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2021 (3) TMI 349 - AT - SEBICompensatory interest on increased offer price - valuation of the shares to be done in accordance with Regulation 8(2)(e) of the SAST Regulations - Application for payment of interest rejected - appellant has prayed for compensatory interest at the rate of 10% per annum on increased offer price to be paid from April 10, 2018 to October 9, 2018 and 18% compensatory interest from January 31, 2020 till date of payment - HELD THAT:- Interest starts running from the date when respondent No. 2 entered into an agreement to acquire 100% ownership of FML which is April 10, 2018. The period of interest stops when respondent No. 2 submitted the draft letter of offer which was published on October 9, 2018. For this period, namely, April 10, 2018 to October 9, 2018 interest has been paid. After SEBI finalized the price of the shareholders on July 4, 2019 interest becomes payable and which has been paid in accordance with the provisions of the Regulations from August 21, 2019 to January 30, 2020 when the amount was eventually paid. Reason for not paying the interest by respondent No. 2 for the intervening period i.e. from the date when the draft letter of offer was published on October 9, 2018 till the date of finalizing the price by SEBI on July 4, 2019 is, that this period was not in the hands of the respondent No. 2. We are of the opinion that the respondent No. 2 cannot be saddled with payment of interest for the period when the price was required to be finalized by SEBI under Regulation 8(16) of the SAST Regulations. It would be unfair on the part of SEBI as well as on the part of the Tribunal to saddle payment of interest upon the acquirer respondent No. 2 for the period when the price was being determined by SEBI. The contention that the shareholders should not suffer due to long pending litigation initiated by the acquirer and, therefore, the acquirer should be directed to pay to the shareholders the interest is erroneous. When SEBI had directed the acquirer to raise the share price from ₹ 400/- to ₹ 608.46 on March 20, 2019, the appellant himself filed appeal No. 182 of 2019 and again filed appeal No. 359 of 2019 when SEBI passed a fresh order fixing the price on July 4, 2019. Thus, in our view no interest is payable from the date of filing of the publication of the draft letter of offer, i.e., from October 10, 2018 to July 4, 2019 when SEBI eventually fixed the price of the shares. We do not find any error in the order of SEBI rejecting the application for grant of interest.
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