One of the justifying conditions for relaxation can be due to factor beyond entity's control: 102(1)(e) of SEBI LODR Regulations

One of the justifying conditions for relaxation can be due to factor beyond entity's control: 102(1)(e) of SEBI LODR Regulations

It was observed that the delay on behalf of the Noticee Vistara ITCL to file disclosure under Regulation 52(1) of the LODR Regulations to the exchange was due to destruction of its units caused by a cyclone

Herein, the Securities and Exchange Board of India (SEBI) had received a letter from Vistara ITCL (India) Ltd. (Vistara), a SEBI-registered Debenture Trustee in which Vistara had provided a list of companies from which it had not received till that date the Half Yearly Communication (HYC) as per Regulation 52(4) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, (LODR Regulations) for the half year ended March 31, 2019.

The aforesaid list of companies included Patil Rail Infrastructure Pvt. Ltd.(Noticee/Company). In view of the aforesaid information, SEBI conducted an examination and had observed prima facieviolation of Regulation52(1)of LODR Regulations by the Noticee.

The Show Cause Notice(SCN) issued to the Noticee alleged that it failed to submit financial results of the company for the half year ended March 31, 2019 to the exchange, which was not in compliance of Regulation 52(1) of the LODR Regulations.

The Adjudicating Officer(AO) observed that in pursuance of the reference of Vistara, SEBI sought information from the Exchanges (NSE and BSE) regarding the compliance status of the Noticee with respect to Regulation 52(1)of the LODR Regulations for the half year ended March 31, 2019.

From the submissions of the BSE vide its email, it was observed that the company had not complied with the provisions of Regulation 52(1)of the SEBI LODR Regulations. Further, the Noticee submitted that they had filed the audited financial results for the half year ended March 3l, 2019 to BSE on October l, 2019. Hence, it was noted that the company had made delayed disclosure to the Exchange under Regulation 52(1) of the LODR Regulations.

It was noted that the company was not in a position to finalise its audited financial results for the half year ended March 31, 2019 on or before the due date of May 15,2019. It was also put forth that Regulation 102 of the LODR Regulations gives power to the Board to relax the strict enforcement of the LODR Regulations.

In the instant case, it was observed that the delay on behalf of the Noticee to file disclosure under Regulation 52(1) of the LODR Regulations to the exchange had resulted due to destruction of its units caused by a cyclone.

In this regard, to substantiate its claim, the Noticee had submitted the weather report for May 03, 2019 obtained from the Indian Meteorological Department (IMD)and proof of discharge of their insurance claim by the 'Oriental Insurance company' due to loss/damage that happened to the Noticee due to the cyclone on May 03, 2019.

Additionally, vide its email dated December 05, 2020, the Noticee had further submitted certified true extract from the minutes of their Board meeting held on May 03, 2019, in which the chairman of the company had informed the Board about destruction of their manufacturing unit in Orissa due to cyclone on May 03, 2019.

The MCA had granted an extension of two and a half months for holding an AGM by the company which was due on September 30, 2019due to delay in finalization of financial results by the company caused due to the cyclone.

Hence, it was noted that the said delay in compliance with the said Regulation by the Noticee was because of an act of God/force majeure eventwhich made the fulfilment of condition by the Noticee as prescribed by the said Regulation impossible.