The court emphasized a pragmatic approach in granting extensions for compliance with regulatory requirements, prioritizing shareholder interests and the absence of grievances.

JUDGMENT :

1. The first petitioner is a joint stock company (‘Company’, for brevity) in the plantation sector. The paid-up capital of the Company is Rs.36,12,940/. The Company's promoters hold 46.60% of the paid-up capital, and the other shareholders hold the balance. The second petitioner is a deemed promoter shareholder and director of the Company. The Company had entered into listing arrangements with the Madras Stock Exchange Limited ('MSE', in short). There has been no complaint against the Company.

1.1. While so, the Securities and Exchange Board of India (‘SEBI’, in short) promulgated Ext.P1 circular to de-recognise stock exchanges in India with a turnover of less than Rs.1000/- crore and allowing Exclusively Listed Companies (‘ELCs’) to get listed in the nationwide stock exchanges on having a minimum paid-up capital of Rs.7/- crore.

1.2. Pursuant to Ext.P1 circular, the National Stock Exchange (‘NSEs’) issued Ext. P2 criteria for listing at NSE, which was impractical for small companies. Subsequently, by Ext.P3 circular, the SEBI ordered that stock exchanges like MSE would be de-recognised and ELCs like the Company would be seized to be a listed company and be moved to the Dissemination Board (DB, for brevity) of NSE. Accordingly, the Company was placed on the DB of the NSE. The Company's shareholders were given an opportunity to buy and sell shares through the DB.

1.3. Then, SEBI issued Ext.P5 circular dated 10.10.2016 to the companies placed on the DB to either get themselves listed in an NSE or provide an exit to the shareholders not falling under the promoter category, failing which penal consequences will follow. The Company submitted Ext.P6 representation to SEBI. However, NSE issued Ext.P7 letter threatening the Company with penal action.

1.4. Aggrieved by the arbitrary action, the Company filed W.P (C) No.336/2017 before this Court, which was disposed of by Ext.P8 judgment. The Company and SEBI filed intra-court appeals, which were disposed of by Ext.P9 common judgment dated 12.06.2018, directing SEBI to consider the Company's representation. The Company was also directed to value its shares and provide the details to SEBI. Consequently, the Company submitted Ext.P11 independent valuation and an additional representation to SEBI.

1.5. As per the final valuation certificate, the Company had to raise Rs.34/- Crore to settle the non- promoter shareholders. The Company informed SEBI that, with a capital of Rs.36/- lakh, it was impossible to pay the non-promoter shareholders or get listed in the NSE. The Company requested to be listed on the SME platform of NSE or the Metropolitan Stock Exchange ―the 5^th respondent.

1.6. Long thereafter, by Ext.P22 E-mail dated 01.09.2023, NSE directed the Company to complete the listing process with the 5^th respondent within one month. Although the Company sought some more time, the NSE directed the Company to seek an extension from SEBI, which was done and rejected by Ext.P26 email. The Company again submitted Ext.P27 request to reconsider the decision. However, by Ext.P29 circular, NSE initiated penal action against the promoters and directors of the Company by freezing their demat account. Notwithstanding the penal action, the Company continued with its effort to get listed. The Company also sought a personal hearing before SEBI, but the same was rejected. No prejudice will be caused to the SEBI, the shareholders of the Company or the general public if the listing is permitted. The listing of shares will ensure compliance with the requirements in the circular. Even though the Company again submitted Ext.P35 representation, SEBI has not responded. The action of the SEBI is arbitrary. Hence, the writ petition.

2. The respondents 2 and 3 have filed a counter affidavit contending that trading at regional/smaller Stock Exchanges had declined, resulting in many listed companies committing default of regulatory compliance like making requisite disclosures. In the said situation, SEBI had publi