Securities Appellate Tribunal, Mumbai (SAT): The Coram of Justice Tarun Agarwala (Presiding Officer) and Justice M.T. Joshi (Judicial Member) and Meera Swarup (Technical Member) expressed that,
“A statute after its repeal is completely obliterated as it had never been enacted. The effect is to destroy all inchoate rights and all causes of action that may have arisen under the repealed statute.”
The appellant made an allotment of 76,50,000 equity shares on a preferential basis and applied to the Stock Exchange for listing of the said shares under the ICDR Regulations, 2018. Further, the NSE by the impugned order imposed a fine of Rs 5, 57, 168 on the ground that there was a delay of 23 days in applying for listing of the shares and consequently as per Regulation 108(2) of the ICDR Regulations, 2009 read with SEBI Circular, an issuer was required to make an application to the Exchange for listing of the shares within 20 days from the date of the allotment.
Similarly, the appellant made an allotment of 51,30,000 equity shares on a preferential basis and applied to the Exchange for listing of the said shares. NSE imposed a fine for making delayed applications by 19 days.
Analysis, Law and Decision
Tribunal observed that the 2009 Regulations were repealed on September 11, 2018, on which date the new Regulations of 2018 came into force. However, the Circular issued under the 2009 Regulations was not rescinded/repealed and continued to remain in force by virtue of Section 24 of the General Clauses Act.
“The consequences of repeal of a statue is very drastic.”
Coram stated that leaving aside the cases where proceedings were commenced, prosecuted and brought to finality before the repeal, no proceeding under the repealed statute could be commenced or continued after the repeal.
Further, elaborating the above, the Tribunal added that the repeal of a law takes effect from the date of repeal and the law repealed remains in operation for the period before its repeal without assistance of any saving clause for transactions past and closed.
“Saving clauses are introduced in the Acts/ Regulations which repeal others to safeguard rights which, but for saving, would be lost. Section 6 of the General Clauses Act also plays the role of a savings clause.”
In Tribunals’ opinion, the words “anything done” under the repealed Act will also preserve the continuance of Rules and Bye-Laws or circulars as held in State of Nagaland v. Ratan Singh, AIR 1967 SC 212.
Once a statute is repealed, the consequence is that the subordinate legislation made under the statute ceases to have effect after the repeal of the statute. However, this can be avoided by insertion of a saving clause providing to the contrary in the absence of a savings clause, Section 24 of the General Clauses Act 1897, provides for the continuance of any appointment, notification, order, rule, bye-law etc. made or issued under the repealed statute in so far as it is not inconsistent with the provisions re-enacted.
Additionally, the Tribunal stated that, the continuance of subordinate legislation under Section 24 of the General Clauses Act is subject to the qualification that it is not inconsistent with the provisions reenacted.
Hence, even though the Regulations 2009 had been repealed, the Circular of 2017 remained in force in view of Section 24 of the General Clauses Act and continued to remain in force.
Therefore, the listing application was required to be made before the stock exchange(s) within 20 days from the date of the issuance of the allotment.
Even though the impugned order refers to Regulation 108 of the 2009 Regulations by virtue of Clause 24 of the General Clauses Act would deem to apply to Regulation 104 of the 2018 Regulations.
The matter was concluded on finding no error in the imposition of fine made by the two stock exchanges. [Art Nirman Ltd. v. National Stock Exchange of India Ltd., 2022 SCC OnLine SAT 73, decided on 8-4-2022]
Advocates before the Tribunal:
Ms. Natasha Dhruman Shah, Advocate for Appellants.
Mr. Pradeep Sancheti, Senior Advocate with Mr. Rashid Boatwalla, Mr. Aditya Vyas, Advocates for Respondent No. 1
Mr. Suraj Choudhary, Advocate with Mr. Mihir Mody, Mr. Arnav Misra, Mr. Mayur Jaisingh, Advocates i/b K. Ashar & Co. for Respondent No. 2