The Securities Appellate Tribunal (SAT) has failed to come out with a decisive verdict on the validity of the PNB Housing Finance-Carlyle deal.

“In view of the difference in opinion between the members of the bench, we direct the interim order dated June 21, 2021 to continue till further orders,” Justice Tarun Agarwala, who is the presiding officer, and Justice M.T. Joshi, judicial member of the SAT, said in an order on Monday.

The interim order had stated that the outcome of the extraordinary general meeting (EGM) of PNB Housing Finance on the preferential allotment of shares and warrants will not be made public. The verdict puts a pause on the progress of the Rs 4,000-crore deal with Carlyle, General Atlantic and Salisbury Investments.

Justice Joshi held that Sebi had issued the notification correctly and that the EGM vote cannot go ahead unless the valuation report is also obtained under the Articles of Association and placed before the general body of shareholders.

“In the present case, in order to safeguard the interest of investors, the impugned order was passed by Sebi on the lines of the provisions made in Article 19(2) by the appellant company and its shareholders, at the time the company was to be listed on the stock exchanges. Therefore, in my view the same cannot be called illegal or unjustified,” he said.

Justice Tarun Agarwala held that Sebi ought not to have stopped the voting at the EGM as the PNB board had approved the issuance of shares according to the ICDR and shareholders should have been allowed to vote.

“The right of the shareholders to accept or reject an agenda is supreme and paramount which cannot be whittled by any executive action of the respondent,” said Agarwala. He said Sebi could have questioned the resolution after it was accepted by the majority of shareholders.

Before the EGM on June 22, Sebi had directed the company to stop allotment unless valuation was carried out by an independent valuer. This prompted PNB Housing Finance to approach SAT for relief. Both sides are now likely to appeal to the Supreme Court.