SAT Advises SEBI to include Provisions in the Delisting Regulation for Addressing Grievances of Misidentified Promoters

Case Details: Synthetic Marble and Resin Ltd. v. National Stock Exchange of India Ltd. - [2023] 157 taxmann.com 39 (SAT-Mumbai)

Judiciary and Counsel Details

• • Justice Tarun Agarwala, Presiding Officer & Ms Meera Swarup, Technical Member
  • Kunal Kataria, Adv. for the Appellant.
  • Pradeep Sancheti, Ankit Lohia, Shlok Bodas, Sagar Divekar, Abhimanyu Mhapankar, Pulkit Sukhramani, Ms Vidhi Jhawar, Deepank Anand, Aman Kacheria, Aprajita Mahto & Rahul Agarwal for the Respondent.

Facts of the Case

Companies SSTL and ESAL were listed companies. Securities of both companies were compulsorily delisted from NSE on account of non-compliance with the listing agreement. Pursuant to the delisting order directors and promoters of said companies, including appellant, were debarred from assessing the securities market and their demat accounts were freezed.

The appellant requested to defreeze its demat account on the ground that it was not a promoter and was wrongly been shown as a promoter in said companies. However, NSE refused the appellant’s request stating that the annual report of two companies from 2001 to 2005 indicates the appellant as a promoter, and, consequently, it could not help appellant.

Appellant thus, filed instant application seeking direction that stock exchange be directed to instruct depositories to defreeze it’s demat account.

SAT Held

The SAT noted that there were lacunas in existing delisting regulation, 2009, which had been subsequently replaced by delisting regulations of 2021. 2021 regulation also had no provisions for redressal of such grievance.

Therefore, SAT directed SEBI that it should consider adding a provision for resolving such disputes. SEBI was recommended to place some mechanism for redressal of such grievance under its delisting regulations

Further, the appellant was directed to file an application/representation under regulation 43 of 2021 regulations giving details and evidence for de freezing of its demat account and upon receipt of application board would investigate and afford an opportunity of hearing to appellant and after considering all relevant facts and circumstances pass a reasoned order.