The Securities Appellate Tribunal ( SAT ) today stayed the SEBI’s order against journalist Prannoy Roy and his wife Radhika Roy from continuing as directors of New Delhi Television Ltd (NDTV).
On June 14th, 2019 order, SEBI has barred Prannoy Roy and his wife Radhika Roy from holding any directorship in New Delhi Television Ltd. (NDTV) for a period of two years.
The order is passed in a 2017 case filed by Quantum Securities Ltd, an NDTV shareholder, alleging that RRPR Holdings, Prannoy Roy and Radhika Roy didn’t disclose information about loan agreements entered into by them with Vishvapradhan Commercial Private Ltd (VCPL) and ICICI.
While the SEBI counsel argued that the orders were uploaded on the regulator’s website on June 14, the tribunal observed that SEBI’s duties do not end by just uploading of the orders.
The SAT bench comprising of Presiding Officer Justice Tarun Agarwala, Member Dr. C.K.G Nair and Judicial Member Justice M.T Joshi observed that, “we are of the opinion that whether the loan agreement was a sham transaction or not and whether the loan agreement, in fact, wrested control of NDTV to VCPL is a question which is required to be considered in detail”.
The bench also said that “Whether call option gives an unfettered right of controlling the company without exercising the right of call option is also required to be considered. Upon the interpretation of the loan agreement at this stage, we are of the opinion that these agreements have remained in existence for the past 10 years. The loan agreements were executed in the year 2009 and 2010. Whether there was a violation of the SEBI laws including the PFUTP Regulations are all required to be considered. At this stage, prime-facie, we are of the opinion that a listed company which is managed by the appellants holding more than 61% of the total shares cannot remain headless”.
The impugned order has been passed restraining the appellants, Dr Prannoy Roy and Ms. Radhika Roy from occupying a position as a Director or in any Key Managerial personnel in NDTV for a period of two years. Such orders prima facie would not be in the interest of the shareholders of the NDTV or for that matter the investors at this stage.
While granting the stay for three months, “We would also like to point out that it is essential for SEBI to supply a copy of the impugned order to the aggrieved party, namely, the appellants. An adjudication proceeding had been initiated by SEBI by the issuance of the show cause notice. The appellants thus have the first right to be supplied a copy of the impugned order from SEBI. It is the onerous duty of SEBI to supply a copy of the impugned order to them so that the directions are made effective”.
The bench also criticised the SEBI and said that “the whole world knows about the impugned order except the appellants. Till date, they have not been supplied a copy of the impugned order in spite of the oral direction given by this Tribunal yesterday. We are constrained to observe that the system undertaken by SEBI needs a revisit. Their liability and their onerous duty do not end the moment they upload the order on their website. The first duty is to supply a copy of the impugned order to the aggrieved party which in the instant case has not been done till date. We accordingly, direct the appellants to apply for a certified copy of the impugned order. If such an application is made, SEBI will provide a certified copy of the impugned order within five working days”.
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