[2022] 15 S.C.R. 1

A
B
C
D
E
F
G
H
1
   [2022] 15 S.C.R. 1
1
SECURITIES AND EXCHANGE BOARD OF INDIA
v.
RAJKUMAR NAGPAL & ORS.
(Civil Appeal No. 5247 of 2022)
AUGUST 30, 2022
[DR. DHANANJAYA Y CHANDRACHUD,
SURYA KANT AND A. S. BOPANNA, JJ.]
SEBI (Debenture Trustees) Regulations 1993 – Companies
Act 1956 – S. 391 (s. 230 Analogous provision, Present law) –
Company Act 2013 – SS. 1(4), 430 – Recovery of Debts – Resolution
Plan – Debenture Holders – Debenture Trust Deeds – Reliance
Commercial Finance Limited (RCFL) issued Non-Convertible
Debentures to various persons – Vistra ITCL was the Debenture
Trustee – RCFL committed default under the Debenture Trust Deed
on March 4, 2019 – On June 07, 2019, a RBI circular provided that
certain lenders may opt for a resolution strategy available to them
under the existing legal framework, including entering into a
resolution plan or initiating legal proceedings for recovery or
insolvency – Thereafter, SEBI issued a circular dated 13 October
2020 providing ‘Standardisation of procedure to be followed by
Debenture Trustee(s) in case of default by issuers of listed debt
securities’ – Debenture Holders instituted a suit before the High
Court, for the protection of their interests with respect to amount
due to them by RCFL – Single Judge of the High Court suggested
that all the concerned parties to enter into a negotiated settlement –
Pursuant to that, the terms of repayments under Resolution Plan
was formulated under the inter-creditor agreement (ICA) and
approved by the company’s lenders – Single Judge also held that
SEBI Circular dated 13 October 2020 could not be permitted to
operate retrospectively and didn’t govern the Debenture Trust Deed
– It directed debenture trustee to conduct a meeting of all debenture
holders in terms of Debenture Trust Deed and SEBI Circular would
not override the express terms of any of the Debenture Trust Deed –
SEBI challenged the Single Judge’s order dated 28 October 2021
and 15 November 2021 before the Division Bench – Division Bench
of the High Court held that SEBI circular would not apply
retrospectively to defaults committed prior to 13 October 2020 –

A
B
C
D
E
F
G
H
2
SUPREME COURT REPORTS
[2022] 15 S.C.R.
Aggrieved by this decision SEBI moved to the Supreme Court – (i)
Whether the Debenture Holders and other parties were required to
follow the Procedure under the SEBI Circular – (ii) Whether the
civil Court had the jurisdiction to entertain the lis in this case – On
appeal, held : SEBI Circular does not stipulate that the signing of
an ICA is the only route to entering into a compromise with the
issuer company – Besides the absence of a clause mandating an
ICA pursuant to an event of default, clause 6.5.3 of the SEBI Circular
recognizes that the debenture holders (through the Debenture
Trustees) may undertake actions besides those contemplated in the
SEBI Circular – However, if the Debenture Holder’s choose to
implement a Resolution Plan to which the lenders are party, they
must do so in compliance with the conditions laid down in the SEBI
Circular – SEBI circular was issued with reference to the RBI circular
– Both the RBI Circular and the SEBI Circular refer to one and the
same ICA and Resolution Plan – This is evident from Clause 4 of
the SEBI Circular – When the SEBI circular came into force, it
specified the conditions under which the debenture holders (through
the Debenture Trustees) could access this Resolution Plan and
participate in its formulation via the ICA – The ICA and the
Resolution Plan are inextricably intertwined and the latter has its
genesis in the former, and flows from it – Any reference to an ICA in
the SEBI Circular is also necessarily a reference to the Resolution
Plan and vice versa – The SEBI Circular does not mandate the
execution of an ICA as the only route to entering a compromise with
the issuer company, it lays down a procedure in the event that
debenture holders choose the route of implementing a Resolution
Plan with the lenders – This proce

…