Justice Jasmeet Singh dismissed the writ petition filed by former judicial officer K. C. Aggarwal, observing that the plea appeared to have been instituted only to stall the IPO of the country’s largest stock exchange.
The petition challenged Sebi’s January 30 communication allowing NSE to restart the IPO process, nearly a decade after its first attempt at listing. The NOC enables the exchange to initiate preparatory steps towards going public.
Following Sebi’s approval, NSE has reconstituted its IPO committee and appointed Rothschild & Co as an independent adviser for the process.
The proposed IPO will be a pure offer for sale, with no fresh issue of shares.
Aggarwal’s challenge centred on Sebi’s corporate action adjustment framework, which seeks to ensure economic neutrality in derivatives positions during events such as bonus issues, stock splits and special dividends.
He alleged that NSE failed to implement the framework correctly in certain instances by adjusting only contract prices without modifying quantities, and by directly debiting dividend-equivalent amounts from derivatives traders’ accounts, including his own.
He argued that dividends accrue solely to shareholders under the Securities Contracts (Regulation) Act and that recoveries from derivatives participants lacked statutory backing. He also contended that his representations to NSE were disposed of without a hearing and that Sebi endorsed the exchange’s stance without an independent examination. Requests under the Right to Information Act seeking details of the debits were rejected, which he said undermined transparency.
Citing concerns around investor protection and market integrity, Aggarwal sought directions restraining Sebi from granting any clearance for the IPO until a detailed inquiry was conducted.
The court, however, declined to intervene, removing a potential judicial hurdle to the listing process.
NSE’s efforts to go public date back to October 2016, when it first filed draft IPO papers with Sebi. The plan was subsequently stalled due to governance concerns, including the co-location case involving preferential server access, as well as issues relating to technology systems and internal controls.
Over the past year, the exchange has revived its listing efforts after several legal matters were resolved either before the Securities Appellate Tribunal or through settlements. NSE has filed two settlement applications with Sebi in the co-location and dark fibre cases, for which it has made provisions of around ₹1,300 crore.
The NOC granted last month signalled the regulator’s in-principle satisfaction with the remedial steps taken by NSE on governance, allowing it to move ahead with the IPO process.
