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

Bombay: Indian Border On Monday, the company requested a suspension of the valuation exercise to be carried out by the registered appraiser appointed by the National Stock Exchange (NSE), in a new request filed before the Securities Appeals Tribunal (SAT).

The valuation should be carried out in relation to alleged transactions between related parties of the company.

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

Market regulator Securities and Exchange Board of India (Sebi) had asked the NSE to appoint a registered valuer to carry out a valuation of the business lost and received, including by way of geographical 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.

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Venkatesh Dhond, senior advocate appearing for Linde, argued that the “valuation exercise is an enquiry into the past… preparing a valuation report which will then serve as a basis for Sebi to decide what needs to be done in the future; it is an exercise which can await an outcome.”

Dhond added that the company’s main concern was that the valuation exercise involved sharing important, confidential and price-sensitive information.

“We are asking that this process be kept for a period of 30 days till the final hearing is held. We do not want to share this information with the assessee or make it public domain. There is no compelling urgency for Sebi to finalise this within 45 days,” the senior counsel argued.

On the other hand, senior advocate Darius Khambata, representing Sebi, said: “It is a smokescreen to create a lot of smoke… Sebi is right in its interpretation… This valuation report will not cause any harm.”

A bench headed by Justices PS Dinesh Kumar and Dheeraj Bhatnagar is likely to pass an order in the matter on Tuesday.

Under scrutiny

On April 29, Sebi had said in its interim order that Linde India was carrying out material transactions with related parties, which prima facie appear significant, without first obtaining permission from shareholders. The company did not make any valuation available to its board when the decision to award future business to a related party was taken, the order said.

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

As per the regulator’s order, NSE was required to share the valuation report with Sebi and the company. After receiving the report, Linde was asked to present it before the audit committee and the board of directors of the company.

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

Aggrieved by the regulator’s order, Linde turned to the SAT in May 2024. requesting an interim measure. However, the matter has not yet been decided on the merits.

Earlier in August, the SAT had fixed the date of the final hearing for October 15. The court had also asked Sebi to file its response in the matter.