Sebi-PNB Housing Finance case: SAT verdict break up, interim order to proceed

The Securities Appellate Tribunal (SAT) on Monday pronounced a break up verdict on the PNB Housing-Sebi case with each judges having completely different observations available on the market regulator Sebi’s motion.
The interim order on PNB Housing Finance-Carlyle deal will proceed, the SAT mentioned. In its interim order, the SAT had restricted PNB Housing from declaring the outcomes of shareholders’ votes on the cope with Carlyle.
The matter was heard by a two-judge Bench of Presiding Officer Justice Tarun Agarwala and Judicial Member Justice MT Joshi. Justice Agarwala dominated in favour of the housing finance firm, whereas Justice Joshi agreed with the market regulator’s motion.
“In view of the difference of the opinion between the Members of the bench we direct the interim order dated June 21, 2021 to continue till further orders. The registry is further directed to place the papers of the appeal before the Presiding Officer on the administrative side for appropriate orders,” the SAT mentioned.
“The impugned communication dated June 18, 2021 issued by General Manager of Sebi cannot be sustained and is quashed. The appeal is allowed. We direct the appellant to declare the results of the extraordinary general meeting which was held on June 22, 2021,” Justice Agarwala mentioned within the order.

However, Justice Joshi differed with Justice Agarwala. “In the present case in order to safeguard the interest of the investors, the impugned order was passed by Sebi on the line of the provisions made in Article 19(2) by the appellant company and its shareholders, at the time the company was to be listed on the stock exchanges. Therefore, in my view the same cannot be called as illegal or unjustified,” Justice Joshi mentioned within the order. “Presiding Officer has observed that the right of shareholders to accept or reject an agenda is supreme and paramount which cannot be whittled by any executive action,” the order mentioned.
On June 8, The Indian Express reported how Stakeholders’ Empowerment Services, on the behest of minority shareholders, had crimson flagged the proposed transaction. On the pricing of the choice share at Rs 390, PNBHF, the agency’s report mentioned, ignored its AoA that requires the worth to be “determined by the valuation of a registered valuer.”
The controversy arose when Sebi wrote to the corporate, elevating objections to pricing of the preferential allotment concern to buyers led by Carlyle together with Aditya Puri, former MD of HDFC Bank and a senior advisor to Carlyle.