9911796707
TMI Blog2025 (2) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... aint against the Company. 1.1. While so, the Securities and Exchange Board of India ('SEBI', in short) promulgated Ext.P1 circular to de-recognise stock exchanges in India with a turnover of less than Rs. 1000/- crore and allowing Exclusively Listed Companies ('ELCs') to get listed in the nationwide stock exchanges on having a minimum paid-up capital of Rs. 7/- crore. 1.2. Pursuant to Ext.P1 circular, the National Stock Exchange ('NSEs') issued Ext. P2 criteria for listing at NSE, which was impractical for small companies. Subsequently, by Ext.P3 circular, the SEBI ordered that stock exchanges like MSE would be de-recognised and ELCs like the Company would be seized to be a listed company and be moved to the Dissemination Board (DB, for brevity) of NSE. Accordingly, the Company was placed on the DB of the NSE. The Company's shareholders were given an opportunity to buy and sell shares through the DB. 1.3. Then, SEBI issued Ext.P5 circular dated 10.10.2016 to the companies placed on the DB to either get themselves listed in an NSE or provide an exit to the shareholders not falling under the promoter category, failing which penal consequences will follow. The Company submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was reviewed, and the Exit Circular dated 30.5.2012 was passed, directing those Stock Exchanges who were unable to achieve an annual turnover of Rs. 1000/- crore to exit within two years. The various High Courts have upheld the Exit Circular. The Exit Circular laid down guidelines for the exit of the derecognised/ non-operational stock exchanges and the ELCs and gave the option to the ELCs to get listed on the nationwide stock exchanges, failing which they would be moved to the DB. The DB was introduced to benefit the investors of ELCs and to provide an exit opportunity to the shareholders at a fair value. The SEBI published Circulars from time to time. In the Circular dated 10.10.2016, it was clarified that the ELCs have to either raise their capital for listing on NSEs or provide an exit to the investors. Similarly, the period to comply with the directives was also extended. Finally, by Ext.R2(b) Circular dated 1.8.2017, it was made clear that failure to provide an exit option to public shareholders, the ELCs, its directors and promoters would be ineligible to access security markets to raise capital. 2.1. In the case at hand, the Company had submitted a representation to SEBI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any useful purpose. Therefore, the direction to consider Ext.P35 representation is not maintainable. The impugned letters issued by SEBI were passed after providing sufficient opportunity to the Company. There is no tenable reason to condone the inordinate delay. The High Court of Delhi in Kusum Lata Singhal v. Securities and Exchange Board of India and another [W.P(C) No.281/2020] has upheld the circulars issued by SEBI. The Company has failed to get its shares listed on any nationwide stock exchange within the stipulated period. Thus, NSE has taken action against the directors/promoters. The action of the SEBI is in accordance with the law. The Company has an alternative remedy of appeal before the Securities Appellate Tribunal under Section 15T of the Securities and Exchange Board of India Act, 1992 ( in short, Act). This Court may not entertain the writ petition. Hence, the writ petition may be dismissed. 3. The Company has filed a reply affidavit stating that there is no legal impediment in SEBI granting an extension to complete the listing process. The Company has explained its difficulties in completing the listing. There is no statutory period to complete the process. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thereafter, the Company sought permission from SEBI to list with the 5th respondent. 9. SEBI then issued Ext.P17 letter dated 7.9.2022 to the Company, directing them to abide by paragraph 4.d of the SEBI Circular dated 10.10.2016 (Ext.P5) within 75 days from the date of the letter. Paragraphs 4 and 5 of Ext.P5 reads as follows: "4. SEBI has been receiving representations seeking clarifications on raising of further capital and the process of exit of ELCs from the DB. Therefore, SEBI, in the interest of the investors of such ELCs, clarifies as follows: a. The respective nationwide stock exchanges hosting the ELC on its DB would here in after be referred as 'designated stock exchange'. b. The ELCs on the DB would be required to exercise one of the two options as mentioned in Para 4.c or 4.d of the circular. c. Raising capital for listing on Nationwide S tock Exchanges. In order to facilitate listing on nationwide stock exchanges, the ELCs on the DB shall be allowed to raise capital for meeting the listing requirements through preferential allotment route in terms of the provisions under the Issue of Capital and Disclosure Requirements Regulations, 2009 (ICDR). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fforts in terms of the Ext.P5 circular to provide an exit option to shareholders before removing the ELC from the DB. Therefore, the Company was granted 75 days from 7.9.2022 to complete the process. 11. The Company's case is that, in the meantime, they had contacted a Banker to interact with the 5th respondent to complete the listing process as reflected in Ext.P19 communication. While the process was in progress, NSE, by Ext.P22 e-mail, granted the Company one month, i.e., on or before 30.9.2023, to complete the listing process; failing which, penal action would be taken. The Company sought time till 31.12.2023. Then, NSE directed the Company to get an extension directly from SEBI. However, by Ext.P26 letter, SEBI rejected the request. The said decision was reiterated in Ext.P34 order. 12. On analysing the background facts, dehors all the earlier circulars and correspondence, NSE, by Ext.P22 letter dated 01.09.2023, had granted the Company time till 30.09.2023 to complete the listing process with the 5th respondent. It was only when the Company sought time till 31.12.2023, that NSE relegated the Company to SEBI to seek for an extension, who in turn by Ext.P26 rejected the reque ..... X X X X Extracts X X X X X X X X Extracts X X X X
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