# In the matter of Harsh Mehta vs. Securities and Exchange Board of India (SEBI)

> HC judgment dated 2024-12-02. Citation: TCN-2024-HC-00009. The writ petition challenges the validity of Regulation 3(2)(b)(i) of the SEBI (Delisting of Equity…

- **Court:** HC
- **Order date:** 2 Dec 2024
- **Citation:** TCN-2024-HC-00009
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-new-delhi/harsh-mehta-vs-securities-and-exchange-board-of-india-d52e5dcb

## Summary

### Background

The writ petition challenges the validity of Regulation 3(2)(b)(i) of the SEBI (Delisting of Equity Shares) Regulations, 2021, arguing it is ultra vires the SEBI Act, 1992. The petitioner also challenges the NCLT order dated 27 February 2024, which approved a resolution plan providing for the delisting of shares of Reliance Capital Limited (RCL). The petitioner contends that the impugned regulation allows delisting without due compliance with restrictions and safeguards, prejudicing investors' interests. The Reserve Bank of India (RBI) had superseded the Board of Directors of RCL and initiated Corporate Insolvency Resolution Process (CIRP). The NCLT approved a resolution plan that nullifies a significant portion of RCL's public shareholding. The petitioner, an investor

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## Facts

The petitioner, Harsh Mehta, challenges the validity of Regulation 3(2)(b)(i) of the SEBI (Delisting of Equity Shares) Regulations, 2021, and the NCLT order dated 27 February 2024, approving the resolution plan for Reliance Capital Limited (RCL). The RBI superseded RCL's board on 29 November 2021, and initiated CIRP on 2 December 2021. The petitioner purchased 6,700 shares of RCL in November 2022, after the company was admitted to CIRP. The NCLT approved a resolution plan on 27 February 2024, assigning nil value to equity shareholders and providing for delisting. The petitioner did not appeal the NCLT order to the NCLAT. The petitioner argues that the impugned regulation allows delisting without following the Delisting Regulations, prejudicing investors. The

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## Issues and analysis

### Issue 1: Whether Regulation 3(2)(b)(i) of the SEBI (Delisting of Equity Shares) Regulations, 2021, is ultra …

**Ratio:** The SEBI Act and the SCRA confer substantial powers on the SEBI to enact regulations,

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**Reasoning:** The court reasoned that the objectives of the SEBI Act and the SCRA are to prevent

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**Interpretation:** The court interpreted the SEBI Act and the SCRA as granting broad powers to the

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**Application:** The court applied the ratio to the facts of the case, finding that the Impugned

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## Parties

- **Judges:** M.S. S…; Jitendra…
- **Appellants:** Harsh M…
- **Respondents:** Reliance Capital…; Securities and…
- **Other parties:** Kohi…

## Timeline

- **2021-11-29 — RBI Supersedes Board of…**: The Reserve Bank of India (RBI) superseded the Board of Directors of Reliance Capital Ltd…
- **2021-12-02 — RBI Files Application…**: The RBI filed an application before the NCLT for admitting RCL to Corporate Insolvency…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 32 — Appeal](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-32)

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