :1. Cairn India be directed to pay the dividend to the appellant
along with interest at the rate of 18% p.a. and,
2. Initiate proceedings under Section 127 of the Companies
Act against every director of the Cairn India who were
knowingly a party to the non-payment of the said dividend.

3.

SEBI by the impugned order disposed of the complaint on the
ground that the unpaid dividend of over Rs. 660.63 crores was
handed over by the company to the income tax authorities and,
therefore, it would not be appropriate for SEBI to take any further
action and, accordingly, closed the complaint. The appellant being
aggrieved by the said order has filed the present appeal.

4.

We have heard Shri Pesi Modi, the learned senior counsel with
Shri Neville Lashkari, the learned counsel for the appellant and Shri
Mustafa Doctor, the learned senior counsel with Shri Vivek Shah,
the learned counsel for the respondent No. 1 and Ms. Fereshte
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Sethna, the learned counsel with Shri Adhiraj Malhotra, the learned
counsel for the respondent No. 2.

5.

Having heard the learned counsel for the parties, we are of the
opinion that the complaint of the appellant has not been considered
by the respondent in the right perspective.

Only a part of the
complaint has been considered by SEBI in so far as the prayer of the
appellant directing Cairn India to pay the dividend alongwith
interest. We are of the opinion that SEBI was justified in holding
that since an amount has been transferred to the income tax
authorities pursuant to some orders issued by them, the question of
paying the dividend by the appellant alongwith interest does not
arise.

In our opinion, it is open to the appellant to pursue his
remedies for return of the dividend amount from the income tax
authorities.

6.

However, if the company, namely, Cairn India had violated the
provisions of the Companies Act in not releasing the dividend when
there was no embargo upon it, it is SEBI’s duty to inquire into the
alleged violation and if it exists take action against the said company
and, if necessary, under Section 124 of the Companies Act. This
aspect has not been considered by SEBI.

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7.

We accordingly, allow the appeal in part and dispose of the
appeal directing SEBI to reconsider the complaint of the appellant
dated April 13, 2017 in relation to violation of the provisions of the
Companies Act and LODR Regulations and pass appropriate orders.

8.

In this regard, it was urged that an opportunity of hearing may
be given by SEBI while disposing of the appellant’s complaint. We
are of the opinion that it is not necessary for SEBI to give an
opportunity of hearing for the purpose of deciding the complaint.
SEBI will consider the complaint and dispose of the complaint in the
light of the directions given by us expeditiously.

9.

In the circumstances of the case, there shall be no order as to
costs.

Sd/Justice Tarun Agarwala
Presiding Officer
Sd/Dr. C. K. G. Nair
Member
Sd/Justice M. T. Joshi
Judicial Member
19.07.2019
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