Linde India seeks stay on valuation exercise in related-party transaction case

Mumbai: Linde India on Monday sought a stay on the valuation exercise to be conducted by the National Stock Exchange (NSE)-appointed registered valuer, in a fresh application filed before the Securities Appellate Tribunal (SAT).

The valuation is to be done in connection with alleged related-party transactions of the company.

The matter pertains to various transactions and agreements that Linde India entered into with Praxair India and Linde South Asia Services, both of which are related parties of the company.

Market regulator Securities and Exchange Board of India (Sebi) had asked NSE to appoint a registered valuer to carry out a valuation of the business foregone and received, including by way of geographic allocation, in terms of the joint venture (JV) and shareholders agreement (SHA) between Linde India and Praxair India that led to the formation of Linde South Asia Services.

Also read | Bombay court ruling raises questions on Sebi’s power to punish company promoters

Venkatesh Dhond, senior counsel appearing for Linde, argued that the “valuation exercise is an inquiry into the past…to come up with the valuation report which is then going to be a basis for Sebi to decide what is to be done in future, is an exercise which can await a finding.”

Dhond added that the main concern for the company was that the valuation exercise involved sharing significant confidential and price-sensitive information.

“We are seeking that this process wait for a period of 30 days until the final hearing takes place. We do not want to share this information with the valuer or in the public domain. There is no earth-shaking urgency for Sebi to finish this within 45 days,” the senior counsel argued.

On the other hand, senior counsel Darius Khambata, representing Sebi, said, “It is a red herring to generate a lot of smoke... Sebi is right in its interpretation... No prejudice will be caused through this valuation report.”

A bench led by justices P.S. Dinesh Kumar and Dheeraj Bhatnagar is likely to pass an order in the matter on Tuesday.

Under scrutiny

On 29 April, Sebi had said in its interim order that Linde India was carrying out material related-party transactions, which on the surface seem significant, without first obtaining shareholder permission. The company did not make any valuation available to its board when the decision to award future businesses to a related party was made, the order said.

Read more | Let’s get real about promoter control of companies

Pertinently, Sebi said the interim order was passed after it received multiple complaints from shareholders based on which it stated the company had carried out related-party transactions.

According to the regulator’s order, it was directed that NSE must share the valuation report with Sebi and the company. After receiving the report, Linde was asked to present the report before the audit committee and the board of the company.

The company was also asked to share the valuation report including certain key observations on the exchanges, along with management comments.

Aggrieved by the regulator’s order, Linde had approached the SAT in May 2024 seeking interim relief. However, the matter is yet to be decided on merit.

Earlier, in August, SAT had posted the matter for final hearing on 15 October. The tribunal had also asked Sebi to file its reply in the matter.