Securities Appellate Tribunal: The Bench of Justice Tarun Agarwala (Presiding Officer) and Justice M. T. Joshi (Judicial Member), reserved its order on the controversial issue of the dubious role of the Pradip Kumar Khaitan (respondent 4) as an independent director in Dhunseri Ventures Ltd.
The Dhunseri Ventures Ltd. is a Company incorporated at Kolkata under the laws of India holding CIN No. L15492WB1916PLC002697 and is listed on the BSE (BSE Code 523736) and the NSE (NSE Symbol COMPANY). The Appellant, one of the supportive shareholders of the company for over a period of 20 years, had filed a complaint before the SEBI pointing out change in designation of respondent 4 from being a Non-Independent Director (Year 2010 to 2014) of the company to an Independent Director (22-05-2014 to 03-07-2015) and thereafter, being designated as a Non- Independent Director again (03-07-2015 to 17-12-2019) despite having familial relations with the Promoters of the company.
The Appellant had highlighted that despite the relationship which could never qualify respondent 4 as independent and despite being non-independent’ director prior to being designated as an independent director, he had acted as an Independent Director and actively participated in functioning of the company for a period before reverting to the Non- Independent Status and finally resigning from the designation of Non-Independent Director in 2019. The Appellant had also pointed out that apart from being non-independent on account of the relationship with the Promoters, respondent 4 also had material pecuniary relationship with the company which further established his non-independence and raised serious doubts on his functioning as an independent director.
The appellant alleged that in spite of detailed representations from the Appellant before SEBI and BSE, a computer-generated Order was passed by the SEBI disposing his complaint on the SCORES platform in a cryptic, unreasoned and mechanical manner. While the Order acknowledged that the information furnished by the Appellant pointed to allegation of violation of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations) it simply refused to register any formal complaint against the company without assigning any reason for the same in complete violation of the principles of natural justice apart from being self-contradictory.
The appellant contended that SEBI had closed his detailed complaint in a perfunctory manner by treating the furnished information as a mere “market Intelligence” and at the same time also stating that appellant would not be able to ascertain the status of information furnished by it before SEBI though the information would be kept confidential and analysed by it (SEBI). The order further stated that the existence of any examination of the information furnished by the appellant would neither be confirmed nor denied by it (SEBI).
Submissions before SAT
The Appellant had challenged the order dated 11-11-2020, communicated by SEBI to the appellant with respect to Complaint bearing No. SEBIE/MH20/0006790/1 (BSE reference No. 20200700003) filed by the Appellant on 07-07-2020 pointing out inter alia the non independent and dubious role of respondent 4 in the company and consequential violation of provisions of the Listing Agreement, Companies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations) and interest of the shareholders.
The appellant argued that the Impugned Order was illegal and had been passed without any application of judicial mind as it did not take into consideration that respondent 4 had been appointed as a non-independent director, despite having familial relations with the Promoters of the company. It was contended by the appellant that the promoter group of the company is the Dhanuka Family in Kolkata. Respondent 5 (C. K. Dhanuka) is the Non-Independent Promoter chairman of the company while respondent 4 was one of the Directors till the date of his resignation on 17-12-2019.
The fundamental question raised by the appellant was to establish the role of Independent Directors as representatives of minority shareholders’ interests vis-à-vis the promoters. The appellant alleged that this was a peculiar case where respondent 4 had tried to outsmart the regulator, SEBI, and impersonated as an “Independent” director in the company. It was further contended by the appellant that there was an overreliance on the submissions made by the company and a complete lack of independent judgement by the SEBI; as it (SEBI) claimed that Mrs. Tarulika Khaitan (daughter of respondent 5) as not related to respondent 4 by virtue of being his “son’s wife” since respondent 4 was her “father-in-law” and reciprocal relationship is not prescribed under SEBI.
Contending that such a dichotomy would defeat the principles of natural justice, especially when Clause 49 reads, “Independent director shall mean a non-executive director of the company who…” clearly display that no relationship should exist from the proposed independent director’s point of view, the appellant argued that respondent 4 was clearly a “relative” in as much as “Son’s wife” is included in the List of relatives in terms of Clause 77 of Section 2 of Companies Act, 2013 which disqualified him as an Independent Director in terms of Clause 49 – I. (A) (iii) (b) of the Listing Agreement. Therefore, respondent 4 could never have been lawfully appointed as an “Independent Director” in company and that he kept juggling between “Independent” and “Non-Independent” directorships in other listed companies. Hence, the appellant urged the Tribunal to take corrective action and bar respondent 4 from acting as a “Director” in any listed company for the protection of minority and public shareholders.
Having heard the appellant in person and noticing that respondent 4 had not made appearance of filed any reply; the tribunal had reserved the order.[Arvind Parasramka v. SEBI, Appeal No. 70 of 2021, order dated 10-05-2021]
Kamini Sharma, Editorial Assistant has reported this brief.
Appearance before the Tribunal:
For the Appellant: Mr. Keshav Parasramka, Appellant in Person.
For SEBI: Adv. Vishal Kanade with Adv. Anubhav Ghosh and Adv. Ravishekhar Pandey
For BSE: Adv. Abhiraj Arora with Adv. Karthik Narayan and Adv. Rashi Dalmia
For Dhunseri Ventures Ltd.: Adv. Mainak Bose with Adv. Nikhil Jhunjhunwala