BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI Date of Decision: 3.10.2019 Appeal No.10 of 2019 Santowin Corporation Limited Shop No.5, Concord CHS Ltd., N.S. Road No.10, JVPD Scheme, Mumbai – 400 049. …. Appellant Versus BSE Limited Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai – 400001. … Respondent Ms. Prachi Pandya, Advocate i/b. Corporate Attorneys Appellant. Mr. Tomu Francis, Advocate with Mr. Arka Saha, Advocate i/b. Khaitan & Co. for the Respondent. CORAM: Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member Justice M.T. Joshi, Judicial Member Per : Justice Tarun Agarwala (Oral)

1. The appellant has filed the present appeal against the

order dated 26th June, 2018 by which the Company has been compulsorily delisted in terms of Rule 21 of the Securities Contracts (Regulation) Rules, 1957 (hereinafter referred to as ‘SCRR’) read with Regulation 22(4) of the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (hereinafter referred to as Delisting Regulations).

2. The facts leading to filing of the appeal is, that the

trading in the equity shares of the Company was suspended with effect from 20th April, 2016. Since the trading of the shares was not revoked inspite of granting opportunity, the Respondent issued a show cause notice dated 1st June, 2018 to show cause as to why the equity shares of the Company should not be compulsorily delisted from the platform of the Exchange. Since no reply was received, the respondents fixed 26th June, 2018 for hearing on which date the Managing Director of the Company sought time to make a representation as his Advocate was unable to attend the hearing. Without granting time to the appellant to make adequate representation, the impugned order dated 26th June, 2018 was passed compulsorily delisting the shares of the Company from the platform of the Stock Exchange. The said impugned order was served upon the appellant through a covering letter dated 3rd July, 2018 which runs into eight pages. Surprisingly, the appellant was served with another order of delisting dated 26th June, 2018 running into eleven pages through a covering letter dated 23rd July, 2018. The appellants have annexed both the orders in the present appeal.

3. The learned counsel for the appellant contended that the

show cause notice was never served upon the appellant. Further, the Managing Director of the Company appeared on 26th June, 2018 which was the date fixed for hearing on which date the appellant sought time so that his Advocate could represent the matter. It was contended that no time was granted and the impugned order was passed on the same date. It was contended that the order was passed in violation of the principles of natural justice.

4. It was also contended that two impugned orders of the

same date has been passed, the first one runs into eight pages and the second runs to eleven pages. It was contended that it was not possible that the delisting committee passed two sets of orders on the same date.

5. The respondent contended that adequate notice was

given and ample opportunity was given to the appellant to get the suspension revoked. Since no reply was given to the show cause notice the request for adjournment was refused and, therefore, there was no violation of the principles of natural justice. In so far as the two orders being passed on the same date it was contended that an incorrect order dated 26th June, 2018 was sent by the covering letter dated 3rd July, 2018 and when the error was realized the correct order dated 26th June, 2018 was sent on 23rd July, 2018.

6. Having heard the learned counsel for the parties, we

find that the show cause notice was issued on 1st June, 2018. The first date of hearing before the delisting committee was fixed on 26th June, 2018. The request for adjournment was only made for 26th June, 2018. The denial on the part of the delisting committee in order to enable the appellant to be represented by an Advocate is against the settled principles of natural justice. Further, we find that it was the first date of hearing and there is no allegation that undue adjournment was sought by the appellant.

7. We also find that proviso to Section 21(A) of the SCRA

Act provides as under: “ Provided that the securities of a company shall not be delisted unless the company concerned has been given a reasonable opportunity of being heard.”

8. From the aforesaid, it is clear that adequate and

reasonable opportunity of being heard was not provided to the appellant. The impugned order is thus violative of the principles of natural justice and cannot be sustained.

9. There is another aspect which is very serious and has

far reaching consequences which needs to be addressed, namely, two orders of the same date has been passed by the delisting committee. It was contended that the first order dated 26thJune, 2018 that was forwarded to the appellant vide covering letter dated 3rd July, 2018 was an erroneous order. There is nothing in the reply which indicates that the first order dated 26th June, 2018 that was forwarded to the appellant vide covering letter dated 3rd July, 2018 was recalled and a fresh order dated 26th June, 2018 was passed on the same date. From a comparison of the two orders we find that certain more facts have been inserted in the second order of 26th June, 2018 primarily to cover the lacuna that was glaring and apparent in the first order dated 26th June,

2018. We are of the opinion that once a signed order dated

26th June, 2018 was sent by the delisting committee a second order of the same date could not have been passed without recalling the earlier order and without issuing notice to the parties which apparently in the instant case has not been done. The passing of the second order dated 26th June, 2018 incorporating further facts amounts to interpolation in the order.

10. For the reasons stated aforesaid, the impugned order of

the delisting committee dated 26th June, 2018 as forwarded to the appellant by the letter dated 3rd July, 2018 and 23rd July, 2018 are quashed on payment of cost of Rs. 1 lakh. The matter is remitted to the delisting committee to decide the matter afresh after granting an opportunity of hearing to the appellant. The respondent will supply a copy of the show cause notice to the appellant and fix a date of hearing. It is made clear that the matter will not be adjourned at the instance of the appellant on the date fixed by the delisting committee. The amount of cost which we have imposed shall not be paid by the respondent to the appellant directly but would be adjusted, if any, in the ultimate order that would be passed by the delisting committee. Sd/- Justice Tarun Agarwala Presiding Officer Sd/- Dr. C. K. G. Nair Member Sd/- Justice M.T. Joshi Judicial Member 3.10.2019 Prepared and compared by RHN