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The Delhi High Court has dismissed a public interest litigation (PIL) challenging the regulatory treatment of investors in companies listed on regional stock exchanges (RSE).
Referring to a decision on a similar petition, rejected last year on the grounds, that shareholders are not socially or economically backward people who cannot access justice by themselves, the court said this was not an appropriate instrument for such cases.
In a judgment dated December 17, the bench of Chief Justice G Rohini and Rajiv Sahai Endlaw said, “We also feel that if any of the shareholders have any grievance, on their approaching Sebi (Securities and Exchange Board of India) with the grievance against any company, requisite action will be taken.”
The petitioner, Midas Touch Investors Association, had objected to the process laid down by Sebi for de-recognition of RSEs and de-listing of companies exclusively listed on RSEs. The association had sought that nearly 5,150 companies listed on these bourses should be de-listed individually and a framework for compensating shareholders of such companies who have suffered a “huge loss” due to de-recognition of RSEs.
The association claimed that the order would hit 10 million shareholders. “The order is likely to reduce Rs 1.5 lakh crore of small shareholders’ wealth into junk. This has been invested by 10 million shareholders in 5,152 companies listed exclusively at 22 RSEs, whose licence to carry on business as a stock exchange has either been cancelled or is in the process of being withdrawn by Sebi,” Midas Touch said in an e-mailed statement.
The judgment noted that although Midas Touch claimed to represent shareholders, it had not received any complaint from them. “Being of the view that considering the subject matter, the petition is not required to be entertained as a PIL, we on the very first date when the petition came up before us heard the counsel for the petitioner as well as the counsels for the respondents appearing on advance notice and reserved judgment,” the judges said in the order.
During arguments, Sebi’s counsel had referred to the court’s July 2014 order in a writ petition filed by commercial pilot Atul Agarwal on the RSE issue, where it had said that a sufficient case of “public interest” had not been laid out. The court said, “It cannot be said that the reliefs claimed in this petition are any different from that claimed in Atul Agarwal supra..... We therefore do not see any reason to take a different view from that taken by us in Atul Agarwal and dismiss this petition.”
