BEFORE THE
SECURITIES APPELLATE TRIBUNAL
MUMBAI
Order Reserved on: 11.04.2019
Date of Decision
: 26.04.2019
Appeal No. 482 of 2018
Entegra Ltd.
99, Niranjan Building,
Marine Drive,
Mumbai – 400 002.

…Appellant
Versus
1. National Stock Exchange of India Limited
Exchange Plaza, C-1, Block G,
Bandra Kurla Complex,
Bandra (East),
Mumbai – 400 051.
2. Securities and Exchange Board of India.
SEBI Bhavan, Plot No. C-4A, G-Block,
Bandra-Kurla Complex, Bandra (East),
Mumbai – 400 051.

…Respondents
Mr. P.N. Modi, Senior Advocate with Ms. Kalpana Desai and
Mr. Saurabh Bachhawat, Advocates i/b SPS Associates for the
Appellant.
Mr. Rashid Boatwalla, Advocate with Ms. Shreya Anuwal,
Mr. Rahul Jain and Ms. Pranjal Krishna, Advocates i/b Manilal
Kher Ambalal & Co. for Respondent No. 1.
Mr. Akshay Patil, Advocate with Mr. Nishant Upadhyay,
Advocate i/b Desai & Diwanji for 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 : Dr. C.K.G. Nair, Member
1.

This appeal is filed challenging the order of the Delisting
Committee of the National Stock Exchange of India Limited
(‘NSE’ for short), Respondent No. 1, communicated to the
appellant vide letter dated November 29, 2018. By the said
decision the equity shares of the appellant company are to be
delisted on account of non-compliance with various clauses of the
erstwhile Listing Agreement as well as the SEBI (Delisting of
Equity Shares) Regulations, 2009. The Securities and Exchange
Board of India (‘SEBI’ for short) is Respondent No. 2.

2.

The facts relevant to the matter are the following. The share
of the appellant company was listed on NSE on October 22, 2001.
On October 18, 2016 trading in the equity shares of the appellant
company was suspended. On February 21, 2018 NSE issued a
show cause notice to the appellant company as to why the equity
shares of the company should not be delisted. On June 12, 2018 an
opportunity of personal hearing was given to the appellant by
NSE. On June 28, 2018 NSE granted a period of one month more
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to the appellant to comply with the process of revocation of
suspension of trading and to comply with other non-compliances,
a list of which was provided to the appellant. On July 16, 2018 the
appellant company requested NSE to grant time till end of August
2018 to comply with the non-compliances relating to documents
and additional time till December 2018 to regularize the fees in
view of the financial hardships being faced by the appellant.
On October 6, 2018 appellant sought from SEBI waiver of
penalties and standard operating procedures for revocation of
trading under the relevant SEBI circulars. On November 1, 2018
NSE provided an updated list of non-compliance. On November
29, 2018 NSE passed the impugned order aggrieved of which the
present appeal has been filed.

3.

Shri P.N. Modi, learned senior counsel appearing on behalf
of the appellant submitted that the case of the appellant is not that
of a willful defaulter and because of various disputes between
other entities certain non-compliances have taken place which are
beyond the control of the appellant. In one such dispute with
Power Finance Corporation the appellant has succeeded in the
matter before NCLT, NCLAT and the Apex Court and because of
which the appellant is expected to overcome most of its problems.
Accordingly, and as per the additional affidavit dated March 27,
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2019 submitted to this Tribunal, all except one (8 out of 9)
non-compliances as provided by the Respondent No. 1 NSE on
November 1, 2018 have been complied with. The only remaining
non-compliance is demating 100% of the promoter shares. The
reason for this non-compliance, as indicated to NSE on November
6, 2018, is that 85,00,000 of these shares which are part of the
promoter group holding were pledged with Madhya Pradesh State
Industrial Corporation in physical form and they have been
requested to return these physical shares to get it demated and on a
returnable basis. With this exception all other requirements have
been complied with and the appellant is in the process of getting
this last issue also complied with.

4.

Further, citing Section 21A of the Securities Contracts
(Regulations) Act, 1956 the learned senior counsel submitted that
a Stock Exchange can delist securities only after recording the
reasons therefore. In the impugned order such reasons are not
explicitly stated though there is a mention that the securities of the
appellant have remained suspended for more than six months, one
of the conditions provided under Rule 21 of Securities Contracts
(Regulations) Rules, 1957.

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5.

Learned senior counsel for the appellant also contended that
the decision of the Delisting Committee was taken in its meeting
held on September 11, 2018 which was however communicated to
the appellant only on November 29, 2018. Further, the decision by
the Delisting Committee, apart from not containing the reasons for
delisting explicitly, also does not give any date from which the
said delisting would takes place. This date i.e. December 24, 2018
is given by the Senior Manager of NSE who communicated the
decision of the Delisting Committee. This is clearly not in
accordance with law as the decision has to be taken by the
Delisting Committee and the communicating authority cannot
arbitrarily decide any such date.

6.

In short, the learned senior counsel submitted that the
appellant’s case is a peculiar one where the appellant company has
been making all-out efforts to comply with the requirements for
remaining listed but due to circumstances some non-compliances
have happened for which time was sought up to end of December
2018 which was not given by NSE. As of now except one
non-compliance all other deficiencies have been complied with.
Therefore, it is not a matter of delisting purely to be looked at in a
technical way when the intention of the appellant is positively
clear.

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7.

Learned counsel for the Respondent No. 1 Shri Rashid
Boatwalla submitted that the appellant was given sufficient time
and an opportunity of hearing was also given. NSE does not have
the power to waive any of the provisions of Securities Contracts
(Regulations) Act, 1956 or SEBI (Delisting of Equity Shares)
Regulations, 2009; such powers are with SEBI and the appellant
has sought waiver from SEBI. Therefore, the Delisting Committee
has taken an appropriate decision in tune with the mandate
provided under the extant laws. Learned counsel for Respondent
No. 1 also relied on this Tribunal’s order in the matter of B S
Appliances Ltd. & Ors. vs. National Stock Exchange of India
Limited (Appeal No. 146 of 2018 decided on May 30, 2018) to
support their contention that listed entities have to comply with
the provisions of continues listing and suffer the consequences of
non-compliances. As such, regulations have been brought in for
bringing discipline in the listed market.

8.

In addition to hearing the parties we have also perused the
documents produced before us. It is on record that the appellant
has been regularly in communication with NSE. It is also evident
from records that the dispute / litigation the appellant had with
other entities on which certain reliefs have been obtained by the
appellant from various fora, including the Apex Court. All these
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clearly show the positive intention of the appellant. Therefore, just
taking a technical view, though within four corners of law, may
not be appropriate in concluding every issue of delisting of the
securities of a listed company in a purely technical way.
The consequences of delisting to multiple stakeholders are high. It
is not only the investors in such securities who are the
stakeholders but even the company is also part of the overall
interest of the securities market. Therefore, when in a particular
case where sufficient evidence is available to show that the
company is making serious efforts in compliance and seeking only
some extra time the authorities should show some flexibility.

9.

In the present matter we note that the securities have
remained suspended for trading only from October 2016. Though
this is more than six months but is not like the case of B S
Appliances (supra) relied on by Respondent No. 1 where the
securities remained suspended for several years and the company
itself remained non-operational for 13 years. The evidence
brought before us appears a genuine interest of the appellant
company in rejuvenating their business and therefore continuing
with listing may be in the overall interest of the stakeholders.

10. Given these peculiar facts and reasons relating to the
appellant company and the fact that except one all other non-
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compliances have been said to be addressed by the appellant in an
affidavit, we are of the view that it will be in the interest of justice
to provide one more opportunity to the appellant. Accordingly, we
set aside the impugned order communicated to the appellant vide
letter dated November 29, 2018 and remand the matter to the
Delisting Committee of NSE to look at the facts, including the
implications of promoter stake pledge, afresh and after giving an
opportunity of hearing to the appellant pass a fresh order on merit
and in accordance with law.

11. Appeal is disposed of on above terms. No order on costs.

Sd/Justice Tarun Agarwala
Presiding Officer
Sd/Dr. C.K.G. Nair
Member
Sd/Justice M.T. Joshi
Judicial Member
26.04.2019
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