TMI Blog2018 (8) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of Clause 36 of the Listing Agreement. We make it clear that our prima facie view that by subscribing to the ZOCDs under the ZOCD Agreement dated 27/2/2012 RIL acquired indirect control over NW18 through IMT is not binding on SEBI and SEBI is directed to reconsider the issue independently without being influenced by the prima facie observations made by this Tribunal in that behalf. - Appeal No. 42 of 2017 - - - Dated:- 22-6-2018 - Mr. J. P. Devadhar, Presiding Officer And Dr. C. K. G. Nair, Member For The Appellants : Mr. Victor Fernandes and Mrs. Sangeeta Fernandes For The Respondent : Mr. Fredun DeVitre, Senior Advocate a/w Mr. Mihir Mody and Mr. Nishant Upadhyay, Advocates i/b K. Ashar And Co.Mr. Rashid Boatwalla a/w Ms. Rashi Agarwal, Advocates i/b MKA And Co. And Mr. Janak Dwarkadas, Senior Advocate a/w Mr. Rohan Rajadhyaksha, Mr. Vivek Shetty and Ms. Tanvi Dattani, Advocates i/b AZB Partners ORDER Per : Justice J.P. Devadhar 1. Where a complaint filed before the Securities and Exchange Board of India ( SEBI , for short) alleges that a listed company has violated Clause 36 of the Listing Agreement by failing to disclose that it h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preliminary issue regarding the maintainability of the appeal and further submitted that similar complaint filed by the appellants alleging that RIL had acquired indirect control over NW18 TV18 through IMT under the SUA dated 23/11/2011 and ZOCD Agreement dated 27/2/2012 has already been rejected in the past and therefore, in view of the principles of res judicata, it is not open to the appellants to re-agitate that issue once again. Preliminary issue : 5. By way of a preliminary objection, Counsel for respondents submit that any decision/order passed by SEBI on the SCORES platform is an administrative decision/order under section 11(1) of SEBI Act and hence appeal against such administrative decision is beyond the appellate jurisdiction of this Tribunal. In support of the above contention, reliance is placed on the Apex Court decision in case of NSDL vs. SEBI reported in (2017) 5 SCC 517. 6. We see no merit in the above contention, because, in the present case, nature of the complaint filed by the appellants required SEBI to consider the scope and ambit of Clause 36 of the Listing Agreement judicially and determine the extent to which the rights of the appellants a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by SEBI in another complaint filed by the appellants, it would be appropriate to note the following relevant facts:- (a) On 22/11/2011 a Deed of Trust was executed under which IMT was established as a Trust with Nirlab Consultancy Pvt. Ltd. (controlled by Mr. Raghav Bahl) as a Trustee and RIL as the sole beneficiary. Thus, IMT was floated/established on 22/11/2011 for the exclusive benefit of RIL. (b) On 23/11/2011 IMT (through Mr. Raghav Bahl) entered into a Single Unit Agreement (SUA) with six entities controlled by Mr. Raghav Bahl and NW18 which was also represented by Mr. Raghav Bahl. Thus the SUA was signed by Mr. Raghav Bahl on behalf of all parties to the SUA. As per the SUA, the parties thereto were to act as largest Indian Shareholders of NW18. (c) On 27/2/2012 investment agreement ( ZOCD Agreement for convenience) was entered into by and between six private limited companies owned and controlled by Mr. Raghav Bahl ( holding companies for convenience), IMT and Mr. Raghav Bahl and his wife in their individual capacity. Under the ZOCD Agreement, IMT was to invest funds (received from RIL) by subscribing to the ZOCDs of the holding companies and the holding compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EBI to direct RIL group to revise the open offer price from ₹ 41.04 per share to ₹ 5,68,430.32 per share, it was also alleged that RIL had failed to disclose that it had acquired indirect control over NW18 through IMT and thus violated Clause 36 of the Listing Agreement. (h) Without disposing of the said complaint, by a communication dated 17/11/2014 SEBI gave its approval for acquisition of shares of NW18 by the RIL group @ ₹ 41.04 per share subject to compliance of certain conditions set out therein. (i) Accordingly, on compliance of the said conditions, public offer process commenced and completed on 26/12/2014. (j) On 29/12/2014 appellants filed Appeal No.55 of 2015 before this Tribunal, inter alia, challenging the open offer price approved by SEBI at ₹ 41.04 per share instead of approving the open offer price of ₹ 5,68,430.32 per share claimed by the appellants. (k) During the pendency of the said appeal, by a communication dated 9/2/2015 SEBI rejected the complaint filed by the appellants on 25/6/2014. By that communication, plea of the appellants that RIL had indirectly acquired control over NW18 through IMT under the SUA/ZOCD Agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y this Tribunal on 13/4/2016 could not be agitated in the disposed of appeal. (o) In the meantime on 6/9/2016 appellants had forwarded their complaint dated 24/3/2014 filed before NSE to SEBI alleging that NSE has failed to consider their complaint that RIL had violated Clause 36 of the Listing Agreement by failing to disclose acquisition of indirect control over NW18 through IMT by executing SUA dated 23/11/2011 and ZOCD Agreement dated 27/2/2012. (p) By the impugned communication dated 9/1/2017, SEBI has rejected the said complaint dated 24/3/2014 forwarded to SEBI on 6/9/2016 by simply recording that IMT was not a subsidiary of RIL and therefore no disclosures were required to be made under Clause 36 of the Listing Agreement. Challenging the said communication, present appeal is filed. 9. With these background facts, we may now consider the plea of the respondents that the issue relating to acquisition of indirect control over NW18 by RIL through IMT has already been decided against the appellants and hence the said plea cannot be agitated again on the principles of res judicata. 10. Arguments advanced by Counsel for respondents that the question as to whether RIL ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were required to be made by RIL under Clause 36 of the Listing Agreement. Sustaining such patently erroneous decision of SEBI would be detrimental to the interests of investors in the securities market and would encourage listed companies to acquire indirect control over other companies through a Trust or some other entity without making disclosures under Clause 36 of the Listing Agreement. 13. Question, however, to be considered herein is, while setting aside the impugned decision dated 9/1/2017, would it be proper to remand the issue for fresh decision especially when, SEBI by its decision dated 9/2/2015 has decided the very same issue and the appellants have not challenged that decision. 14. As noted earlier, while considering the sole issue of open offer price of NW18 raised in Appeal No.55 of 2015 which was determined by IMT, inter alia, on the basis of ZOCD Agreement, this Tribunal on perusal of the clauses contained in the ZOCD Agreement, observed in the order dated 13/4/2016 that SEBI in its decision dated 9/2/2015 has failed to consider the clauses contained in the ZOCD Agreement and, accordingly, in public interest directed SEBI to reconsider the issue relating to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no disclosures were required to be made under Clause 36 of the Listing Agreement. Accordingly, the impugned decision which is patently erroneous and contrary to the spirit of Clause 36 of the Listing Agreement, is quashed and set aside. (c) Argument that by its decision dated 9/2/2015 SEBI has already held that there was no divestment of control over NW18 on execution of ZOCD Agreement is without any merit, because, in the order passed in Appeal No.55 of 2015 on 13/4/2016 this Tribunal has held that SEBI in its decision dated 9/2/2015 has failed to consider the clauses contained in the ZOCD Agreement and accordingly, in public interest, directed SEBI to reconsider the issue afresh. Admittedly, on reconsideration of the issue SEBI has not passed any quasi judicial order but only submitted a report to this Tribunal in the form of an affidavit. In these circumstances, while setting aside the impugned decision dated 9/1/2017, we direct SEBI to decide afresh the question as to whether on execution of ZOCD Agreement dated 27/2/2012 RIL acquired indirect control over NW18 through IMT and failed to disclose the same in violation of Clause 36 of the Listing Agreement. (d) We make it c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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