TMI Blog2015 (9) TMI 1070X X X X Extracts X X X X X X X X Extracts X X X X ..... ally converted. According to the contention, only when securities or shares are converted by the acquirer into voting rights by getting it registered or upon exercise of option to acquire voting rights, the liability of making public announcement can be fastened. - Held that:- We find that the plea that the matter at hand relates to Regulation 14(2) was not raised before the original authority or the Tribunal. We also find that it is a plea of desperation and undeserving of acceptance. There is no merit in these appeals and hence they are dismissed with consolidated cost of ₹ 50,000/- to be paid by the appellant to SEBI within eight weeks. - Decided against the appellants. - Civil Appeal No. 3219 of 2006, Civil Appeal No. 2132 of 2007 - - - Dated:- 18-9-2015 - Vikramajit Sen And Shiva Kirti Singh, JJ. JUDGMENT Shiva Kirti Singh, J. 1. Both the appeals have been preferred by the same appellant under Section 15Z of the Securities Exchange Board of India Act, 1992 (for short, SEBI Act ). The main appeal is of 2006 and requires detailed consideration. It is directed against order dated 08th August 2005 passed by the Securities Appellate Tribunal upholding a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was claimed by the appellant on the ground that it had already pledged its shares to lenders who had lent money to SIL. The plea of pledge raised by the appellant was found without any substance and only an attempt to conceal subsequent purchase. Hence, SEBI came to a conclusion that the appellant was already holding between 15% to 75% shares of the target company SIL and it could acquire additional shares of this company through creeping acquisition mode, that is, without public announcement only upto 5% of its paid up capital during the period of 12 months ending on 31st March 2000. However, by acquiring 11,36,700 shares of SIL during June 1999 to August 1999 it acquired shares constituting more than 5% of the paid up capital of SIL. For making such acquisition, the appellant was liable to make public announcement as required by Regulation 11(1) of the Regulations of 1997. Since the appellant failed to do so, the Whole Time Member of SEBI held it guilty and issued the following directions on 27th January 2004 : 15. In view of the findings above and in exercise of the powers conferred upon me under Section 19 read with Section 11B of SEBI Act read with regulations, I h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it was erroneous to determine the total share holding of KIL at any given point of time during the investigation by completely ignoring the sale of shares made by it during the relevant period. He said that such a lopsided interpretation of Takeover Code would be erroneous and not maintainable. He said that determining the shareholding of a person without netting off would give a distorted picture. He therefore concluded that for the reason mentioned above, the provisions of Takeover Code were not applicable in this case and no violation of SEBI Regulations has taken place. 4. The Tribunal accepted the counter arguments advanced on behalf of the SEBI to the effect that even during the period June 1999 to August 1999 the appellant had acquired 6,61,800 shares which constituted 6.29% of the paid up capital of SIL which was beyond the permissible limit of 5% and hence the requirement of making public announcement in terms of Regulation 11(1) had to be met by the appellant which the appellant failed to do. 5. Before the Tribunal as well as before us the main contention of the appellant is that SEBI failed to consider that the appellant was not only a promoter having more than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in concert with him, has acquired, in accordance with the provisions of law, 15 per cent or more but less than fifty five per cent (55%) of the shares or voting rights in a company, shall acquire, either by himself or through or with persons acting in concert with him, additional shares or voting rights entitling him to exercise more than 5 per cent of the voting rights, in any financial year ending on 31st March unless such acquirer makes a public announcement to acquire shares in accordance with the regulations. 12. . . . . 13. Before making any public announcement of offer referred to in regulation 10 or regulation 11 or regulation 12, the acquirer shall appoint a merchant banker in Category I holding a certificate of registration granted by the Board, who is not an associate of or group of the acquirer or the target company. 14. (1) The public announcement referred to in regulation 10 or regulation 11 shall be made by the merchant banker not later than four working days of entering into an agreement for acquisition of shares or voting rights or deciding to acquire shares or voting rights exceeding the respective percentage specified therein: Provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch acquisition is followed by sale in the same financial year, the liability of making the public announcement would remain unaffected and shall attract action, as in this case. 8. Hence, the main contention advanced on behalf of the appellant is found to be without any merit. The other contention is that Regulation 14(2) of the Regulations of 1997 postpones the time for required public announcement to acquisition of voting rights when purchased securities are actually converted. According to the contention, only when securities or shares are converted by the acquirer into voting rights by getting it registered or upon exercise of option to acquire voting rights, the liability of making public announcement can be fastened. 9. Aforesaid plea has been rightly countered by learned Senior Advocate for SEBI, Mr. C.U. Singh by pointing out that in case of acquisition of shares or voting rights the appropriate applicable provision is Regulation 14(1) and not Regulation 14(2) which applies only when the acquisition is of other securities including Global Depository Receipts, American Depository Receipts. It is only such securities which require conversion or exercise of option which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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