adjudication order in the matter of m/s electrosteel steels limited and m/s electrosteel castings...
TRANSCRIPT
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
1/140
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
2/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 2 of 140
referred to as ‘ESL’), at Kodolibad, Jharkhand was rejected by the Ministry of
Environment and Forest (presently Ministry of Environment, Forest & Climate Change
‘MoEF&CC’) (hereinafter referred to as ‘MoEF ’), however, the fact thereof was not
disclosed in the Red Herring Prospectus of Initial Public Offer (IPO) of ESL and also to
the shareholders and financial institutions.
2. SEBI sought comments from ESL and the Book Running Lead Managers, viz. Axis Capital
Ltd., SBI Capital Markets Ltd. and Edelweiss Financial Services Ltd. (hereinafter
collectively referred to as ‘ BRLMs ’) for failing to ensure disclosure in the Draft Red
Herring Prospectus (hereinafter referred to as ‘DRHP’) / Red Herring Prospectus
(hereinafter referred to as ‘ RHP ’) /Prospectus of ESL regarding rejection of the
proposal for forest clearance of Kodolibad Iron ore mine. Further comments were also
sought from ECL, the listed promoter company of ESL, for the failure to disclose thematerial event viz. rejection of forest clearance for iron ore mine by MoEF to the stock
Exchanges for onward dissemination to the shareholders in accordance with clause 36
of the Listing Agreement.
3. From the replies, it was inter alia observed that the in-principle approval for ECL’s
proposal for diversion of forest land for Kodolibad Iron Ore Mine was rejected by MoEF,
and MoEF vide letter dated November 04, 2008 had communicated the same to the
Government of Jharkhand. It was further observed that post the said rejection, ECL videletter dated May 27, 2009 had requested the State Government to recommend its
proposal to MoEF again, and the State Government vide its letters dated July 10, 2009
and September 18, 2009 had requested MoEF to reconsider the proposal. Subsequently,
MoEF vide its letter dated February 13, 2012 granted in-principle approval to ECL for
diversion of forest land for the purpose of the iron ore mine, subject to fulfillment of 29
conditions stated in the said letter.
4. It was observed that as on the date of filing of the prospectus with RoC i.e. September29, 2010, in absence of a positive decision from MoEF, the rejection of the proposal for
forest clearance for Kodolibad Iron Ore Mine was a material event requiring disclosure
in the DRHP/ RHP/ Prospectus of ESL. The BRLMs and ESL stated that various
disclosures regarding pendency of the proposal with MoEF and risk factors were
included in the prospectus. However, it was observed that the BRLMs/ ESL had failed to
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
3/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 3 of 140
disclose the fact of rejection of ECL’s proposal of forest clearance for Kodolibad Iron Ore
Mine in the DRHP/ RHP/ Prospectus of ESL. It was also observed that ECL had inter alia
stated that allocation of mine would help ECL in achieving cost effectiveness and
reducing the cost of production.
5. It was inter alia alleged that the BRLMs had failed to ensure adequate disclosures of the
fact of rejection of the proposal for forest clearance of Kodolibad iron ore mine in the
DRHP/ RHP/ Prospectus of ESL and had, therefore, violated the provisions of
Regulation 57(1), Regulation 57(2)(a)(ii) and Regulation 64(1) of SEBI (Issue of Capital
and Disclosure Requirement) Regulations, 2009 (hereinafter referred to as ‘ICDR
Reg ulations’ ) and Regulation 13 of SEBI (Merchant Bankers) Regulations, 1992
(hereinafter referred to as ‘ Merchant Bankers Regulations’ ). Further, it was alleged
that ESL had failed to disclose the fact of rejection of the proposal for forest clearance ofKodolibad iron ore mine in the DRHP/ RHP/ Prospectus of ESL and had, therefore,
violated the provisions of Regulation 57(1), Regulation 57(2)(a)(ii) of ICDR Regulations.
It was also alleged that by omitting to disclose the said material information in the RHP,
the disclosures made by BRLMs and ESL in the RHP dated September 29, 2010 were
misleading. Also, that by not disclosing the rejection of forest clearance for Kodolibad
Iron Ore Mine to the stock exchanges, it was alleged that ECL had violated Clause 36 of
the Listing Agreement read with Section 21 of the Securities Contract (Regulation) Act,
1956 (hereinafter referred to as ‘SCRA’).
APPOINTMENT OF ADJUDICATING OFFICER
6. The undersigned was appointed as the Adjudicating Officer vide Order dated August 16,
2013 under rule 4 of SEBI (Procedure for Holding Inquiry and Imposing Penalties by
Adjudicating Officer) Rules, 1995 (hereinafter referred to as ‘Rules’ ) read with sub-
section (2) of Section 15I of SEBI Act to inquire into and adjudge under Section 15HB of
the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as ‘SEBI
Act ’) for the alleged violation of the provisions of ICDR Regulations and Merchant
Bankers Regulations by the BRLMs and for the alleged violation of the provisions of
ICDR Regulations by ESL. The undersigned was also appointed as Adjudicating Officer
vide order dated August 16, 2013 under rule 4 of Securities Contract (Regulation)
(Procedure for Holding Inquiry and Imposing Penalties by Adjudication Officer) Rules,
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
4/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 4 of 140
2005 (hereinafter referred to as ‘SCR Rules’ ) read with sub-section (1) of Section 23 I of
SCRA to inquire into and adjudge under Section 23A(a) and 23E of the SCRA for the
alleged violation of the provisions of Listing Agreement read with Section 21 of the
SCRA by ECL.
SHOW CAUSE NOTICE, HEARING AND REPLY
7. Show Cause Notice No. EAD-6/AK/VS/24165/2013, EAD-6/AK/VS/24165/2013 and
EAD-6/AK/VS/24168/2013 dated September 20, 2013 (hereinafter referred to as
‘SCN1 ’) were issued to the BRLMs respectively under rule 4 of the Rules to show cause
as to why an inquiry should not be held and penalty be not imposed under Section 15HB
of SEBI Act for the alleged violation specified in the said SCN. Show Cause Notice No.
EAD-6/AK/VS/24161/2013 and EAD-6/AK/VS/24159/2013 dated September 20, 2013(hereinafter referred to as "SCN2" and "SCN3" ) were issued to ESL and ECL
respectively, under rule 4 of the Rules and Rule 4 of SCR Rules, to show cause as to why
an inquiry should not be held and penalty be not imposed under Section 15HB of SEBI
Act against ESL and under 23A(a) and 23E of the SCRA against ECL for the alleged
violations specified in the said SCN. The said SCN was delivered and acknowledged by
the BRLMs, ESL and ECL.
8. The BRLMs vide common letter dated October 10, 2013 inter alia sought time for fourweeks for filing reply to the SCN. Similarly, ESL and ECL vide individual letters each
dated October 08, 2013 inter alia sought time of thirty days for filing reply to the SCN.
Subsequent to the same, vide letter dated November 01, 2013, J. Sagar Associates on
behalf of the BRLMs requested for grant of an opportunity to undertake inspection of
documents and records in relation to the SCN. Vide individual letters dated November
19/ 21, 2013, the BRLMs informed that they have appointed J. Sagar Associates,
Advocates and Solicitors, Authorised Representatives (hereinafter referred to as ‘AR of
BRLM’) for undertaking inspection of documents and to carry out all related deeds with
respect to the extant adjudication proceedings against the BRLMs. Also, vide individual
letters dated November 4, 2013, ESL and ECL requested to undertake the inspection of
documents in relation with the notice and provide copies of the same. Vide the said
letters, ESL and ECL also inter alia informed that they had appointed Khaitan & Co. as
their legal counsel(s), Authorised Representatives (hereinafter referred to as ‘AR of
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
5/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 5 of 140
ESL/ECL ’) to represent them in the matter and undertake inspection of documents. Vide
email dated November 11, 2013, the BRLMs were advised to specify the documents for
which the inspection was sought. Vide letter dated November 15, 2013, AR of BRLMs
inter alia stated that it may not be possible to specify or list out the documents required
for inspection, since the BRLMs are not aware of the documents in possession of SEBI.AR of BRLMs vide the said letter requested that an opportunity to inspect all the records
& documents which SEBI possesses and which led to the issuance of the SCN may be
provided along with their copies. Further, vide email dated November 11, 2013, ESL and
ECL were also advised to specify the documents for which the inspection was sought.
Vide individual letters dated November 14, 2013, ESL and ECL also requested to seek
inspection of all the documents and records in SEBI ’s possession, leading to the issuance
of the SCN along with the copies of the documents. Accordingly, an opportunity of
inspection was provided to the BRLMs, ESL and ECL on December 10, 2013.
9. Inspection of following documents and copies thereof were given to the BRLMs:
a) Order communicating appointment of Adjudicating Officer dated August 20, 2013;
b) Copies of the Complaints dated August 24, 2011, September 16, 2011 and November
23, 2011;
c) Copy of SEBI letter dated March 25, 2013 issued to ESL;
d) Copy of SEBI letter dated March 25, 2013 issued to BRLMs;
e) Copy of letter dated April 18, 2013 received from ESL;f) Copy of letter dated April 18, 2013 received from BRLMs.
10. Inspection of following documents and copies thereof were given to ESL and ECL:
a) Order communicating appointment of Adjudicating Officer dated August 20, 2013;
b) Copies of the Complaints dated August 24, 2011, September 16, 2011 and November
23, 2011;
c) Copy of SEBI letter dated March 25, 2013 issued to ESL;
d)
Copy of SEBI letter dated March 25, 2013 issued to ECL;e) Copy of SEBI letter dated March 25, 2013 issued to BRLMs;
f) Copy of letter dated April 18, 2013 received from ESL;
g) Copy of letter dated April 17, 2013 received from ECL;
h) Copy of letter dated April 18, 2013 received from BRLMs.
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
6/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 6 of 140
11. Vide letter dated December 16, 2013, BRLMs requested to confirm that there are no
other documents other than the above in possession of SEBI, whether relied upon or
otherwise. Vide email dated December 18, 2013, it was informed that all relevant
documents relied upon while issuing the SCN had been provided as an annexure to the
SCN and vide inspection dated December 10, 2013.
12. The BRLMs filed their replies to the SCN vide individual letters dated December 31,
2013, the details of which have been brought out at the later part of this order. ESL and
ECL filed individual replies dated December 27, 2013, the details of which have also
been brought out at the later part of this order. In the interest of natural justice, an
opportunity of hearing was provided to the BRLMs, ESL and ECL on January 07, 2014
vide individual hearing notices dated December 30, 2013. Vide individual letters dated
January 02/03, 2014, the BRLMs requested for rescheduling the hearing to any dateduring or after the fourth week of January, as their legal counsels were pre-occupied on
January 07, 2014. Similarly, ESL and ECL requested for grant of four weeks time for
preparing their submissions and presenting the matter. Vide email dated January 06,
2014, the BRLMs were informed that their request for postponement of the hearing has
been acceded to, and they were given another opportunity for personal hearing on
January 28, 2014. Similarly, vide email dated January 06, 2014, ESL and ECL were
informed that their request for postponement of the hearing has been acceded to, and
they were given another opportunity for personal hearing on January 27, 2014.
13. Mr. Somasekhar Sundaresan, Mr. Ravichandra S. Hegde and Ms. Aashni Dalal from J
Sagar Associates (AR (JSA)); Mr. Anay Khare, Mr. M. Natarajan and Ms. Lakha Nair from
Axis Capital Ltd.; Ms. Sunita Kumari and Mr. Bhaskar Chakraborty from SBI Capital
Markets Ltd.; Mr. B. Renganathan, Mr. Sachin Khandelwal and Mr. Sumeet Lath from
Edelweiss Financials Ltd. (hereinafter collectively referred to as Authorised
Representatives – ‘ ARs of BRLMs) ’) appeared on behalf of the BRLMs. The AR of the
BRLMs reiterated in detail the submissions made vide letters dated December 31, 2013.
During the hearing, the following documents were submitted: Copies of the following Case Laws:
o Order of the Hon'ble Securities Appellate Tribunal (hereinafter referred to as
‘ SAT ’) in the matter of JM Mutual Fund & JM Capital Management Pvt. Ltd. Vs.
SEBI dated November 22, 2004 ;
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
7/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 7 of 140
o Order of the Hon'ble SAT in the matter of Imperial Corporate Finance &
Services Pvt. Ltd. Vs. SEBI dated July 30, 2004 ;
List of correspondence and events between the date of the alleged rejection of
proposal (October 04, 2008) and the date of in-principle approval received for
diversion of forest land submitted by ECL.The ARs of BRLMs stated that they would make further submissions by February 14,
2014. The ARs of BRLMs were inter alia also advised to submit past non-compliance of
SEBI Act and Regulations made thereunder by any of the BRLMs and action taken by
SEBI in the past, if any, against any of the BRLMs during the last five years.
14. Mr. P N Modi - Senior Counsel, Mr. Neville Lashkari - Counsel, Ms. Tushna Thapliyal from
Khaitan & Co. and Shri Arun Gadoria from ECL (hereinafter referred to as Authorised
Representatives - "ARs of ESL/ECL" ) appeared on behalf of ESL and ECL. During thehearing, ARs of ESL/ ECL reiterated in detail the submissions made vide letter dated
December 27, 2013 and submitted copies of following case laws: Hon'ble SAT Order - M/s Vijay Textiles Ltd Vs SEBI dated April 28, 2011 Order of the Whole Time Member dated September 13, 2013 in the matter of
M/s. Gennex Laboratories Ltd.
During the hearing ARs of ESL/ ECL submitted the summary of the reply dated
December 27, 2013. ARs of ESL/ ECL were advised to submit the supporting documents
for the instances mentioned in Annexure-A to the aforesaid submission. The ARs ofESL/ECL were also advised to submit the information/documents and further
submissions by February 10, 2014 and were informed to submit past non-compliance of
SEBI Act and Regulations made thereunder by ESL/ECL and action taken by SEBI in the
past, if any, against them in the past five years.
15. Vide letter dated February 14, 2014, AR of BRLMs forwarded Note on Submissions
containing the submissions made by them on behalf of the BRLMs at hearing held on
January 28, 2015, which are dealt in the later part of the Order. Along with the said Note
on Submissions, a detail of past regulatory actions taken by SEBI against the BRLMs was
also forwarded. Similarly, ESL and ECL vide letter dated February 10, 2014, filed further
written submissions through its AR, which are dealt in the later part of the order.
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
8/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 8 of 140
16. During the proceedings, it was observed that vide letter dated January 16, 2009, MoEF
had unconditionally also rejected ECL’s proposal for Environment Clearance for the
Kodolibad Iron Ore Mining Project of ECL. In the said letter, MoEF had inter alia noted
that the proposed project was located within the core area of the Singbhum Elephant
Reserve, which is critical to wildlife conservation, and that the Forest AdvisoryCommittee (hereinafter referred to as ‘FAC’) had rejected the proposal for diversion of
the forestland for the said project. Hence, letter Ref: EAD-6/AK/VS/9580/2014, EAD-
6/AK/VS/9581/2014 and EAD-6/AK/VS/9593/2014 dated March 28, 2014 were
further issued to the BRLMs and letter Ref: EAD-6/AK/VS/9605/2014 and EAD-
6/AK/VS/9593/2014 dated March 28, 2014 were further issued to ESL/ ECL, wherein it
was inter alia pointed out that the disclosures made in the RHP gave an appearance to
the investing public that environment clearance was received with respect to the iron
ore mine, whereas, the fact of the matter was that the same was unconditionallyrejected by MoEF vide letter dated January 16, 2009. The BRLMs and ESL/ ECL were
advised to offer their comments, if any, in the matter. Further vide the said letter dated
March 28, 2013, it was also clarified to the BRLMs that they had violated Regulation 13
of Merchant Bankers Regulations read with the following clauses of Code of Conduct for
Merchant Bankers as specified in Schedule III:
Clause 1 - A merchant banker shall make all efforts to protect the interests of investors;
Clause 4 - A merchant banker shall at all times exercise due diligence, ensure proper
care and exercise independent professional judgment;Clause 6 - A merchant banker shall ensure that adequate disclosures are made to the
investors in a timely manner in accordance with the applicable regulations and
guidelines so as to enable them to make a balanced and informed decision;
Clause 7 - A merchant banker shall endeavour to ensure that the investors are provided
with true and adequate information without making any misleading or exaggerated
claims or any misrepresentation and are made aware of the attendant risks before
taking any investment decision;
Clause 20 - A merchant banker shall not make untrue statement or suppress any
material fact in any documents, reports or information furnished to the Board.
17. BRLMs and ESL/ ECL were given fifteen days time to offer their comments. Vide letter
dated April 07, 2014, AR of BRLMs sought additional period of four weeks upto May 13,
2014 for filing its reply to the aforesaid letter. Vide email dated April 23, 2014, the
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
9/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 9 of 140
BRLMs were granted time till May 09, 2014 to file their reply. Vide emails/ letters dated
April 16, 2014 and April 21, 2014, ESL and ECL sought time till May 30, 2014 to file their
reply to letter dated March 28, 2014. Vide email dated April 21, 2014, ESL and ECL were
also granted time till May 09, 2014.
18. Vide letter dated May 09, 2014, the BRLMs filed detailed individual replies to letter
dated March 28, 2014 which have been dealt with in the later part of the Order.
However, the broad issues brought out by the BRLMs through their submissions are
mentioned below:
(a) That whether a disclosure in relation to permissions, approvals and its status with
respect to the parent company of the issuer was at all required to be made, when
admittedly the same did not form a part of the objects of the issue?
(b) That if the disclosure was indeed required, whether such disclosures pertaining tothe approvals were appropriately disclosed?
(c) That if the disclosures were not appropriately disclosed as alleged, whether such non
disclosures pertained to the material adverse factors of the Issuer Company, which
had a significant influence on the decision making of the Investor?
(d) That whether their professional judgment in making appropriate disclosures to the
extent of what ought to be disclosed was faulty or blameworthy, which had a
potential bearing on the investment decision?
(e) That whether the disclosures made did not at all cover the risks associated with non-obtaining of the permissions?
(f) That whether at all there has been a rejection in real sense, especially considering
the controversy surrounding the issues relating to environment and forest approvals
within the Ministry?
(g) That did they as merchant bankers, at any point of time, had any reasons to believe
that the required p ermissions wouldn’t come through?
(h) That did the applicable rules and regulations of the regulator mandate detailed
disclosures even for non- issuer companies?
(i) That even assuming, there had been a difference between the professional judgment
exercised by them as merchant bankers and the judgment supposedly required to be
exercised as per SEBI’s expec tation, whether at all there had been any loss caused to
the investors, in as much as the investors would not have invested in the Issuer
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
10/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 10 of 140
Company had they exercised and disclosed such factors, which in the opinion of SEBI
was required?
19. On May 9, 2014, ESL and ECL filed individual detailed replies to letter dated March 28,
2014, which are dealt in the later part of the order.
20. Thereafter vide hearing notice dated May 21, 2014, the BRLMs were given another
opportunity of personal hearing on June 06, 2014. Similarly, vide hearing notice dated
May 21, 2014, ESL and ECL were given another opportunity of personal hearing on June
05, 2014. The BRLMs vide individual letters dated May 26/29, 2014 requested to
reschedule the hearing to any date during or after fourth week of June. This request of
the BRLMs was acceded to and the personal hearing was rescheduled to June 27, 2014.
Also, ESL and ECL vide emails/ letters dated May 29, 2014 requested to reschedule thehearing to a date after June 15, 2014. This request of ESL and ECL too was acceded to
and the personal hearing was accordingly rescheduled to June 26, 2014.
21. Mr. Somasekhar Sundaresan, Mr. Ravichandra S. Hegde and Ms. Aashni Dalal from J
Sagar Associates, Mr. Anay Khare, Mr. M. Natarajan and Ms. Lakha Nair from Axis
Capital Ltd.; Ms. Sunita Kumari from SBI Capital Markets Ltd.; Mr. Sachin Khandelwal
from Edelweiss Financials Ltd., the Authorised Representatives (ARs of BRLMs)
appeared on behalf of the BRLMs. The ARs reiterated the submissions made vide lettersdated May 09, 2014. The ARs stated that they would make further submission by July
11, 2014. Vide letter dated July 11, 2014, ARs on behalf of the BRLMs forwarded a Note
on Submissions containing the submissions at the personal hearing held on June 27,
2014.
22. Ms. Tushna Thapliyal from Khaitan & Co. and Shri. Arun Gadoria from ECL (ARs of
ECL/ESL) appeared on behalf of ESL and ECL. The ARs of ECL/ESL reiterated in detail
the submissions made vide letter dated May 09, 2014 and submitted the following
documents:
i) Copies of Case law – Shiva Cement Limited vs. Union of India dated March 4,
2014 ;
ii) MoEF Notification dated September 14, 2006.
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
11/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 11 of 140
23. During the hearing, clarification was sought from ARs of ESL/ ECL as to whether ECL
had reverted back to the MoEF with regard to the rejection of Environment Clearance by
MoEF, despite Expert Appraisal Committee (hereinafter referred to as "EAC") of MoEF
recommending the project for Environment Clearance, subject to obtaining prior
clearance from wild life angle. In response, the ARs of ESL/ECL informed that since ECLwas pre-occupied with pursuing the matter with MoEF for Forest Clearance, ECL did not
revert back to MoEF with respect to rejection of Environment Clearance communicated
by MoEF vide letter dated January 16, 2009. ARs of ESL/ECL requested that they desired
to make further submissions in the matter. The ARs of ESL/ECL were advised to make
their submissions by July 11, 2014. Vide letter dated July 11, 2014, AR's filed the written
submissions which are dealt in the later part of the order.
24. On a perusal of correspondence annexed by the BRLMs/ ESL/ECL along with theirindividual submissions, it was noted that ECL in its letter dated November 17, 2010 to
the Hon’ble Chief Minister of Jharkhand had inter alia mentioned that the Forest
Diversion Proposal of Kodolibad Iron Ore mine was twice rejected by the FC Division of
MoEF and sent back to the State Government. Hence vide email dated October 10, 2014,
the BRLMs/ESL/ECL were inter alia requested to provide a copy of the letter of MoEF
rejecting the proposal on second occasion. The BRLMs were also requested to update
the status of the conditions imposed by MoEF while granting in-principle approval for
diversion of forest land vide letter dated February 13, 2012 and provide thesubscription and allotment details category-wise.
25. The BRLMs vide their individual letters dated October 30, 2014, after re-confirming
with the issuer company ESL as well as the promoter of the issuer company i.e. ECL,
inter alia clarified that the two letters referred in the subject letter dated November 17,
2010 refer to letters from MoEF dated November 04, 2008 and January 16, 2009. It was
further also stated that the extract referred to by SEBI of ECL’s letter of November 17,
2010, issued after closure of IPO of ESL, ought not to be read in isolation and without
reference to the other contents of the said letter as well as the entire factual context
pertaining to ECL’s proposal for diversion of f orestland. The BRLMs also informed that
ECL had complied with all conditions imposed by MoEF while granting in-principle
approval. The relevant details regarding subscription and allotment were also provided.
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
12/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 12 of 140
26. ESL vide letter dated October 14, 2014 and ECL vide letter dated October 13, 2014
informed that they will provide the necessary information and data by November 10,
2014. Subsequently, ESL and ECL vide individual replies dated October 30, 2014 inter
alia also clarified that the twice rejected referre d to in ECL’s letter dated November 17,
2010 to the Chief Minister of Jharkhand are references to MoEF’s letter dated November04, 2008 and January 16, 2009. ESL also informed that ECL had complied with all the
conditions imposed by MoEF while granting in-principle approval.
27. It was, thus, noted that the BRLMs/ESL/ECL had clarified that the “twice rejected”
referred to in ECL’s letter dated November 17, 2010 to the Chief Minister of Jharkhand
were references to MoEF’s letters dated November 04, 2008 and J anuary 16, 2009. On
perusal of the said two MoEF’s letters , it was noted that MoEF’s letter dated November
04, 2008 addressed to the Government of Jharkhand was for communicating therejection of proposal of diversion of 55.79 ha forest land for mining of Iron Ore in favour
of ECL in West Singbhum District of Jharkhand. However, letter dated January 16, 2009
was the letter addressed by MoEF to ECL communicating the rejection of ECL’s proposal
for environment clearance by MoEF. On the contrary, it was noted that ECL’s letter
dated November 17, 2010 addressed to the Hon’ble Chief Minister of Jharkhand had
inter alia brought to the notice of the Hon’ble Chief Minister that the forest diversion
proposal of Kodolibad Iron Ore Mine itself was twice rejected by the FC division and
sent back to the State Government. Thus, it was noted from the same that ECL vide letterdated November 17, 2010 had pointed out that the forest diversion proposal itself was
twice rejected by the FC division of MoEF. However, BRLMs/ESL/ECL appeared to
clarify rejection of the forest diversion proposal as one occasion and rejection of the
environment clearance as the second occasion.
28. It was further also observed from Vol III of the ‘First Report on Illegal Mining of Iron and
Manganese Ore s in the State of Jharkhand’ of the Justice M.B.Shah Commission available
in public domain that ECL’s proposal for forest diversion was again considered in the
meeting of FAC dated September 10, 2010. From a copy of FAC Minutes of the said
meeting annexed to the said Report and available in public domain, it was noted that the
FAC Minutes had recorded that as no new fact or material in addition to what had been
submitted earlier had been brought to the notice of the FAC, the Committee again
recommended the proposal for rejection. As per the said minutes, the Committee had
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
13/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 13 of 140
noted that a detailed report on the present status of all mines located in the core of
Singhbhum Elephant Reserve was awaited from the State Government. The Committee
had also noted therein that the proposal of ECL was recommended for rejection on
account of being part of core zone of Singhbhum Elephant Reserve and that the opening
of this proposed site for mining will lead to disturbances to wildlife, pollution to therivers and fragmentation & depletion of forest resources in this region as per Wild Life
Institute of India (WII) ’s observation in its report dated October 03, 2008.
29. In view of the above, letters Ref: EAD-6/AK/RSL/31241/2014, EAD-6/AK/RSL/
31239/2014 and EAD-6/AK/RSL/31243/2014 dated November 03, 2014 were sent to
BRLMs. Also letter Ref: EAD-6/AK/RSL/31237/2014 dated November 03, 2014 and
letter Ref: EAD-6/AK/RSL/31233/2014 dated November 03, 2014 were sent to ESL and
ECL respectively. Vide the said letters, BRLMs/ ESL/ ECL were again requested to clarifythe discrepancies noted as above between their individual replies dated October 30,
2014 and ECL’s lett er dated November 17, 2010, as also vis-à-vis information available
in public domain (Vol III of the ‘First Report on Illegal Mining of Iron and Manganese
Ores in the State of Jharkhand’ of the Justice M.B.Shah Commission) that the forest
diversion proposal of ECL itself was twice rejected by FAC of MoEF – once in 2008 and
again in 2010.
30. In response, the BRLMs vide their individual letters dated November 10, 2014 inter alia pointed out that prospectus of ECL was dated September 29, 2010 and the subject
Minutes of the Meeting of the FAC as referred to in the clarification were signed after the
date of the Prospectus (i.e. October 1, 2010). It was also pointed out that the Minutes of
the said meeting do not appear to be available on the MoEF website as on date. Further
it was also pointed out that details sought referred to a letter dated November 17, 2010,
which too was a date well after completion of the issue. BRLMs stated that therefore any
inference or findings drawn on the basis of such documents after the closure of the issue
would be incorrect and inappropriate and irrelevant to the present proceedings.
Without prejudice to the above, the BRLMs vide their individual letters dated November
10, 2014 inter alia reiterated the submissions made in their individual replies dated
October 30, 2014. It was further stated that on enquiring with ESL and ECL, they were
informed that ECL had not participated in such meeting, nor, any correspondence in this
regard was ever received by ECL.
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
14/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 14 of 140
31. ESL and ECL vide individual letters dated November 10, 2014 inter alia denied that FAC
Minutes of September 10, 2010 are in public domain and/ or were in public domain at
the relevant point of time. It was inter alia further placed on record vide the said letters
that only upon receipt of letter/ email dated November 03, 2014 and Annexure thereofthat they saw the FAC minutes of September 10, 2010 i.e. four years after the event,
however, authenticity or correctness of the information cannot be verified. Vide the said
letters, ESL and ECL inter alia, therefore, sought any mat erial in SEBI’s possession that
MoEF rejected the forest diversion proposal in 2010 including any correspondence
between MoEF and the State Government, as the minutes of FAC meeting of September
10, 2010 are/ were not available on MoEF’s website.
32. Hence, vide letter dated February 09, 2015, the following details were sought directlyfrom MoEF by invoking sub-section 2 of section 15-I of SEBI Act and under sub-section
2 of section 23-I of SCRA:
i) When did the rejection by FAC of MoEF in its meeting held on September 09, 2010
became known to ECL/ the State Government?
ii) Copy of the MoEF’s letter communicating the aforesaid rejection to ECL/ the State
Government;
iii) Whether the said rejection was otherwise available in public domain and details
thereof;iv) Copy of letter received by MoEF from Principal Secretary of Ministry of Steel;
v) Copies of ECL’s letters dated August 13, 2010, August 11, 2010 and September 20,
2010 annexed to the said letter received by MoEF from Principal Secretary of
Ministry of Steel;
vi) Copy of reply sent by MoEF to Principal Secretary of Ministry of Steel, if any;
vii) Any other related document/ information.
33. In response, MoEF vide letter dated March 27, 2015 sent some document copies.However, since the specific information/ details sought vide letter dated February 09,
2015 were not received, MoEF was requested to provide the same vide letter dated
April 21, 2015. The same was followed up with MoEF vide letters dated May 18, 2015
and June 09, 2015. MoEF sent its reply vide letter dated June 15, 2015 annexing
therewith certain document copies.
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
15/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 15 of 140
34. On perusal of the aforesaid letters of MoEF and document copies provided therewith,
the following was inter alia noted: that the FAC of MoEF in its meeting held on September 10, 2010 had again
recommended for rejection the proposal of ECL for diversion of forest land for
Kodolibad Iron Ore Mine project; that the recommendations of FAC dated September 10, 2010 were not
communicated to the State Gov ernment. However, MoEF’s reply was silent as
regards communication, if any, directly with ECL; that from ECL’s letter dated August 11, 2010 to MoEF, it was noted that directors of
MoEF had held meeting with Secretary, MoEF on August 09, 2010 in the matter of
rejection of forest diversion proposal of ECL for Kodolibad Iron Ore Mine, just prior
to the FAC meeting held on September 09, 2010;
that further ECL vide letter dated November 17, 2010 addressed to the Hon’ble
Chief Minister of Jharkhand had inter alia mentioned that the forest diversion for
Kodolibad Iron Ore Mine was twice rejected by the FC division and sent back to the
State Government;
that ECL, just prior to the opening of IPO of ESL for subscription on September 21,
2010, had itself acknowledged the actual fact at the point of time that the forest
diversion proposal for its Kodolibad Iron Ore Mine was rejected by FAC of MoEF
vide its letter no. F.No. 8-35/2008-FC dated November 04, 2008, by stating as so in
its correspondence dated August 11, 2010 with MoEF. However, this factual aspect
that the proposal of forest diversion was rejected at the In-Principle stage itself was
not disclosed as such in the prospectus of ESL by the BRLMs.
35. It was also noted that the Hon’ble Supreme Court vide Order dated August 04, 2006 in
I.A. No. 1598 to 1600 (T. N. Godavarman Thirumulpad v. Union of India ) had
observed that: “in case MoEF disagrees with the recommendations of the FAC, it shall
record in writing and communicate to the said FAC. The FAC may after considering allsuch reasons, pass such further orders as it thinks fit; provided where the Government still
disagrees with the order passed by FAC, it may seek appropriate direction from the Hon’ble
Supreme Court.”
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
16/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 16 of 140
36. Thus, it was observed that inspite of the fact that the recommendation of FAC played a
crucial role in proposals for forest diversion, the BRLMs failed to disclose to the
investors the MoEF/ FAC’s decision of rejection of the forest diversion pro posal at the
in-principle stage itself. This was also despite MoEF having concurred with the views of
FAC and communicated the same to the State Government and ECL.
37. In view of the above, additional comments, if any, based on the aforesaid facts that
emerged from MoEF letters dated March 27, 2015 and June 15, 2015 and the document
copies provided therewith were sought from the BRLMs vide letter Ref: EAD-
6/AK/8825/2015/1/2/3 dated July 06, 2015 and from ESL and ECL vide letters Ref:
EAD-6/AK/RSL/18821/2015 and EAD-6/AK/RSL/18823/2015 dated July 06, 2015
respectively.
38. In response, BRLMs vide individual letters dated July 24, 2015 inter alia stated that the
process adopted of issuing repeated letters/ e-mails which are in effect supplementary
allegations and notices in the garb of clarificatory letters/ supplementary materials is
incorrect and impermissible in law. In the matter, the BRLMs referred to Order dated
January 15, 2015 passed by the Hon’ble Securities Appellate Tribunal (SAT) in the
matter of Purshottam Budhwani v SEBI (Appeal No. 53 of 2013) , wherein a similar
procedure had been found to be improper and baseless. It was also pointed out by the
BRLMs vide their aforesaid individual letters that Section 15 I of the SEBI Act, underwhich the Adjudicating Officer is appointed by SEBI, enables the Adjudicating Officer to
only look into the merits of the matter placed before the officer by SEBI and the
responses provided by the BRLMs, and thereafter to adjudicate the controversy
between SEBI and the Noticees. However, in the present case, the Adjudicating Officer
had taken the task of investigating into the matter which ought to have been done by
SEBI before the issuance of the SCN and not after receipt of the reply and submissions in
the matter. Vide the said individual letters, the BRLMs inter ali a also sought an
opportunity of inspection of new documents and records to enable them to prepare
their response.
39. As regards the BRLMs contention inter alia regarding conducting investigation process
under the garb of adjudication proceedings, it was clarified vide letter dated July 30,
2015 that the information / details / documents were sought from MoEF vide letters
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
17/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 17 of 140
dated February 09, 2015 and April 21, 2015 by invoking the powers available to the
adjudicating officer under sub-section 2 of section 15-I of SEBI Act, 1992. Further, that
as a principle of natural justice, information / details / documents received from MOEF
were provided to the BRLMs seeking additional comments of the BRLMs, if any, based
on facts that emerged from MOEF letters dated March 27, 2015 and June 15, 2015 anddocument copies provided therewith. Also, vide the said letter, an opportunity to
inspect new documents i.e. the letters / documents which were provided as annexures
to letter dated July 06, 2015 was provided on August 10, 2015. Accordingly on August
10, 2015, the AR on behalf of the BRLMs undertook inspection of documents in
connection with letter dated July 06, 2015 issued to them. The AR on behalf of the
BRLMs undertook to make further submissions by August 25, 2015 in the matter.
40. Vide individual letters dated August 25, 2015, the BRLMs while reiterating their earliersubmissions, inter alia further stated that the issue raised in the letter dated July 06,
2015 were based on assumptions, conjecture and surmise and thereby unsustainable.
That as a result of contradictory, conflicting, fragmented and inconsistent allegations
made in a piecemeal manner vide multiple notices, letters and emails, SEBI has
rendered it impossible for the BRLMs to understand the allegations against it and
effectively provide a response to the same. It was also inter alia stated that the quoted
observations made by the Hon’ble Supreme Court in Order dated August 4, 2006 (I.A.
No. 1598 to 1600) (T. N. Godavarman Thirumulpad v. Union of India ) referred to inthe letter under reply, were made by the Hon’ble Supreme Court in relation to a peculiar
situation concerning the issuance of temporary working permissions in cases of
renewal of mining leases & the said procedure prescribed therein, and cannot be
applied gener ally to all cases. Particularly, the said observations of the Hon’ble Supreme
Court have no application to the facts and circumstances of the present case.
41. In this regard, the BRLMs cited the judgment dated March 24, 2014 passed by the
Hon’ble National Green Tribunal in Appeal No. 73/2012 (Sudiep Shrivastava v. State
of Chattisgarh & Ors. ), wherein the Hon’ble Tribunal was inter alia seized of the issue
as to “ whether the advice rendered by FAC is binding on the Minister dealing with the
proposal for granting approval to the forest clearance ” and also considered the
observations of the Hon’ble Apex Court in the T.N. Godavarman case as referred to by
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
18/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 18 of 140
SEBI in the letter under reply. In this regard, the BRLMs have stated that the following
observations of the Hon’ble Tribunal are relevant:
“15. To meet the submissions of the respondents, learned counsel for the appellant has
placed reliance on the order dated 4th
August 2006 passed by the Hon’ble Supreme Court inI.A No. 1598-1600 in WP(C) no. 202/1995: T.N Godawaramn Thirumulkapad Versus Union
of India and others:(2010)13SCC 740. He particularly invited our attention to the
following directions at Para 20(x) to (xii) in the Said order:
[…]
16. It is pointed out to us by the respondents that the Hon’ble Sup reme Court was
considering a peculiar situation arising out of issuance of temporary working permissions
(TWP) in cases of renewal of mining leases without following the procedure under the FC
Act and had laid down the pre-conditions and procedure for gran t of TWP’s vide para 20
in said judgment. It is correct that the Hon’ble Supreme Court was not dealing with the
case of grant of approval for fresh mining licenses and was dealing with the peculiar
situation before it. This is apparent from a bare perusal of the order:
““18. On considerations thereof, the conditions precedent for the grant of TWP’s as well as
the procedure for their grant shall be as provided hereinafter. At the outset, it is clarified
that TWPs shall be granted only where the following conditions are satisfied.
Preconditions:
19.(i) TWPs can only be granted for the renewal of mining leases, and not where the lease
is being granted for the first time to the applicant user agency:
(ii) The mine is not located inside any national park/sanctuary notified under sections 18,
26- A or 35 of the Wild Life (Protection) Act, 1972…”
[…]
19. In the entire scheme of FC Act and the rules made therein there is no provision which
give the meaning of the word ‘advice’ or makes the acceptance of the advice tendered by
the FAC obligatory. The formation of the FAC is for the purposes of ensuring the fair and
fully informed decision by the Minister without any arbitrariness in the matter of grant of
approval under Section 2 of the FC Act. […]
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
19/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 19 of 140
20. Given a proper meaning to the word “Advise” used in section 3 of the FC Act and the
rules framed there under, it is not difficult to see that the function of FAC is to give advice
or to make recommendations to the Central Government (MoEF) which the Central
Government is under obligation to consider but is free to take such decision granting
approval to the proposal with or without conditions or rejecting the same after such further enquiry as it may consider necessary. In other words, considering the scheme of the
FC Act and the Rules made thereunder, in our considered view, such an advice is not
binding stricto senso on the Central Government (Minister of State Environment and
Forest) but the Central Government remains under obligation to duly consider the advice
of the FAC and pass a reasoned order either accepting with or without condition or
rejecting the same based on facts, studies and such other authoritative material, if
necessary gathered from further enquiry. ”
[Emphasis supplied]
42. Further, vide the said individual letters dated August 25, 2015, BRLMs have stated that
the allegations in letter dated July 06, 2015 are recorded on the basis of minutes of the
meeting held by FAC on September 10, 2010. The BRLMs have pointed out that the
minutes of the FAC meeting dated September 10, 2010 were never shared with them,
nor were they available in the public domain. It has been stated further that such
minutes were provided to them for the first time along with letter dated July 06, 2015,
however, it did not change the scope of the proceedings, nor, the submissions made
earlier. The BRLMs have also stated that it is also a matter of record from the perusal of
the correspondence provided that the minutes of the FAC were never in the public
domain. In the matter, the BRLMs have emphasized that MoEF also clarified that it did
not inform the State Government of the decision taken at FAC meeting on September 10,
2010. Also, that MoEF did not even make a mention of the FAC meeting held in
September 2010 while providing the status update to the Planning Commission.
43. Further, in response to letter dated July 06, 2015, ESL and ECL vide individual letters
dated July 27, 2015 submitted their replies. ESL/ ECL vide the said reply while
reiterating their earlier submissions has inter alia further stated that the present
enquiry is a random and roving enquiry and unconnected to the allegations in the SCN.
It has been stated that ECL’s letter to the Chief Minister dated November 17, 2010 and/
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
20/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 20 of 140
or the recommendations of FAC are of no relevance to the allegations raised in the SCN,
which were restricted to alleged non-disclosure in ESL’s IPO/ under clause 36 of Listing
Agreement (in respect of forest clearance for Kodolibad Iron Ore Mine). Further, both
ESL/ ECL in addition to submissions made earlier, have denied that FAC minutes of
September 2010 were in public domain. Also, ESL/ ECL too have stated that reference todirections passed by the Hon’ble Supreme Court on August 04, 2006 in I.A. no. 1598 -
1600 are of no relevance to the present case as they were passed in the context of
mining activity inside national parks/ sanctuaries and issue of Temporary Working
Permissions for renewal of mining lease, and are not applicable when considering grant
of approval for fresh mining lease. Further, ESL/ ECL have denied that ECL was aware of
the second rejection by FAC in September 2010 by way of any communication with
MoEF, other than by means of written correspondence. Further, it has been pointed out
that it is MoEF’s own assertion that MoEF did not communicate the recommendation ofFAC dated September 10, 2010 to the State Government.
44. In the aforesaid letter dated July 06, 2015 sent to ESL/ ECL, another opportunity of
hearing was granted to ESL/ ECL on August 06, 2015. Ms Tushna Thapliyal and Mr.
Arun Gadoria (ARs) appeared on behalf of ESL and ECL. The ARs reiterated the
submissions made vide individual letters dated July 27, 2015. Further, during the
personal hearing the ARs submitted the following case laws:
Tolaram Relumal and Ano v State of Bombay – (1955) 1 SCR 158 Sudiep Srivastava v State of Chattisgarg and Others – Judgment dated
March 24, 2014. Appeal no. 73/2012 before the National Green Tribunal,
New Delhi;
Tourist Hotel v. State of Andhra Pradesh and Ano. – (1975) 1 LLJ 211 AP Copy of the Forest (Conservation) Act, 1980 Copy of the Forest Conservation Rules, 2003 Copy of the Clause 36 of the Listing Agreement
45. Further, during the personal hearing, it was pointed out to the ARs of ESL/ ECL that vide
individual letters dated November 10, 2014 of ESL and ECL, in response to letter dated
November 03, 2014, ECL and ESL had inter alia stated that “twice rejected” in ECL’s
letter dated November 17, 2010 to Chief Minister refers to MoEF’s letters dated
November 04, 2008 and January 16, 2009. However from records, it was noted that
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
21/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 21 of 140
November 17, 2010 letter of ECL to the Chief Minister referred to the fact that forest
diversion proposal of Kodolibad Iron Ore mine was twice rejected by the FC division,
whereas letter dated January 16, 2009 is with respect to rejection of environment
clearance and not with respect to forest diversion proposal.
46. Vide hearing notice dated September 04, 2015, another opportunity of personal hearing
was granted to the BRLMs on September 22, 2015. Mr. Somasekhar Sundaresan, Mr.
Ravichandra S. Hegde and Ms. Aashni Dalal from J. Sagar Associates, Mr. Anay Khare, Mr.
M. Natarajan and Ms. Lakha Nair from Axis Capital Ltd., Mr. Bhaskar Chakraborty from
SBI Capital Markets Ltd., Ms. Bhavana Kapadia from Edelweiss Financial Services Ltd.
(Authorized Representatives – ARs of BRLMs ) appeared on behalf of the BRLMs. The
ARs reiterated the submissions made vide individual letters dated July 24, 2015 and
August 25, 2015. The BRLMs were requested to submit copy of the letter dated August13, 2010 and/ or September 20, 2010 of ECL addressed to the MoEF, Ministry of Steel or
any other authority in the matter of forest clearance of Kodolibad Iron Ore Mine Project,
if any.
47. Vide letter dated October 06, 2015, the AR on behalf of the BRLMs submitted a Note on
Submissions summarizing the key submissions made under instructions from and on
behalf of the BRLMs in the matter. It was also submitted by the AR that as per
instructions, no letter dated August 13, 2010 and/ or September 20, 2010 of ECLaddressed to MoEF, Ministry of Steel, or, any other authority in the matter of forest
clearance of Kodolibad iron ore mine project is available with the BRLMs. Also that the
BRLMs reconfirmed with the issuer company ESL and were informed that no such letter
is available in their records as well. Similar individual emails dated September 10, 2015
were also received from each of ECL and ESL confirming that as per their records, there
is no letter from ECL to Ministry of Steel dated September 20, 2010. Further while
reiterating the submissions already made, the Note on Submissions from BRLMs also
pointed to the fact that uploading of the minutes of the FAC on the website of MoEF had
commenced pursuant to the Order of the Hon’ble Supreme Court requiring
transparency in conduct of affairs of FAC. It was stated therein that therefore prior to
July 06, 2011 i.e. the date of the Hon’ble Supreme Court Order, the minutes of FAC’s
proceedings were not available in public domain.
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
22/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 22 of 140
CONSIDERATION OF ISSUES AND FINDINGS
48. I have carefully perused the written submissions wherever submitted by the BRLMs,
ESL and ECL as well as by AR of BRLMs on behalf of the BRLMs and by AR of ECL/ESL on
behalf of ECL/ESL, the facts put forth during the hearings and the documents availableon record. The allegation against the BRLMs is of failing to ensure adequate disclosure
of the fact of rejection of proposal of forest clearance for Kodolibad Iron Ore Mine in the
DRHP/ RHP/ Prospectus of ESL, and therefore violating the provisions of Regulation
57(1), Regulation 57(2)(a)(ii) and Regulation 64(1) of the ICDR Regulations and
Regulation 13 of Merchant Bankers Regulations. The allegation against ESL is of failing
to disclose the fact of rejection of proposal of forest clearance for Kodolibad Iron Ore
Mine in the DRHP/ RHP/ Prospectus of ESL, and therefore violating the provisions of
Regulation 57(1) and Regulation 57(2)(a)(ii) of the ICDR Regulations. Further, theallegation against ECL is of failing to disclose the fact of rejection of proposal of forest
clearance for Kodolibad Iron Ore Mine to the Stock Exchanges and therefore violating
the provisions of Clause 36 of the Listing Agreement read with Section 21 of the SCRA.
49. The relevant provisions referred above reads as follows:
Regulation 57 (1), 57 (2) (a) (ii) of the ICDR Regulations
Manner of disclosures in the offer document57 (1) The offer document shall contain all material disclosures which are true and
adequate so as to enable the applicants to take an informed investment decision.
(2) Without prejudice to the generality of sub-regulation (1):
(a) the red-herring prospectus, shelf prospectus and prospectus shall contain:
(ii) the disclosures specified in Part A of Schedule VIII, subject to the provisions
of Parts B and C thereof.
Due diligence.
64 (1) The lead merchant bankers shall exercise due diligence and satisfy himself about all
the aspects of the issue including the veracity and adequacy of disclosure in the
offer documents.
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
23/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 23 of 140
Regulation 13 of the Merchant Bankers Regulations
Code of conduct.
13 Every merchant banker shall abide by the Code of Conduct as specified in Schedule
III. The specific provisions are:a. Clause 1 - A merchant banker shall make all efforts to protect the interests of
investors.
b. Clause 4 - A merchant banker shall at all times exercise due diligence, ensure
proper care and exercise independent professional judgment.
c. Clause 6 - A merchant banker shall ensure that adequate disclosures are made to
the investors in a timely manner in accordance with the applicable regulations and
guidelines so as to enable them to make a balanced and informed decision.
d. Clause 7 - A merchant banker shall endeavour to ensure that the investors areprovided with true and adequate information without making any misleading or
exaggerated claims or any misrepresentation and are made aware of the attendant
risks before taking any investment decision.
e. Clause 20 - A merchant banker shall not make untrue statement or suppress any
material fact in any documents, reports or information furnished to the Board.
Clause 36 of Listing Agreement
"…..The Company will also immediately inform the Exchange of all the events which will
have bearing on the performance/ operations of the company as well as price sensitive
information.….."
Section 21 of SCRA
Conditions for Listing
21 Where securities are listed on the application of any person in any recognized stock
exchange, such person shall comply with the conditions of the listing agreement with that
stock exchange.
50. Before proceeding to examine the issues involved in the matter, from MoEF’s reply
dated June 15, 2015, I have taken note of the fact that the recommendation of FAC dated
September 10, 2010 of rejection of the forest diversion proposal for the Kodolibad Iron
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
24/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 24 of 140
Ore Mine of ECL on a second occasion was not communicated to the State Government.
Also that MoEF has started uploading the minutes of the FAC meetings, only in
pursuance to directions contained in Hon’ble Supreme Court Order dated July 06, 2011.
Hence, there is no record pertaining to uploading of the minutes of FAC meeting dated
September 10, 2010 on the website of MoEF (presently MoEF&CC). Thus, I find fromthe available records that there is nothing on record to suggest that the rejection of
ECL’s pro posal for forest diversion by FAC in September 2010 on a second occasion was
officially communicated to the State Government/ ECL by MoEF. This issue arose
because on a perusal of ECL’s letter dated November 17, 2010 to the Hon’ ble Chief
Minister of Jharkhand, it came to be realized that ECL had inter alia highlighted therein
that the Forest Diversion Proposal of its Kodolibad Iron Ore mine was twice rejected by
the FC (Forest Conservation) Division of MoEF and sent back to the State Government.
However, I note here that the BRLMs, the issuer company ESL as well as the promoter ofthe issuer company i.e. ECL have all inter alia clarified that the two letters referred in
the subject letter dated November 17, 2010 refer to – (i) letter from MoEF dated
November 04, 2008 to the State Government and (ii) letter from MoEF dated January
16, 2009 addressed to ECL. On perusal of the said two letters issued by MoEF, I note that
letter dated November 04, 2008 was issued by the FC division i.e. the Forest
Conservation division of MoEF, however, letter dated January 16, 2009 was issued by IA
division i.e. the Environmental Impact Assessment division of MoEF, and not the FC
division. Further, I find that MoEF has not commented as regards communication, if any,directly with ECL. However, in the absence of any evidence to support the prima facie
impression gathered from reading of ECL’s letter dated November 17, 2010, I accept the
contention of the BRLMs, the issuer company ESL and the promoter listed company ECL
that the minutes of the FAC meeting held on September 10, 2010 again recommending
rejection of forest diversion proposal for Kodolibad Iron Ore Mine of ECL on a second
occasion were never shared with ECL, nor, available in public domain. In view of the
same, I do not propose to take forward the issue with regard to the rejection by FAC
of the forest diversion proposal for Kodolibad Iron Ore Mine of ECL on a second
occasion in September 2010 and will proceed with the matter at hand accordingly.
51. Further, I find that the BRLMs have cited Order dated January 15, 2015 passed by the
Hon’ble Securities Appellate Tribunal (SAT) in the matter of Purshottam Budhwani
v SEBI (Appeal No. 53 of 2013) to state that issuing repeated letters/ e-mails in the
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
25/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 25 of 140
garb of clarificatory letters/ supplementary materials is incorrect and impermissible in
law, and that the Hon’ble SAT had considered a similar procedure followed in the
aforesaid cited case to be improper and baseless. Unlike the case of Purshottam
Budhwani v SEBI, where reply based on SCN and not on ‘supplementary material letters’
was considered, in the extant case, I find that all submissions made by the BRLMs, theissuer ESL and its promoter ECL have been taken on record. Also, as can be seen from
above, at every stage, an opportunity of personal hearing was given to BRLMs, issuer
ESL and its promoter ECL. Thus, the proceedings were conducted as per the principles
of natural justice. Hence, the facts in the extant case are different from the aforesaid case
referred by the BRLMs. Besides, even in the said case of Purshottam Budhwani v SEBI
referred by the BRLMs, I note that the Hon’ble SAT has remanded back to SEBI for issue
of fresh SCN by incorporating all the details. Further, I find that this concern was raised
by the BRLMs after issue of letters in the matter of purported second rejection by FACon September 2010. However, in view of the fact that I do not propose to take forward
the issue with respect to second rejection by FAC in September 2010, the contention
itself is no longer relevant.
52. With this in place, we now move ahead to examine one by one the issues involved in the
matter. The issues that arise for consideration in the present case are:
a) What is to be considered as ‘material disclosure’ from the investors point of view
and what is t he significance of the phrase ‘ offer document shall contain all materialdisclosures which are true and adequate’ as per Regulation 57(1), Regulation
57(2)(a)(ii) and Regulation 64(1) of the ICDR Regulations?
b) In which case, whether the actual status of the forest diversion proposal of
Kodolibad Iron Ore Mine of ECL was material disclosure required to be disclosed in
the Initial Public Offer (hereinafter referred to as ‘IPO’) of ESL so that the investors
investing in the IPO of ESL could take an informed investment decision?
c) If so, whether the disclosure made in the DRHP/ RHP and prospectus of IPO of ESL
with respect to the status of ‘forest clearance’ and ‘environmental clearance’ for the
Kodolibad Iron Ore Mine of ECL were true and adequate as per Regulation 57(1),
Regulation 57(2)(a)(ii) and Regulation 64(1) of the ICDR Regulations, as applicable
to the BRLMs/ issuer ESL?
d) If not, whether the BRLMs and the issuer ESL suppressed material facts regarding
rejection of ‘forest clearance’ and ‘environment clearance’ by MoEF with respect to
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
26/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 26 of 140
the Kodolibad Iron Ore Mine of ECL in the RHP of IPO of ESL and thereby misled the
investors who invested in the issue by concealing the factual status of the
clearances from them?
e) If so, did the BRLMs fail to exercise proper due-diligence on their part in violation
of Clause 1 of Form C of Schedule VI of Regulation 57(1), Regulation 57(2)(a)(ii)and Regulation 64(1) of the ICDR Regulations and Regulation 13 of the Merchant
Bankers Regulations read with clauses 1, 4, 6, 7 and 20 of Code of Conduct for
Merchant Bankers as specified in Schedule III?
f) Does the violation, if any, on the part of the BRLMs attract monetary penalty under
Section 15HB of the SEBI Act?
g) If so, what would be the monetary penalty under Section 15HB of SEBI Act against
the BRLMs and the issuer ESL taking into consideration the factors mentioned in
Section 15J of the SEBI Act?h) Further, what constitutes events having a bearing on the performance/ operations
of a company as well as price sensitive information, which are required to be
immediately disclosed to the stock exchanges in accordance with Clause 36 of the
Listing Agreement?
i) In which case, whether the rejection of the proposal for forest clearance for
Kodolibad Iron Ore Mine of ECL by MoEF was a event having a bearing on the
performance/ operations of ECL as well as a price sensitive information, which was
required to be immediately disclosed to the stock exchanges in accordance withClause 36 of the Listing Agreement read with Section 21 of SCRA?
j) If so, whether such disclosure was made by ECL to the concerned stock Exchanges
where the shares of the company were listed?
k) Does the violation, if any, on the part of ECL attract monetary penalty under Section
23A(a) and 23E of the SCRA?
l) If so, what would be the monetary penalty under Section 23A(a) and 23E of the
SCRA against ECL taking into consideration the factors mentioned in Section 23J of
the SCRA?
53. I note that the BRLMs, ESL and ECL have inter alia denied all allegations made in
the complaints and the SCN/ letters issued to them. ESL has inter alia also stated
that the contentions, allegations and averments in the complaints, SEBI’s letter and
SCNs are contrary to and inconsistent with events that transpired leading to receipt
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
27/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 27 of 140
of in-principle approval by ECL from the Central Government. Further, the BRLMs
have inter alia stated that there was no independent enquiry or any investigation
conducted by SEBI in the present case. The BRLMs have stated that without any
independent evaluation of facts and records, selectively recording the
acknowledgement made by the BRLMs without appreciating the content of the saidresponses, such acknowledgment cannot in any manner be construed as admission
of fault by the BRLMs. The BRLMs vide letter dated December 31, 2013 have inter
alia stated that the word ‘rejection/ rejected’ in their earlier response cannot be
construed to be an acknowledgement of rejection as alleged in the complaint
letters filed with SEBI, as the word rejection was coined in the reply in context of
the letter of SEBI which was under reply. The BRLMs have stated that the
Adjudicating Officer, hence, ought to consider all submissions made without
limiting to or relying only upon the documents relied upon and annexed to the SCN,and, follow the adversarial system to consider whethe r at all SEBI’s observations &
allegations are sustainable to warrant the initiation of the present proceedings. The
BRLMs have also stated that ESL in its reply has pointed out that the complainants
were neither investors nor shareholders of the company.
54. In the matter, all submissions made by the BRLMs, ESL and ECL both written and at
the personal hearing, as well as documents placed on record, are given due
consideration. I find that SCN is generally issued based on an investigation or
preliminary inquiry conducted by SEBI, and an adjudicating officer so appointed, is
required to conduct a quasi-judicial enquiry and accordingly penalize or acquit the
persons charged. Further, as regards the suggestion of the BRLMs of following the
adversarial system, I note here that fairness to the BRLMs is better protected in the
adversarial system. However, some of the good features of the Inquisitorial system
can also be adopted to strengthen the adversarial system and make it more
effective. This includes leading evidence with the object of seeking the truth and
focusing on justice to the investors. Further, I find that Courts have alsoconsistently opined that though trials in India are adversarial, there are instances
where shades of the inquisitorial system seep in, like in Public Interest Litigations
and examination of witnesses. The Hon’ble Supreme Court in Makhan Lal Bangal
v. Manas Bhunia & Ors (2001) 2 Supreme Court Cases 652 has held as follows:
“Though the trials in India are adversarial, the power vesting in the court to ask any
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
28/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 28 of 140
question to a witness at any time in the interest of justice gives the trial a little touch
of its being inquisitorial. ” Similarly, in Manohar Joshi v. State of Maharashtra
reported in MANU/SC/1218/2011, the Hon’ble Supreme Court held as follows:
“By its very nature the PIL is inquisitorial in character. Access to justice being a
Fundamental Right and citizen's participatory role in the democratic process itselfbeing a constitutional value, accessing the Court will not be readily discouraged.”
Taking all of the same into consideration, the Order is being passed by following
the adversarial system and exercising the powers available to the Adjudicating
Officer under Section 15I(2) of the SEBI Act and Rule 4(6) of SEBI (Procedure for
Holding Inquiry and imposing Penalties by Adjudicating Officer) Rules, 1995.
55. Further, it is a settled law that where an authority makes an Order in exercise of
a quasi-judicial function, it must record its reasons in support of the Order itmakes. Every quasi-judicial order has to be supported by reasons. Similarly, in the
extant case, I propose to pass a speaking Order giving reason in support and after
observing the principles of natural justice.
56. I further note that vide letter dated December 31, 2013, the BRLMs have inter alia
stated that to hold them guilty of the alleged violations, it is important that each of
the grounds mentioned below will have to be dismissed by the Adjudicating Officer
with justifiable reasons: That there was no “rejection” of the Proposal made by ECL and it was merely a
communication issued by the MoEF which inter alia informed the inability of the
FAC to recommend acceptance of the Proposal;
That there is no provision for rejection of Proposal, more particularly by the FAC
which is a mere recommending body to assist the MoEF, under the applicable rules
and regulations formulated by MoEF as amended from time to time;
That the same Proposal which was submitted by ECL in 2007, was considered by
the MoEF (which is the deciding authority) and in-principle approval was granted
by the Central Government on February 13, 2012. No fresh Proposal had ever been
submitted;
That the reconsideration of the Proposal cannot mean conside ring a “rejected”
Proposal. Without prejudice to the above, it is to be noted that, even if the Proposal
were to have been rejected by MoEF, such rejection would not have been fatal to
http://fnopenglobalpopup%28%27/citation/crosscitations.asp','MANU/SC/1218/2011','1');http://fnopenglobalpopup%28%27/citation/crosscitations.asp','MANU/SC/1218/2011','1');
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
29/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 29 of 140
the public issue made by the Issuer Company save and except the cost factors as
mentioned in the Risk Factors;
That the Proposal and the underlying events pertained to ECL and not the Issuer
Company. Adequate disclosures and risk factors pertaining to the Issuer Company
have been admittedly provided in the Prospectus; That even assuming without admitting that there was indeed a rejection of
Proposal, the said rejection is not fatal to the object and purpose of the public
issue, and therefore lacks “materiality”;
That it is incorrect to state that there was no visible event that had taken place
indicating a reversal of the initial decision of rejection;
That they have taken all necessary care and exercised due diligence in the conduct
of their affairs in the matter as expected from the merchant banker or any
regulatory bodies.
57. I note here that the BRLMs, ESL and ECL have all endeavoured to provide a
complete chronology of events in the matter, the scheme of the applicable law
along with all necessary records in support thereof. Taking the same into
consideration, we will now move ahead to examine one by one each of the issues
listed as above at Para 52 above.
A) The first issue for consideration is what is to be considered as ‘materialdisclosure’ from the investors point of view and what is the
significance of the phrase ‘ offer document shall contain all material
disclosures which are true and adequa te’ as per Regulation 57(1),
Regulation 57(2)(a)(ii) and Regulation 64(1) of ICDR Regulations?
58. BRLMs Submission vide letter dated December 31, 2013 in the matter: That the ICDR Regulations do not provide for any cut and dried formula to
identify materiality of information in any offer document; The word materiality is also not defined in the ICDR Regulations. Therefore, it is
prudent and reasonable that the materiality of a given fact be judged on the
basis of the following criterion:
Whether the failure to disclose such fact has resulted in providing
inadequate information to the shareholders;
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
30/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 30 of 140
Whether the failure to disclose such fact has resulted in depriving the
shareholders to take an informed decision;
Whether such fact, when disclosed would have changed the decision of the
investors who would have taken a different decision than what was taken in
the absence of disclosure of such fact.
59. I note that ICDR Regulations under Regulation 57(1) states that the offer document
shall contain all material disclosures which are true and adequate so as to enable
the applicants to take an informed investment decision. Thus, I note that disclosure
of all material facts in the RHP is a matter of legal obligation. However, as pointed
out by the BRLMs, what is ‘material disclosure’ has not been defined under the
ICDR Regulations. It is based on the disclosures made in the prospectus that an
investor decides whether to invest in a particular company or not. I agree with thesubmissions made by BRLMs as above. I note that ‘material disclosure’ has to be
determined objectively from the view point of a reasonable investor. Accordingly, I
note that the assessment of the materiality of an event or development requires a
contextual determination that takes into account all of the relevant circumstances,
including the nature of the event or development and its consequences to the
issuer's business.
60. Here it, however, needs to be noted that the word ‘material’ means ‘important’. TheBlack's Law Dictionary (Tenth Edition) defines 'Material' inter alia as 'Of such a
nature that knowledge of the item would affect a person's decision making;
significant; essential.' Further, Materiality is not the same as completeness. One
might possess all material information without necessarily possessing all true and
adequate information. Hence, I find that the ICDR Regulations has tried to strike a
balance by requiring issuers to disclose in the offer document all material
disclosures which are true and adequate, so as to enable the investors to take an
informed investment decision.
61. Now to examine what constitutes material disclosures that are true and adequate
from the investors’ point of view, we need to look at the aspect of what investors
expect in a disclosure. Investors, in general, expect explicit statements bringing out
the real facts and how it would affect their investments or that of the issuer
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
31/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 31 of 140
company. Hence, disclosures in prospectus should be based on actual facts at the
time of the issue and not based on some speculation or hypothesis. In case any
event or outcome happens, which may directly or indirectly affect the issuer
company and / or investors, an investor has the right to know and the issuer/
BRLMs is required to inform the investors all the facts necessary to ensure theunderstanding of what has occurred. Concern regarding what impact such truthful
disclosure would have on an investor should not weigh in the mind of the issuer
while making disclosures in the prospectus. Further, the subjective views of the
issuer, if any, thus, does not factor into this analysis. Thus, true and adequate
disclosure is said to be made, if the disclosure is accurate and not misleading and
does not omit a fact that is either material itself or is necessary to understand the
facts that have been disclosed, so as to enable the investors investing in the issue to
take an informed investment decision.
62. Besides, I note that Regulation 57(2)(a)(ii) of the ICDR Regulations states that the
RHP, shelf prospectus and prospectus shall contain disclosures specified in Part A
of Schedule VIII subject to the provisions of Parts B and C thereof. Also as per 64(1)
of the ICDR Regulations, BRLMs are required to exercise due diligence and satisfy
themselves about all the aspects of the issue including the veracity and adequacy of
disclosure in the offer documents.
B) In which case, the next issue for consideration is whether the factual
status of the forest diversion proposal of Kodolibad Iron Ore Mine of
ECL was a material disclosures required to be disclosed in the IPO of
ESL, so that the investors investing in the IPO of ESL could take an
informed investment decision?
63. BRLMs Submission vide letter dated December 31, 2013 in the matter: that the information pertaining to the rejection of proposal by an advisory
committee pertains to the approval to be obtained from ECL and not ESL;
that rejection or approval of the Proposal would not have any material
bearing on the Issuer Company ESL, except to the limited extent of increasing
the cost of procuring the raw materials, which cannot, by any stretch of
-
8/18/2019 Adjudication Order in the matter of M/s Electrosteel Steels Limited and M/s Electrosteel Castings Limited.
32/140
______________________________________________________________________________________ Adjudication Order in the matter of M/s. Electrosteel Steels Ltd. and M/s. Electrosteel Castings Ltd. Page 32 of 140
imagination, be construed as a material factor affecting the business of the
Issuer Company ESL or its working;
That the fact that the Proposal was pending approval from MoEF was a fact
clearly borne out from the facts mentioned in various letters;
That in addition to the same, the Prospectus contained several Risk Factorswhereby, the possibility of the Proposal being rejected was also accounted for.
Further, the Risk Factors also intimated the investors that alternative
arrangements by Issuer Company would have to be made to procure the raw
materials in the event of the rejection of forest clearance. Therefore, the
disclosure or non-disclosure of the alleged rejection cannot have any material
bearing on the decision of the investors.
64. ESL’s Submission vide letter dated February 10, 2014 in the matter: The so called rejection as per records was only an initial response as a part of
the process and was certainly not a final decision;
The initial so called rejection