Meghna Barik, Pune
On September 22, the Supreme Court declined to get involved in a Securities and Exchange Board of India (SEBI) directive that called for a valuation exercise in a Linde India case involving related-party transactions.
The business had petitioned the Supreme Court to overturn a recent (SAT) ruling that rejected Linde India’s appeal of the valuation procedure mandated by SEBI. Chief Justice of India D. Y Chandrachud asserted that they cannot intervene at this stage if the order has been dismissed in SAT.
The main case is set for hearing before SAT on October 15. Linde India, represented by senior counsel Abhishek Manu Singhvi, expressed concerns regarding the timing of the valuation exercise.
According to Abhishek Manu Singhvi, carrying out the valuation before the final decision is made could have dire consequences especially if it is made public. He said that he was worried that the market might go into panic if it turned out that the valuation was incorrect and was then made public on stock exchanges.
Singhvi stressed that none of the shareholders had suffered any negative effects and that Linde India’s share price had risen from ₹600 per share when the allegations first surfaced to ₹9900 per share today. The case is a result of an interim order issued by SEBI on April 29 which identified significant related-party transactions that Linde India carried out without first obtaining shareholder approval.
When choosing which related parties—Praxair India and Linde South Asia Services—to award future business to SEBI, it was observed that Linde India had neglected to furnish its board with a valuation. In the course of its inquiry, SEBI ordered the National Stock Exchange (NSE) to designate a registered valuer to evaluate Linde India’s business value gains and losses including geographical allocations under its joint venture and shareholder agreements with Praxair India. Linde South Asia Services was eventually established as a result.
A bench of the SAT led by Justices P.S. Dinesh Kumar and Dheeraj Bhatnagar have supported SEBI’s directive. They also issued an additional order directing SEBI to make sure the NSE and its designated valuer follow confidentiality guidelines regarding unpublished price-sensitive information (UPSI). The next hearing in the ongoing legal proceedings involving Linde India is set for mid-October.