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2006 (10) TMI 244 - HC - Companies LawCompromise and arrangement - sanction of the scheme - challenging the order of the Bombay Stock Exchange - direct the stock exchange to list the shares - whether the no objection from the stock exchange is to be treated as a mandatory requirement - HELD THAT:- The listing agreement requiring placing of the scheme before the exchange and a requirement that the arrangement is not contrary to the securities law show that given the authority to the exchanges under the Securities Contracts (Regulation) Act and the Securities and Exchange Board of India Act, 1992 the undertaking given as per the listing agreement needs to be given its due weightage, that, should there be any claim from a company for listing contrary to the provisions of the SEBI Act, the question of insisting on recognition under the protective umbrella of the approval order does not arise. Now, coming to the reference from the SEBI as regards the direction to the Bombay Stock Exchange to grant its approval, it must be noted that it is not a blanket direction, but an approval to be granted subject to its bye-laws and if the Bombay Stock Exchange finds that the terms of arrangement are contrary to its regulations or the requirement under the listing agreement the same has to be tested in a manner known to law and as provided under the Securities and Exchange Board of India Act. It may also be noted that the Bombay Stock Exchange, apart from referring to the non-satisfaction of the listing requirement, had also pointed out to the conduct of the transferor company, namely, Pentamedia Graphics Ltd., as regards issuance of fake certificates in the market. In the background of this and the view on writing off of assets to a huge sum, it is better the question as to the satisfaction of the listing agreement and the correctness of the order of this court is left to the expert body, viz., Bombay Stock Exchange, and the appellate forum, if the applicant so chooses to test the correctness of the same. In the light of the view that I have taken, I do not accept the plea of the applicants. I accept the objections raised by the Bombay Stock Exchange. The question is what would be the effect of the order of this court granting approval. It must be noted that the Act provides for an appeal against the order of the Bombay Stock Exchange before the Appellate Tribunal. In the face of such an expert body to deal with the matters relating to the views expressed, it is but proper that the applicants seek their remedy by way of appeal before the Appellate Tribunal. Until such time, the listing cannot take place as regards Mayajaal Entertainment Ltd., or on the question of allotment of shares to the shareholders of Pentamedia Graphics Ltd. The approval granted to the scheme cannot stand in the way of the stock exchange considering the compliance of the listing agreement. In the view that I have taken, subject to the result in the appeal before the Appellate Tribunal the clause in the scheme as regards listing has to await the outcome of proceedings. In the face of section 392(1)(b), the applicants herein are directed to exhaust their appeal remedy to satisfy the listing agreement, particularly sub-clause (g) so that clause 34 of the scheme breathes life. In the circumstances, the applications are dismissed reserving the liberty to the applicants to move the Tribunal if they so choose. Until then, clause 34 in the approved scheme cannot be enforced by reason of the order of this court dated November 8, 2004. There will, however, be no order as to costs.
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