The National Company Law Appellate Tribunal(NCLAT) has allowed Reliance Industries to delist textile manufacturer Alok Industries, which it has acquired through insolvency process. A two-member NCLAT bench headed by Chairperson Justice S J Mukhopadhaya has modified the order passed by the National Company Law Tribunal (NCLT), Ahemdabad, which denied such permission. While approving Rs 5,052-crore bid of RIL for Alok Industries on March 8, 2019, the NCLT did not give its approval to RIL's plea for granting exemptions for delisting of Alok Industries' shares from the bourses.
Later, RIL again sought permission, but was denied on July 26, 2019. The appellate tribunal observed that the Securities and Exchange Board of India (Sebi) in its affidavit had also said that there is no requirement for permission of the market regulator for such delisting. "In view of the specific plea taken by the ‘SEBI' - 3rd Respondent, no further clarification is required. The ‘Resolution Applicant' will act in accordance with the stand taken by the ‘SEBI' and in accordance with law, if not yet taken. "The order dated July 26, 2019 passed by the Adjudicating Authority (Ahmedabad Bench) stands clarified/modified to the extent above," the appellate tribunal said.
The NCLAT order came over a petition filed by RIL, challenging the NCLT order. The NCLT in its order dated July 26, 2019 said: "that approval of this bench (NCLT) in respect of Face Value Reduction and the Promoter Capital Reduction is/are dispensed with, however the applicant shall approach to the Competent Authority(s) viz MCA and SEBI and any other competent authorities, as the case may be for necessary compliances". As RIL relied on the Sebi amendment notification with regard to delisting of shares, the NCLAT had earlier on September 11 impleaded Sebi and on October 15 granted the regulator seven days to file a reply affidavit to make its stand clear about the amendment related to delisting of shares.
Last year, Sebi relaxed requirements to comply with delisting norms for companies facing insolvency proceedings provided the resolution plan lays down the procedure for delisting that particular entity from the exchanges. In a notification, the markets regulator had said norms pertaining to delisting of equity shares would not be applicable to any entity that is getting delisted pursuant to a resolution plan approved under the IBC. The notification was issued on June 1. Alok Industries, a Mumbai-based textile company, was in the first list of 12 companies issued by the Reserve Bank of India in 2017 for initiation of insolvency process.
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