[2024] 12 S.C.R. 1117 : 2024 INSC 992 Jyoti Limited v. BSE Limited & Anr (Civil Appeal No. 4707 of 2022) 10 December 2024 [Pankaj Mithal and Sandeep Mehta, JJ.] Issue for Consideration Bombay Stock Exchange (BSE) rejected the application of the appellant for the listing of certain equity shares to the BSE holding that the appellant had not taken in principle approval from the Stock Exchange and it also did not take the approval of the shareholders for the allotment of the shares to the Asset Reconstruction Private Limited (RARE). Order upheld and confirmed by the Securities Appellate Tribunal. Headnotes† Securitisation and Reconstruction of Financial Assets and Enforcement of Security Act, 2002 – s.9(1) – Companies Act, 2013 – s.62(1)(c) – SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 – Regulation 28:

Held: s.9, SARFAESI Act authorizes RARE to convert portion of the debt into shares of the borrower company but such authority is subject to s.62, Companies Act, 2013 which in turn requires a resolution of the shareholders of the company – However, when such a proposal is not by the appellant company, the approval of the shareholders may not be necessary – On facts, the proposal for increasing the subscribed capital of the company by converting part of the debt into equity shares was initiated by the appellant company itself and not actually by RARE – Therefore, the proposal was that of the company only – Accordingly, as contemplated by s.62(1)(c), Companies Act, 2013, the approval of the shareholders would be mandatory before the shares are accepted for listing on the BSE – Furthermore, the approval of the BSE is necessary in view of Regulation 28 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 – No error or illegality committed either by the BSE or the Securities Appellate Tribunal – Statutory appeal u/s.22 F, Securities Contracts (Regulation) Act, 1956 is devoid of merit. [Paras 5, 7-9] 1118 [2024] 12 S.C.R. Supreme Court Reports List of Acts Securitisation and Reconstruction of Financial Assets and Enforcement of Security Act, 2002; Companies Act, 2013; SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015; Securities Contracts (Regulation) Act, 1956. List of Keywords

Bombay Stock Exchange (BSE); Securities Appellate Tribunal; Listing of equity shares; In principle approval from the Stock Exchange; Approval of the shareholders for the allotment of the shares to the Asset Reconstruction Private Limited (RARE); SARFAESI Act; Convert debt into equity shares; Resolution of the Board of Directors; Approval of the shareholders mandatory; Subscribed capital; Resolution of the shareholders of the company; Special resolution; Proposal for increasing the subscribed capital of the company; Listing of the equity shares at the Stock Exchange/ BSE; Approval of the BSE; Statutory appeal. Case Arising From CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4707 of 2022 From the Judgment and Order dated 21.12.2021 of the Securities Appellate Tribunal, Mumbai in Appeal No. 224 of 2019 Appearances for Parties Lakshmeesh S. Kamath, Mrs. Samriti Ahuja, Ms. Aditi Prakash, Advs. for the Appellant. Pratap Venugopal, Sr. Adv., Ms. Surekha Raman, Amarjit Singh Bedi, Shreyash Kumar, Yashwant Sanjenbam, Imilikaba Jamir, M/s. K J John And Co, Rahul Gupta, Advs. for the Respondents. Judgment / Order of the Supreme Court Order 1. Heard learned counsel for the parties. 2. Under challenge in this statutory appeal is the judgment and order dated 21.12.2021 passed by the Securities Appellate Tribunal, Mumbai [2024] 12 S.C.R. 1119 Jyoti Limited v. BSE Limited & Anr in Appeal No. 224 of 2019 titled as “Jyoti Limited Vs. BSE Limited and Anr.”.

3. The appellant-Jyoti Limited applied for listing of certain equity shares to the Bombay Stock Exchange1 but the application to that effect was not accepted for the reason that the appellant had not taken in principle approval from the Stock Exchange and that the appellant had not even taken the approval of the shareholders for the allotment of the shares to the Asset Reconstruction Private Limited2. The above order of the BSE rejecting the application of the appellant for the listing of shares was upheld and confirmed by the Securities Appellate Tribunal by the order impugned.

4. In assailing the above orders, the submission of learned counsel appearing for the appellant is that Section 9(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Act, 20023 permits the RARE to take measures such as conversion of any portion of debt into shares of the borrower company i.e., the appellant herein and once such power is exercised, the shares have to be listed on the Stock Exchange. Further submission of the learned counsel for the appellant is that it is only where the company, i.e., the appellant herein, proposes to increase the subscribed capital, the consent/ the resolution/approval of the shareholders is required, as mandated by Section 62(1)(c) of the Companies Act, 2013. Since in the case at hand the appellant company had not proposed to increase the subscribed capital rather it is the RARE that has done it, no such approval of the shareholders is necessary. 5. Section 9 of the SARFAESI Act authorizes RARE to convert portion of the debt into shares of the borrower company but such authority is subject to Section 62 of the Companies Act, 2013 which in turn requires a resolution of the shareholders of the company. However, when such a proposal is not by the appellant company, the approval of the shareholders may not be necessary. 6. Notwithstanding the above, in the case at hand, it is evident that the appellant company had entered into discussion with RARE 1 BSE for short 2 RARE for short

3 SARFAESI Act for short 1120 [2024] 12 S.C.R. Supreme Court Reports and it was agreed upon between the parties to convert part of its outstanding debts of Rs.32.80 Crore into equity shares. Accordingly, a resolution of the Board of Directors of the appellant company was passed to the above effect on 02.05.2018 but such an action was never endorsed by the shareholders of the company. Thereafter, the appellant company itself filed an application before the BSE on 15.05.2018 for listing of the shares i.e. 59,63,636 equity shares allotted to the RARE.

7. Having considered the relevant provisions of the law and the submissions advanced by the learned counsel for the appellant, we find that the conversion of the debt into additional shares had taken place with the agreement of the appellant company and RARE, and it is on the basis of such an agreement between the parties that a resolution was passed on 02.05.2018 by the Board of Directors of the appellant company accepting the proposal to convert the debt into shares and to allot them in favor of RARE, thus, resulting in increase of the equity capital of the appellant company. Even the application for listing of the aforesaid additional shares was made by the appellant company to the BSE meaning thereby that the proposal for increasing the subscribed capital of the company by converting part of the debt into equity shares, as aforesaid, was initiated by the appellant company itself and not actually by RARE. Therefore, the proposal was that of the company only. Accordingly, as contemplated by Section 62(1)(c) of the Companies Act, 2013, the approval of the shareholders would be mandatory before the shares are accepted for listing on the BSE.

8. Insofar as the other ground for rejection of the application is concerned, that is to say, for want of approval of the BSE, the Securities Appellate Tribunal has returned a clear finding that the approval of the BSE is necessary in view of Regulation 28 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and we do not have different opinion on it rather we accept the said finding which is not perverse in any manner. 9. In view of the aforesaid facts and circumstances, we are of the opinion that no error or illegality has been committed either by the BSE or the Securities Appellate Tribunal in refusing to accept the request of the appellant company for the listing of the shares at the Stock Exchange inasmuch as Section 62 of the Companies [2024] 12 S.C.R. 1121 Jyoti Limited v. BSE Limited & Anr Act stands duly attracted and in the light of sub-clause (c) of sub-section (1) of Section 62 of the Companies Act, special resolution of the shareholders is necessary which is lacking in the instant case. 10. The aforesaid order has been passed by us in the peculiar facts and circumstances of this case where the appellant company itself has passed the resolution and applied for the listing of shares and as such is deemed to be the proposer for increasing the share capital. 11. Accordingly, this statutory appeal under Section 22 F of Securities Contracts (Regulation) Act, 1956 is devoid of merit and is dismissed.

12. Pending application(s), if any, shall stand disposed of. Result of the case: Appeal dismissed. †Headnotes prepared by: Divya Pandey

[2024] 12 S.C.R. 1117 : 2024 INSC 992 Jyoti Limited v. BSE Limited & Anr (Civil Appeal No. 4707 of 2022) 10 December 2024 [Pankaj Mithal and Sandeep Mehta, JJ.] Issue for Consideration Bombay Stock Exchange (BSE) rejected the application of the appellant for the listing of certain equity shares to the BSE holding that the appellant had not taken in principle approval from the Stock Exchange and it also did not take the approval of the shareholders for the allotment of the shares to the Asset Reconstruction Private Limited (RARE). Order upheld and confirmed by the Securities Appellate Tribunal. Headnotes† Securitisation and Reconstruction of Financial Assets and Enforcement of Security Act, 2002 – s.9(1) – Companies Act, 2013 – s.62(1)(c) – SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 – Regulation 28:

Held: s.9, SARFAESI Act authorizes RARE to convert portion of the debt into shares of the borrower company but such authority is subject to s.62, Companies Act, 2013 which in turn requires a resolution of the shareholders of the company – However, when such a proposal is not by the appellant company, the approval of the shareholders may not be necessary – On facts, the proposal for increasing the subscribed capital of the company by converting part of the debt into equity shares was initiated by the appellant company itself and not actually by RARE – Therefore, the proposal was that of the company only – Accordingly, as contemplated by s.62(1)(c), Companies Act, 2013, the approval of the shareholders would be mandatory before the shares are accepted for listing on the BSE – Furthermore, the approval of the BSE is necessary in view of Regulation 28 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 – No error or illegality committed either by the BSE or the Securities Appellate Tribunal – Statutory appeal u/s.22 F, Securities Contracts (Regulation) Act, 1956 is devoid of merit. [Paras 5, 7-9] 1118 [2024] 12 S.C.R. Supreme Court Reports List of Acts Securitisation and Reconstruction of Financial Assets and Enforcement of Security Act, 2002; Companies Act, 2013; SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015; Securities Contracts (Regulation) Act, 1956. List of Keywords

Bombay Stock Exchange (BSE); Securities Appellate Tribunal; Listing of equity shares; In principle approval from the Stock Exchange; Approval of the shareholders for the allotment of the shares to the Asset Reconstruction Private Limited (RARE); SARFAESI Act; Convert debt into equity shares; Resolution of the Board of Directors; Approval of the shareholders mandatory; Subscribed capital; Resolution of the shareholders of the company; Special resolution; Proposal for increasing the subscribed capital of the company; Listing of the equity shares at the Stock Exchange/ BSE; Approval of the BSE; Statutory appeal. Case Arising From CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4707 of 2022 From the Judgment and Order dated 21.12.2021 of the Securities Appellate Tribunal, Mumbai in Appeal No. 224 of 2019 Appearances for Parties Lakshmeesh S. Kamath, Mrs. Samriti Ahuja, Ms. Aditi Prakash, Advs. for the Appellant. Pratap Venugopal, Sr. Adv., Ms. Surekha Raman, Amarjit Singh Bedi, Shreyash Kumar, Yashwant Sanjenbam, Imilikaba Jamir, M/s. K J John And Co, Rahul Gupta, Advs. for the Respondents. Judgment / Order of the Supreme Court Order 1. Heard learned counsel for the parties. 2. Under challenge in this statutory appeal is the judgment and order dated 21.12.2021 passed by the Securities Appellate Tribunal, Mumbai [2024] 12 S.C.R. 1119 Jyoti Limited v. BSE Limited & Anr in Appeal No. 224 of 2019 titled as “Jyoti Limited Vs. BSE Limited and Anr.”.

3. The appellant-Jyoti Limited applied for listing of certain equity shares to the Bombay Stock Exchange1 but the application to that effect was not accepted for the reason that the appellant had not taken in principle approval from the Stock Exchange and that the appellant had not even taken the approval of the shareholders for the allotment of the shares to the Asset Reconstruction Private Limited2. The above order of the BSE rejecting the application of the appellant for the listing of shares was upheld and confirmed by the Securities Appellate Tribunal by the order impugned.

4. In assailing the above orders, the submission of learned counsel appearing for the appellant is that Section 9(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Act, 20023 permits the RARE to take measures such as conversion of any portion of debt into shares of the borrower company i.e., the appellant herein and once such power is exercised, the shares have to be listed on the Stock Exchange. Further submission of the learned counsel for the appellant is that it is only where the company, i.e., the appellant herein, proposes to increase the subscribed capital, the consent/ the resolution/approval of the shareholders is required, as mandated by Section 62(1)(c) of the Companies Act, 2013. Since in the case at hand the appellant company had not proposed to increase the subscribed capital rather it is the RARE that has done it, no such approval of the shareholders is necessary. 5. Section 9 of the SARFAESI Act authorizes RARE to convert portion of the debt into shares of the borrower company but such authority is subject to Section 62 of the Companies Act, 2013 which in turn requires a resolution of the shareholders of the company. However, when such a proposal is not by the appellant company, the approval of the shareholders may not be necessary. 6. Notwithstanding the above, in the case at hand, it is evident that the appellant company had entered into discussion with RARE 1 BSE for short 2 RARE for short

3 SARFAESI Act for short 1120 [2024] 12 S.C.R. Supreme Court Reports and it was agreed upon between the parties to convert part of its outstanding debts of Rs.32.80 Crore into equity shares. Accordingly, a resolution of the Board of Directors of the appellant company was passed to the above effect on 02.05.2018 but such an action was never endorsed by the shareholders of the company. Thereafter, the appellant company itself filed an application before the BSE on 15.05.2018 for listing of the shares i.e. 59,63,636 equity shares allotted to the RARE.

7. Having considered the relevant provisions of the law and the submissions advanced by the learned counsel for the appellant, we find that the conversion of the debt into additional shares had taken place with the agreement of the appellant company and RARE, and it is on the basis of such an agreement between the parties that a resolution was passed on 02.05.2018 by the Board of Directors of the appellant company accepting the proposal to convert the debt into shares and to allot them in favor of RARE, thus, resulting in increase of the equity capital of the appellant company. Even the application for listing of the aforesaid additional shares was made by the appellant company to the BSE meaning thereby that the proposal for increasing the subscribed capital of the company by converting part of the debt into equity shares, as aforesaid, was initiated by the appellant company itself and not actually by RARE. Therefore, the proposal was that of the company only. Accordingly, as contemplated by Section 62(1)(c) of the Companies Act, 2013, the approval of the shareholders would be mandatory before the shares are accepted for listing on the BSE.

8. Insofar as the other ground for rejection of the application is concerned, that is to say, for want of approval of the BSE, the Securities Appellate Tribunal has returned a clear finding that the approval of the BSE is necessary in view of Regulation 28 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and we do not have different opinion on it rather we accept the said finding which is not perverse in any manner. 9. In view of the aforesaid facts and circumstances, we are of the opinion that no error or illegality has been committed either by the BSE or the Securities Appellate Tribunal in refusing to accept the request of the appellant company for the listing of the shares at the Stock Exchange inasmuch as Section 62 of the Companies [2024] 12 S.C.R. 1121 Jyoti Limited v. BSE Limited & Anr Act stands duly attracted and in the light of sub-clause (c) of sub-section (1) of Section 62 of the Companies Act, special resolution of the shareholders is necessary which is lacking in the instant case. 10. The aforesaid order has been passed by us in the peculiar facts and circumstances of this case where the appellant company itself has passed the resolution and applied for the listing of shares and as such is deemed to be the proposer for increasing the share capital. 11. Accordingly, this statutory appeal under Section 22 F of Securities Contracts (Regulation) Act, 1956 is devoid of merit and is dismissed.

12. Pending application(s), if any, shall stand disposed of. Result of the case: Appeal dismissed. †Headnotes prepared by: Divya Pandey