Case: Kalpana Bhandari &amp; Others Vs. Securities &amp; Exchange Board of India &amp; Others

the near future. Be that as it may, it appears to us that the grievances raised by the petitioners in the writ petition though are not within the powers of SEBI can be adequately looked into by the Central Government. 11.Moreover, the primal grievance of the petitioners, as we see, is that Sesa Goa must offer the petitioners price not less than Rs.57/- per share for acquiring the shares of Sesa Industries from the petitioners and other investors. Some of the shareholders similarly situated with that of petitioners filed a writ petition being Writ Petition No. 1280 of 1999 before this court earlier. Inter alia, the prayers made therein were: "(a) ..............(b) that this Honble Court may be pleased to issue a writ of mandamus or any other appropriate writ order or direction in the nature of mandamus: (i) immediately calling upon Respondent No.1 and Respondent No.2 to refund the said moneys of the Petitioner as invested by the Petitioner in the said shares of Respondent No. 1, with interest thereon, by buying back the said shares of the Petitioner at a rate so decided by this Honble Court after taking into consideration the original issue price of Respondent No.1 and the interest loss caused to the Petitioner for holding on to the shares of Respondent No.1 ever since;(ii)...............(iii) ...............(iv) directing Respondent No.3 to initiate necessary action against Respondent No.1 and Respondent No.2 for committing gross violations of the provisions of SEBI Act, 1992 and Companies Act, 1956 and for defrauding and misleading the members of the investing public." 12.The said writ petition came to be dismissed by the Division Bench of this court on 17th June, 1999 by the following order : "CORAM: M. B. GHODESWAR & B. N. SRIKRISHNA, JJ. DATE: 17TH JUNE, 1999P.C. :"1. The crux of the case sought to be made out by the Petitioner is that the 2nd Respondent Company (whose shares are already listed on the Stock Exchange) had privately issued circulars to its shareholders regarding the issue of shares of the 1st Respondent-Company with a promise that the shares of the 1st Respondent would be listed on the Stock Exchange at Mumbai after about 12 to 18 months. This contingency failed to take place. The Petitioner made complaints to the 3rd Respondent, The Securities and Exchange Board of India (SEBI). The SEBI has ignored the complaints. The Petitioner seeks a writ of mandamus against the SEBI to carry out its duties. 2. Mr. Samdani, learned Counsel appearing on behalf of the Petitioner, has taken us to the provisions of the Securities and Exchange Board of India Act, 1992 (for short, the "SEBI Act") and the regulations made therein. Even assuming that there is a breach of the promise to list the securities of the 1st Respondent on the Mumbai Stock Exchange, we are not prima facie satisfied that it would, by itself, amount to a dereliction of a statutory duty of the SEBI as a watchdog of investors under the SEBI Act. 3. In our view, the Petitioner may have his remedy either under the Contract Act or under the provisions of the Companies Act, but we see no failure in discharge any statutory duties on the part of the SEBI. No relief can be granted in exercise of our powers under Article 226 of the Constitution of India. Hence, rejected." 13.It is true that at the time the Writ Petition No.1280 of 1999 was filed the letter of offer dated 5th June, 2003 issued by Sesa Goa and now under challenge before us had not seen the light of the day and obviously, the said letter was not under challenge but the effective prayer for buy back of shares of Sesa Industries by Sesa Goa at a reasonable rate is identical in both matters. For the reasons on which the earlier Writ Petitions No.1280 of 1990 came to be rejected, justify rejection of the present writ petition as well. 14.In the light of the aforesaid discussion, we do not deem it necessary to go into the diverse aspects raised by the learned counsel for the petitioners regarding the lifting of the corporate veil, the allegations of insider trade practices, fraudulent and unfair action of Sesa Goa and Sesa Industries. Suffice it to say, however, that letter dated 5th June, 2003 is voluntary letter of offer made by Sesa Goa. It is for the petitioners to accept the same or reject outright. There is no compulsion on the part of the offerer upon the petitioners to accept the said offer. The offer has been made inter alia for the reasons: "(e) The Company has been unable to list its shares by reasons of the difficulties mentioned above and also due to the weak state of the capital market and also world wide industrial recession, particularly in the steel industry. The company had also taken the opinion of a leading merchant banker on the disability of listing its shares after taking into consideration various relevant factors in the context of the original proposal. Furthermore it was advised that it would not be practical to successfully make a new issue or divest part of the promoter holding to facilitate listing of the Companys shares in the larger interest of existing shareholders. Hence the shares remain unlisted till date. (g) The Company is of the view that the recovery of the capital market on a large scale basis may take some more time. Listing of the Shares of the Company would have provided an exit route to the shareholders, but unfortunately it has not been possible so far to do so. Therefore, with a view to provide an exit opportunity to the shareholders, SIL has requested the Acquirer to make this offer and the Acquirer has agreed to the same." If the petitioners feel that the said offer is not for their benefit, they may not accept the same and not follow the exit route suggested by the offerer. Ultimately it is pure commercial dealing.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Though the learned counsel for petitioner worked very hard, to an extent unnecessary, to persuade us to entertain the writ petition, however, we hardly found the case fit for invocation of extra ordinary jurisdiction for the reasons which we indicate hereinafter. First, there is substance in the submission of SEBI that as Sesa Industries is not listed company nor have they made any application to any recognised Stock Exchange manifesting intention of getting their securities listed and, therefore, they have no jurisdiction in thewould be, thus, seen that the provisions contained in various sections as noted in Sectionso far as they relate to issue and transfer of securities andof dividend SEBI has powers (i) in case of listed public companies and (ii) in case of those public companies which intend to get their securities listed on any recognized stock exchange in India. In other words SEBI does not have power in relation to the issue and transfer of securities andof dividend under the various provisions referred to in sectionfor the companies other than listed public companies and the public companies which intend to get their securities listed on any recognised stock exchange in India. Such power is vested in the Central Government. Sesa Industries is admittedly not a listed company on any recognised Stock Exchange. The question is whether SEBI erred in its opinion that Sesa Industries is not even covered under Section 55A(b) of Companies Act. It is the case of SEBI that Sesa Industries intention to get its securities listed is not manifested as it has not made any application to recognised stock exchange under Rule 19 of Contract (Regulation) Rules, 1957. The approach of SEBI cannot be faulted. Even the learned counsel for the petitioners did not dispute that the criteria applied by SEBI is not irrelevant. However, the learned counsel for the petitioners submitted that every year the Chairman in his speech in the annual general meeting, expressed companys intention to have their shares listed at the recognised stock exchanges. The intention is always a question of fact and unless the opinion of regulatory body on this aspect is palpably perverse and grossly erroneous, it would not be proper for this court in extraordinary jurisdiction to interfere with such opinion of regulatory body. Moreover not a single resolution of the Board of Directors has been placed on record by the petitioners to indicate that the Board of Sesa Industries took decision to have their securities listed at the recognised stock exchange/s. Besides that the yardstick applied by SEBI that by making an application to recognised Stock Exchange, the intention of the company to have its securities listed at recognised stock exchange is manifested cannot be said to be unreasonable. In the circumstances SEBIs stand that it has no jurisdiction in the matter cannot be said to be withoutif Sesa Industries is not a listed public company nor is held to have intended to get their securities listed on any recognised stock exchange in India, the various provisions referred to in section 55A relating to issue of transfer of securities andof dividend in relation to the said company is clearly administered by the Central Government and the petitioners can always apply to the Central Government for the various grievances raised before us. Not only that, section 237 of the Companies Act provides for investigation in the companys affairs by the Central Government in the manner provideda matter of fact, the petitioners themselves, have, made an application to the Central Government requesting them to invoke their powers under the Companies Act for carrying out special audit and investigation into the affairs of Sesa Goa and Sesa Industries. Surprisingly and for the reasons best known, the petitioners have not impleaded Central Government as party respondent in the present writ petition, presumably because the petitioners feel that the Central Government would act on the application made by them in the near future. Be that as it may, it appears to us that the grievances raised by the petitioners in the writ petition though are not within the powers of SEBI can be adequately looked into by the Centralis true that at the time the Writ Petition No.1280 of 1999 was filed the letter of offer dated 5th June, 2003 issued by Sesa Goa and now under challenge before us had not seen the light of the day and obviously, the said letter was not under challenge but the effective prayer for buy back of shares of Sesa Industries by Sesa Goa at a reasonable rate is identical in both matters. For the reasons on which the earlier Writ Petitions No.1280 of 1990 came to be rejected, justify rejection of the present writ petition asthe light of the aforesaid discussion, we do not deem it necessary to go into the diverse aspects raised by the learned counsel for the petitioners regarding the lifting of the corporate veil, the allegations of insider trade practices, fraudulent and unfair action of Sesa Goa and Sesa Industries. Suffice it to say, however, that letter dated 5th June, 2003 is voluntary letter of offer made by Sesa Goa. It is for the petitioners to accept the same or reject outright. There is no compulsion on the part of the offerer upon the petitioners to accept the said offer. The offer has been made inter alia for theThe Company has been unable to list its shares by reasons of the difficulties mentioned above and also due to the weak state of the capital market and also world wide industrial recession, particularly in the steel industry. The company had also taken the opinion of a leading merchant banker on the disability of listing its shares after taking into consideration various relevant factors in the context of the original proposal. Furthermore it was advised that it would not be practical to successfully make a new issue or divest part of the promoter holding to facilitate listing of the Companys shares in the larger interest of existing shareholders. Hence the shares remain unlisted tillThe Company is of the view that the recovery of the capital market on a large scale basis may take some more time. Listing of the Shares of the Company would have provided an exit route to the shareholders, but unfortunately it has not been possible so far to do so. Therefore, with a view to provide an exit opportunity to the shareholders, SIL has requested the Acquirer to make this offer and the Acquirer has agreed to thethe petitioners feel that the said offer is not for their benefit, they may not accept the same and not follow the exit route suggested by the offerer. Ultimately it is pure commercial dealing.