BEFORE THE SECURITIES APPELLATE TRIBUNAL

MUMBAI

Appeal No.295 of 2014


Date of decision : 23/9/2014


Oracle Financial Services Software Limited
Oracle Park, 10
th
floor,
Off Western Express Highway,
Goregaon (East), Mumbai 400 063. Appellant


Versus


1. Securities and Exchange Board of India
SEBI Bhavan, Plot No.C-4A, G Block,
Bandra Kurla Complex,
Bandra (East), Mumbai 400 051.

2. National Stock Exchange of India Limited
Exchange Plaza, C-1, Block G,
Bandra Kurla Complex,
Bandra (East),
Mumbai 400 051.

3. BSE Limited
P.J. Towers,
Dalal Street,
Mumbai 400 001. Respondents

Mr. Janak Dwarkadas, Senior Advocate with Mr. Ankit Lohia and Mr. Amit
Dey, Advocates for the Appellant.

Mr. Kevic Setalvad, Senior Advocate with Mr. Pratham Masurekar,
Advocate for Respondent No.1.

Mr. Rashid Boatwalla, Advocate with Ms. Vamika Kaul,
Advocate for Respondent No.2.

Mr. Manish Chhangani, Advocate for Respondent No.3.
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CORAM : Justice J.P. Devadhar, Presiding Officer
A. S. Lamba, Member

Per : Justice J.P. Devadhar (Oral)


1. This appeal was mentioned yesterday for urgent reliefs. Since none
appeared on behalf of respondents, we directed the Registry to place the
matter on board today and directed the appellant to give fresh notice to the
respondents.

2. Today, counsel for respondents have appeared and sought
adjournment to take instructions and to file affidavit in reply. Since counsel
for appellant has insisted on considering the issue relating to grant of interim
relief in view of urgency in the matter, we have heard counsel on both sides
for the limited purpose of granting interim relief.

3. Short question that falls for consideration in this appeal is, whether by
impugned communications all dated 19
th
September, 2014, the respondents
are justified in holding that the appellant has violated clause 16 of the listing
agreement, on ground that the time gap between the book closure and record
date fixed as 24/9/2014 for the purpose of interim dividend is less than 30
days.

4. Facts relevant for the purpose of this appeal are that appellant, a
public limited company, was to hold its 25
th
Annual General Meeting (AGM)
on 12
th
September, 2014 and for that purpose appellant had declared book
closure during the period from 8
th
September, 2014 till 12
th
September, 2014.

5. On 8
th
September, 2014 appellant intimated to both the stock exchanges
i.e. Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), that
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in the meeting to be held on 12
th
September, 2014, Board of Directors of
appellant would consider declaration of interim dividend. Thereafter, on
12
th
September, 2014, AGM was held and on the same day board of directors
in their meeting declared interim dividend @ Rs.485 per share and for that
purpose fixed the record date as 24
th
September, 2014 and payment date as
29
th
September, 2014 and intimated the same to both the stock exchanges. On
12
th
September, 2014 itself NSE placed on its website that the appellant has
informed that interim dividend has been declared by appellant on 12/9/2014
and that the dividend would be paid to the equity shareholders on or before
29
th
September, 2014. Similarly, on 12
th
September, 2014 the BSE had
announced on its website that the board of directors of the appellant at its
meeting held on 12
th
September, 2014 have declared interim dividend Rs.485
per equity share of Rs.5 each of the company.

6. As per clause 16 of the listing agreement, appellant gave 7 days notice
to the stock exchanges regarding the record date fixed as 24/9/2014 and
sought their approval in that respect. Since both the stock exchanges were of
the opinion that under clause 16 of the listing agreement, time gap between a
book closure and a record date should be 30 days and in the present case the
time gap being less than 30 days, the issue was referred to Securities and
Exchange Board of India (SEBI). By impugned communication dated
19
th
September, 2014, SEBI informed both the stock exchanges and both the
stock exchanges, in turn, by their respective communications, both dated 19
th

September, 2014 informed appellant that the record date fixed by appellant as
September 24, 2014 is violative of clause 16 of listing agreement and
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accordingly called upon appellant to comply with clause 16 of listing
agreement. Challenging the aforesaid order, present appeal is filed.

7. Since the controversy in the appeal relates to interpretation of clause 16
of the listing agreement, we quote clause 16 of the Model Equity Listing
Agreement of respondent No.2, which reads thus:
The issuer agrees to close its transfer books for purposes
of declaration of dividend or the issue of right or bonus
shares or issue of shares for conversion of debentures or of
shares arising out of right attached to debentures or for
such other purposes as the NSE may agree to or require
and further agree to close its transfer books at least once a
year at the time of the Annual General Meeting if they
have not been otherwise closed at any time during the
year and to give to NSE the notice in advance of at least
seven working days, or of as many days as NSE may from
time to time reasonably prescribe, stating the dates of
closure of its transfer books (or, when the Transfer books
are not to be closed, the date fixed for taking a record of its
shareholders or debenture holders) and specifying the
purpose or purposes for which the transfer books are to be
closed (or the record is to be taken) and to send copies of
such notices to the other recognized stock exchanges in
India.

The Issuer further agrees to ensure that the time gap
between two book closures and record dates would be at
least 30 days.

The Company on whose stocks, derivates are available or
whose stocks form part of an index on which derivatives
are available, shall give a notice period of at least 7
working days to stock exchanges for corporate actions like
mergers, de-mergers, splits and bonus shares. (Emphasis
supplied)

8. According to the appellant, in view of specific provision contained in
clause 16, 30 days time gap applies between two book closures and two
record dates and not between a book closure and a record date. Counsel for
SEBI strenuously urged before us that plain reading of clause 16 of lsiting
agreement makes it ex facie clear that the time gap between a book closure
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and a record date should be 30 days and in the present case since the time
gap is less than 30 days, there is violation of clause 16 of Listing Agreement.
According to counsel for SEBI, 30 days time gap applies to the time lag
between a book closure and the record date.

9. Prima facie we see no merit in the contentions raised on behalf of the
respondents.

10. On perusal of clause 16 of the listing agreement, it is seen that in a year
there could be more than one book closure for the purpose of declaration of
dividend or the rights issue or bonus shares, etc. If more than one book
closure is postulated under clause 16, then obviously time gap of 30 days
under clause 16 would be referrable to the time gap between two book
closures. Fact that the word and is used between the words two book
closures and record dates, it cannot be inferred that the time gap should be
between a book closure and a record date. If the intention was to keep the
time gap of 30 days between a book closure and a record date, then the word
two would not have been used prior to the words book closures. In
other words, the very fact that the word two is used prior to the words
book closures is suggestive of the fact that the time gap is intended
between two book closures and two record dates and not between a book
closure and a record date.

11. It is not in dispute that a company can declare dividend at its general
meeting, but the dividend declared in the general meeting cannot exceed the
amount recommended by the board. If the contention of respondent-SEBI is
accepted, it would mean where a company keeps the transfer book closed at
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the time of its AGM as per clause 16 of the listing agreement and also seeks to
declare dividend, then according to respondents the record date for such
dividend should be after 30 days of book closure and payment of dividend
should be made thereafter. In such a case, paying dividend beyond 30 days
would be violating Section 205A of Companies Act, 1956 and, therefore, we
are prima facie of the opinion that the interpretation put forth by the
respondents cannot be accepted.

12. Apart from above, in the present case, both the stock exchanges have
placed on their respective websites that the appellant had declared interim
dividend on 12
th
September, 2014 and in fact NSE has informed the investors
that the payments would be made by 29
th
September, 2014. Having
announced that dividend would be paid on 29/9/2014, it is difficult to
envisage as to how the investor interest would be jeopardized if record date
is fixed as 24/9/2014 and payments are made on 29/9/2014.

13. In view of our prima facie opinion, we direct both the stock exchanges
i.e. BSE & NSE to announce the record date for interim dividend declared by
appellant forthwith to be 24
th
September, 2014 so as to enable the appellant to
make payment to the investors by 29
th
September, 2014. We make it clear that
passing of our order will not come in the way of SEBI initiating any
proceedings against the appellant relating to interpretation of clause 16 of the
Listing Agreement and pass appropriate orders in accordance with law.

14. At this stage, counsel for BSE requests that the record date be changed
from 24/9/2014 to 25/9/2014 as it would be difficult for the Exchange to
update the trading system within such a short time. Counsel for appellant
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has no objection. In view of the difficulty expressed by BSE, we direct both
the BSE and NSE to fix 25
th
September, 2014 as the record date.

15. Since SEBI is permitted to pass order on merits on the interpretation of
clause 16 of Listing Agreement, we see no reason to keep the appeal pending.
SEBI is directed to pass order on merits after hearing the appellant.

16. Accordingly, appeal is disposed of in the above terms with no order as
to costs.

Sd/-
Justice J.P. Devadhar
Presiding Officer


Sd/-
A.S. Lamba
Member


23/9/2014
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