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2019 (4) TMI 596 - SECURITIES APPELLATE TRIBUNAL, MUMBAIViolation of SEBI PFUTP Regulations - non adherence to mandated disclosure under Regulation 7 of the Takeover Regulations, 1997 - as alleged parties connected to each other and were Persons Acting in Concert (“PACs”) with the Birlas acquired shares of the appellant company without making mandatory disclosures as prescribed under law - HELD THAT:- Here the target company in question is the appellant whose promoters held 63% of its share capital at the relevant time. That means even if all other parties coming together would still be in a minority. The argument that an effort in substantial acquisition of shares in the appellant company has been made stands disproved as it is an admitted fact that the combined shareholding of all respondents together was less than 10%. The trigger for mandated disclosure under Regulation 7 of the Takeover Regulations, 1997, has been violated does not have merit since it is found that respondents who were found to be PACs had a maximum shareholding of only about 4.85% of the shareholding in the appellant company. We also found no merit in the argument that all the 10 respondents were persons acting in concert and came together to dislodge the then management of the company based on the fact that they were petitioners/consenting shareholders to a Company Petition filed against mismanagement and oppression etc. In fact what is on evidence is that some of the respondents had sold part of their shares even prior to the Company Petition filed in March 2010. If these entities were in fact consolidating their shareholding in the appellant company such reverse transactions would not have been done. Similarly, some of the entities such as Respondent No. 2 had acquired the shares of the appellant company since the latter’s incorporation and as such cannot be held to have acquired the shares of the appellant with a motive or objective of dislodging the management and for taking over the company. In the light of these facts even if Respondents 2 to 11 were parties to a Company Petition filed under Section 397/398 of Companies Act as shareholders with certain objective that same motive cannot be extended to allege commonality of intent or motive as PACs under 2(1) e (1) of the Takeover Regulations, 1997. As held in Daiichi Sankyo Company Limited [2010 (7) TMI 289 - SUPREME COURT OF INDIA] and K.K. Modi (supra) [2001 (11) TMI 947 - HIGH COURT OF BOMBAY] a common objective for acquiring shares need to be established which is not available in this present matter. Accordingly, we find no merit in the contention that the respondents have violated Regulation 7 of Takeover Regulations, 1997. Appeal dismissed.
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