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Judgment
F.M. Ibrahim Kalifulla, J.—This Original Side Appeal has been preferred by the Madras Stock Exchange Limited (for short, MSE), as
against the order of the learned single Judge dealing with Company cases in Company Application No. 576 of 202 in Company Petition No. 79 of
2001, dated 20.9.2002.
The first respondent-Transferee Company as part of the Scheme of Amalgamation originally ordered on 20.7.2001, sought for a direction to the
appellant-MSE for compliance of Clause (4)(2) of the Scheme of Amalgamation and consequently grant exemption to the first respondent-
Transferee Company from Rule 19(2)(b) of Securities Contracts (Regulation) Rules, 1957 (for short, ""the Rules"") for listing of its shares in the
appellant-MSE. While seeking for the above direction, the first respondent-Transferee Company also brought to the notice of the learned single
Judge with particular reference to Clauses 8.3.5.1 and 8.3.5.3 of the Securities and Exchange Board of India (for short, SEBI) Guidelines for the
purpose of grant of relaxation of Rule 19(2)(b) of the Rules and stated that such requirement under the above referred to Clauses 8.3.5.1 and
8.3.53 of the SEBI Guidelines was duly complied with.
It is in the light of the above stand taken on behalf of the first respondent-Transferee Company, the learned Judge directed the appellant-MSE
for compliance of Clause 4(2) of the Scheme of Amalgamation and consequently grant exemption to it from Rule 19(2)(b) of the said Rules for the
purpose of listing its shares with the appellant-MSE.
In the course of the submissions, learned Counsel for the appellant-MSE brought to our notice that in accordance with the new Guidelines
governed by Clause 8.3.5.1(iii) issued by the newly impleaded fifth respondent herein, namely SEBI, at least 25% of the paid-up capital of the
unlisted Transferee Company is allotted to the public share-holders of listed Transferor Company, as has been pointed out in the fifth respondent-
SEBT''s communication dated 31.3.2004 addressed to the appellant-MSE. In fact, in the said communication, the appellant-MSE has been
directed to ensure that the first respondent-Transferee Company complied with the above stipulation as contained in Clause 8.3.5.1(iii) of the new
Guidelines issued by the fifth respondent-SEBI. The said communication of the fifth respondent-SEBI also made it clear that subject to compliance
of the said requirement, the relaxation of strict enforcement of Rule 19(2)(b) of the Rules would be carried out.
After the issuance of the communication dated 31.8.2004 by the fifth respondent SEBI, the first respondent-Transferee Company in its letter
dated 21.9.2004 addressed to the appellant-MSE has given an undertaking to the effect that, ""Meanwhile, we undertake to conclude the case
against your exchange under CMP. No. 16571 of 2002 and 1731 of 2004 in OSA. No. 403 of 2002 at the Hon''ble High Court of Chennai, as
per the guidelines of the above referred SEBI letter."" Even subsequently, the said undertaking was reiterated in their communication dated
1.2.2005 in no uncertain terms which reads that, ""We are taking steps to convene our Annual General Meeting shortly to discuss and decide,
among other things, the necessary steps to increase the public holding in our Company to more than 25% either by way of right shares or through
book building process or by Initial Public Offering. We undertake to strictly comply with all the criteria as set out in SEBI''s letter
CFD/DIL/YG/19324/2004 dated 31.08.2004, addressed to you under copy to us.
Having regard to such a categoric undertaking letters issued by the first respondent-Transferee Company, there is no reason as to why the first
respondent-Transferee Company should not be directed to ensure that the compliance reported by it before the learned single Judge which
persuaded the learned Judge to pass the impugned order, should not be directed to be carried out to its full extent without any deviation, by
prescribing a time limit in order to enable the appellant-MSE herein to comply with the direction of the learned single Judge in the order dated
20.9.2002 passed in Company Application No. 576 of 2002 in Company Petition No. 79 of 2001 for listing of the first respondent-Transferee
Company.
With that view, we direct the first respondent-Transferee Company to comply with its undertaking as agreed in the above referred to passages
of the communications referred to therein, within a period of three months from the date of receipt of a copy of this judgment and on such
compliance, the appellant-MSE is directed to comply with the order of the learned single Judge dated 20.9.2002 in Company Application No.
576 of 2002 in Company Petition No. 79 of 2001, within four weeks thereafter.
The Original Side Appeal stands disposed of on the above terms. No costs.