Case BriefsTribunals/Commissions/Regulatory Bodies

Securities and Exchange Board of India (SEBI): The Board comprising G. Mahalingam as Whole Time Member, granted Wipro exemption from the prohibition on the public announcement of buy-back during the pendency of an amalgamation scheme.

Wipro approved a scheme of amalgamation of four of its subsidiaries with itself and the said scheme was pending sanction of the National Company Law Tribunal.

Regulation 24(ii) of the Securities and Exchange Board of India (Buy–back of Securities) Regulations, 2018 prohibits public announcement of buy-back during the pendency of any scheme of amalgamation. The instant application was filed by Wipro seeking exemption/relaxation from strict enforcement of the said requirement pleading that in view of the backlog of cases at NCLT, it could not anticipate the time for completion of the merger.

In its application, Wipro submitted that relaxation from the requirement of Regulation 24(ii) would enable it to place a proposal for buy–back of equity shares for the consideration of the Board of Directors of the company; and such proposed buy–back inter would be in the interests of investors as shareholders of the company would benefit from return of surplus cash through the buy–back program.

The Board noted that vide Circular No. CFD/DIL3/CIR/2017/21 dated 10-03-2017 and Regulation 37(6) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, SEBI had exempted schemes involving the merger of a wholly owned subsidiary with holding company from various compliances. Further, Regulation 28 of the Buy–back Regulations empowers SEBI to relax strict enforcement of any requirement of the said Regulations, in the interest of investors and the securities market, on the satisfaction that the requirement is procedural in nature or if it might cause undue hardship to investors.

In view of the above, Wipro’s application was allowed.[Buy-back of securities in Wipro Ltd., In re, 2019 SCC OnLine SEBI 1, Order dated 15-02-2019]

Supreme Court

Supreme Court: Considering various provisions regarding the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) formed under the Companies Act, 2013, the Constitution Bench comprising of H.L. Dattu, CJ, Dr. A.K. Sikri, Arun Mishra, R.F. Nariman and Amitava Roy, JJ held the provisions on qualifications for appointment of a technical member and also the provisions relating to the constitution of the Selection Committee to be invalid, while establishing the validity of the NCLT and NCLAT.

The present case which was represented by A.P. Datar was in reference to the striking down of certain provisions of Companies Act, 2013 which were same as that of the Companies Act, 1956, with particular emphasis on Chapter XXVII i.e. Sections 408, 409, 411(3), 412, 413, 425, 431 and 434, which were enacted without incorporating the amendments suggested by this Court in Union of India v. R. Gandhi, (2010) 11 SCC 1.

The Court while reiterating the 2010 judgment clearly upheld the validity of the constitution of the NCLT and the NCLAT. While striking down the provisions dealing with qualifications for  appointment of a technical member, the Court stated that a Technical Member is supposed to possess experience in the field to which the Tribunal relates to, and since members of Indian Company Law Service are not experts of their field, they are not qualified to be technical members. The Court also held that the number of the members of the Selection Committee should be reduced from five to four and a casting vote should be provided to the Chairperson to remove the predominance of the bureaucracy. Madras Bar Association v Union of India, 2015 SCC OnLine SC 484, decided on 14.05.2015.