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Pramod Jain And Others Versus Securities And Exchange Board of India

Justification for long delay on the part of the SEBI in granting approval to the offer of the appellant and situation having changed to the prejudice of the appellant, the appellants are entitled to withdraw their offer - Held that:- We are in agreement with the finding recorded by the SAT that there was undue delay on the part of the SEBI in dealing with the DLO. No doubt, in a given case timeline prescribed under the Regulations may not be adhered to when the SEBI justifiably takes time in dea .....

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awal has to be dealt with under Regulation 27, as held by this Court. The general principle is that public offer once made cannot be withdrawn. Exception to the rule is the specified situations under the Regulation as laid down by this Court in above decisions particularly in Nirma Industries Limited (2013 (5) TMI 629 - SUPREME COURT OF INDIA). In the present case, though SEBI was not justified in causing delay in giving its comments on public offer, this by itself is not enough to justify withd .....

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currently held that public offer is capable of being carried out and has not become impossible. The assets are available with the target company. Finding has also been recorded about the circumstances preceding the public offer and the conduct of the acquirer which is based on record. The steps for development of the Vile Parle property had already been initiated and the acquirer had taken remedies before the CLB against the decision of the target company and had settled the matter with the targ .....

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ear prejudice to the acquirer to the extent of rendering the carrying out of public offer impossible. In the facts of the present case, we do not find any ground to interfere with the concurrent finding of the SEBI and the SAT that request for withdrawal from public offer was not justified. Question (ii) is answered accordingly. - Civil Appeal No. 9103 of 2014 - Dated:- 7-11-2016 - Anil R. Dave And Adarsh Kumar Goel, JJ. JUDGMENT Adarsh Kumar Goel, J. 1. This appeal has been preferred under Sect .....

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ns of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the Takeover Regulations). FACTS : 2. Golden Tobacco Limited (the target company) is a company having its registered office at Tobacco House, S.V. Road, Vile Parle (West), Mumbai - 400 056. The equity shares of the target company are listed on the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE). 3. On November 12, 2009, Mr. Pramod Jain and Pranidhi Holdings Private Limited ( .....

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uity shareholders at a price of ₹ 101/- (the offer price) per equity share. At that time, market price of the target company shares was ₹ 109/- per share. Networth of the target company as on 31st March, 2009 was ₹ 42.44 crores. Net current assets were ₹ 134.4 crores and gross sales were ₹ 173.68 crores. The offer was for hostile takeover of the target company. The PA mentioned that the prime object of the offer was to acquire substantial shares/voting rights accomp .....

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st and average price of ₹ 100.15 and ₹ 89.13 respectively. Thus, the acquirers and the PAC had 6.47 % of the issue of equity share capital as on the date of PA. The background of the acquirers mentioned in the DLO was that Mr. Pramod Jain was prime Director of PHPL and had experience in financial and consultancy services. 4. The acquirers and PAC, through the merchant banker, filed the draft letter of offer (DLO) with SEBI on November, 26, 2009. During examination of the DLO, certain .....

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ers and Suraksha Realty Ltd. Various correspondences were exchanged between SEBI and the merchant banker, acquirers, PAC, the target company and certain other entities in respect of such complaints. 5. The appellants vide application dated 8th October, 2011 sought permission to withdraw the offer under Regulation 27(1)(d). The stand of the appellants in the said letter was that the SEBI had not taken any decision on the DLO in two years during which period the management of the target company ha .....

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default in payments. Most valuable assets of the target company had been encumbered in violation of SEBI regulations and against the interest of minority shareholders and the acquirers. Since the date of PA, financial position of the target company had deteriorated substantially. ORDER OF SEBI 6. The SEBI vide order dated 13th April, 2012 declined to permit withdrawal of the PA but observed that alleged violation of Regulation 23 by the target company shall be investigated. It was held that as p .....

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, 2010. The merchant banker vide letter dated 5th May, 2010 informed the SEBI that the acquirers had reached a settlement with the target company and withdrawn their petition before the Company Law Board (CLB) against the Resolution dated 18th January, 2010. SEBI had also advised the merchant banker that it had not been provided any material in support of the allegation of violation of Regulation 23 by the target company in selling its assets. The merchant banker informed the SEBI vide letter da .....

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r, 2011 responded to the merchant banker, seeking tabulated list of the allegations of the acquirers and the PAC but instead of doing so, the merchant banker forwarded request for withdrawal of the PA. It was observed that in the circumstances there was no delay on the part of the SEBI. It was further observed that the acquirers had challenged the Resolution of the Extra Ordinary General Meeting (EGM) and had also filed a suit. The acquirers entered into an amicable settlement before the CLB. SE .....

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acquirers should have used due diligence with regard to the allegation in FIR dated 25th July, 2009 about personal borrowings by promoters of the target company by sale of prime properties as the PA was much after the FIR. The acquirers and the PAC had already purchased substantial shares of the target company and thus, could not make PA without exercising due diligence regarding the financial condition and quality of management of the target company. The acquirers were not strangers to the targ .....

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regards the timeline stipulated in Regulation 18, it was observed that under the second proviso thereto, the SEBI could take time in making inquiry on a complaint and thereafter could call for a revised letter of offer with or without re-scheduling the date of opening or closing the offer. However, it was observed that in the present case, SEBI was wholly unjustified in taking more than two years for offering its comments on the letter of offer submitted by the appellants. This, however, did no .....

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development of the said property on 29th September, 2008 but the said offer was rejected and Sheth Developers were shortlisted for the purpose. It was thereafter that the appellants decided to make hostile takeover public offer to frustrate the decision of the target company to develop the property with Sheth Developers. It will be appropriate to refer to the findings of the SAT in this regard: 14. We see no merit in the above contentions. Admittedly, GTL had decided to develop the Vile-Parle pr .....

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operty. Thereupon appellants decided to make hostile public offer on November 12, 2009 with a view to frustrate decision of GTL to develop the Vile-Parle property jointly with Sheth Developers. Although object of the proposal to acquire 25% shares of GTL at ₹ 101/- per share as against the market price of ₹ 109/- per share, as stated in the public offer was to obtain substantial stake/voting rights of GTL, it is not in dispute that appellants were basically interested in developing t .....

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roperty to Sheth Developers has frustrated the public offer made by appellants. 15. Admittedly, after making public offer, appellants had filed Company Petition No. 3 of 2010, wherein specific grievance was made to the effect that GTL had entered into MOU with Sheth Developers without disclosing all material facts to the shareholders and without the approval of shareholders which was in gross violation of regulation 23 of SAST Regulations, 1997. It was also alleged in the Company Petition that t .....

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olutions have been passed in relation to development of Vile-Parle property and in implementation of the said resolution third party rights have been created. By that order Company Law Board directed that during the pendency of Company Petition No. 3 of 2010 GTL shall not act upon resolution dated January 18, 2010 any further. From aforesaid order passed by Company Law Board it is clear that in view of resolution passed in the EGM held on January 18, 2010, violation of regulation 23 committed by .....

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romoters/management of GTL on the basis of undisclosed reasons and having withdrawn Company Petition No. 3 of 2010 unconditionally, it is not open to appellants to allege that their public offer is frustrated on account of GTL entering into MOU with Sheth Developers for development of Vile-Parle property. 18. Similarly, having settled the dispute relating to siphoning of funds by GTL during 2009-2010 which plea was specifically raised in Company Petition No. 3 of 2010, appellants are not justifi .....

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elation to siphoning of funds either during 2009-2010 or during 2010-2011. 21. It is relevant to note that appellants, subsequent to withdrawal of Company Petition No. 3 of 2010 in February 2010, have filed S. C. Suit No. 817 of 2011 in April 2011 before the City Civil Court at Mumbai, alleging for the first time that the Company Petition No. 3 of 2010 was withdrawn on account of oral assurance given by promoters of GTL that Vile-Parle property would be developed only after holding public auctio .....

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impossible of performance cannot be accepted, because, both grounds based on which appellants had sought withdrawal of public offer, were in fact settled by appellants on the basis of oral assurance given by promoters of GTL and further, for the alleged breach of oral assurance, appellants have filed Suit in the Bombay City Civil Court and obtained stay of development of Vile-Parle property and that stay is admitted operating till date. 23. Strong reliance was placed by counsel for appellants o .....

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oint Development Agreement is in respect of Vile-Parle property. In view of approval granted by the general body of shareholders on January 18, 2010, grievance of appellants that Vile-Parle property has been encumbered in violation of regulation 23 does not survive at least from January 18, 2010. 26. Apart from above, as late as on August 9, 2011 appellants had addressed a letter to SEBI requesting them to keep the process of open offer in abeyance, because, in the proceedings pending before the .....

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y, investigate regarding possession of the original title deeds of Vile-Parle property and investigate regarding possession of the original title deeds of Vile-Parle property, investigate regarding usage of funds etc. It was further stated in the said letter until appellants are assured of their concern on the above issues, SEBI should keep the process of open offer in abeyance. 27. Aforesaid letter dated August 9, 2011, clearly falsifies the case of appellants that the actions taken by promoter .....

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or the parties. CONTENTIONS OF THE APPELLANTS 9. Main contention raised on behalf of the appellants is that there is no justification for long delay on the part of the SEBI in granting approval to the offer of the appellant and situation having changed to the prejudice of the appellant, the appellants are entitled to withdraw their offer. Since under the scheme of the regulations, the appellants could not withdraw the offer once made except in circumstances mentioned in Regulation 27, the regula .....

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the assets which could prejudice the interests of the acquirer. Thus, it could not be held that the acquirer was indefinitely bound by the offer. Reference was also made to the timeline provided in Regulation 22 and the provisions of Regulation 23. It was submitted that while normal ups and downs in the market may not be a ground to permit withdrawal of offer, unilateral action of the promoters resulting in transfer of assets could certainly be the ground to permit withdrawal of offer. The obje .....

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8 SCC 20 and Securities and Exchange Board of India vs. M/s. Akshya Infrastructure Pvt. Ltd. (2014) 11 SCC 112 relied upon in the impugned order are not applicable. Even if clause (d) of regulation 27 is read ejusdem generis so as to apply only in situations where it is impossible for the acquirer to perform the public offer, it cannot exclude situations where SEBI itself is satisfied that serious prejudice was caused to the acquirer by intervening actions of the promoters in alienating or encum .....

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ause any serious prejudice to the acquirer. 10. Thus, the submissions of the appellants are two fold : (i) The SEBI failed to adhere to the timeline prescribed under the Takeover Code which rendered it impossible for the appellants to conclude their open offer. Adherence to timeline prescribed under Regulations 18(2), 22(2), (3) and (4) are critical under the Takeover Code, the Bhagwati Committee Report and the International Practice. The time is of essence in cases of hostile takeover. (ii) The .....

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s. The appellants pointed out various illegal acts of the promoters but the SEBI failed to take any action. The appellants requested the SEBI to keep the open offer in abeyance till action was taken against the promoters. This justifies the prayer of the appellants to withdraw the open offer. 12. Shri C.A. Sundaram, learned senior counsel for the appellants submitted that all the members of the SAT (majority as well as minority) have held the delay by SEBI to be unjustified but still, on erroneo .....

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manner in which financial position quickly deteriorated after the PA. The petition filed by the acquirers before the Company Law Board was withdrawn on the assurance of the promoters that the assets will not be encumbered without the public auction. Thereafter, the matter was pending in the civil suit. Thus, there was a breach of Regulation 23. 13. Shri Sundaram submitted that open offer was not a concluded contract but mere invitation to the public to offer their shares. The result of not allow .....

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tructure Pvt. Ltd. (supra) by submitting that unlike the said cases, in the present case, there was undue delay on the part of the SEBI and prejudice was caused to the acquirers for reasons not attributable to them. He submitted that doctrine of frustration under Section 56 of the Contract Act will clearly apply. As a regulator, the SEBI is duty bound to protect the interest of the acquirer and also to ensure that a genuine attempt by an acquirer is not defeated by the promoters by their unilate .....

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e making the PA. The first appellant was aware of the acts of mismanagement by the promoters of the target company. The PA was made with the intention of curbing fraudulent and the illegal practices of the promoters and for the target company s benefit. The appellants approached SEBI to investigate the illegalities knowing fully well that SEBI s role was only to regulate the security market. For mismanagement or other illegalities, remedy was under Section 397/398 of the Companies Act which reme .....

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BI in dealing with the DLO. 17. It was submitted that the appellants ought to have exercised due diligence before making the PA. The appellants were not strangers and had 6.47% shares. They had advanced loan of ₹ 8.5 crores and acquired shares worth ₹ 66.33 lakhs before the PA. They were aware of the FIR and alleged acts of mismanagement they had resorted to public offer out of frustration against the decision of the target company developing the Vile Parle property with Sheth Develo .....

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any and no prejudice was suffered by the acquirers. Referring to the penalty levied by SEBI on the target company for entering into a MoU without approval of the General Body, it was submitted that this could not furnish a ground for withdrawal of the PA. Appellants had raised the issue before the CLB and settled the matter. QUESTIONS 18. The rival submissions require us to determine the following questions : (i) To what extent is the timeline laid down under the Takeover Regulations required to .....

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quisition of controlling interest of a company can be friendly or hostile. In a friendly acquisition, management of the target company sells its controlling shares to the acquirer. Where management of the target company is unwilling to negotiate with an acquirer, the acquirer can directly approach the shareholders by making an open offer which is called Hostile takeover. A Hostile takeover helps to unlock the hidden value of the shares and puts pressure on the management to work efficiently. On .....

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ed takeover) sale of valuable assets, etc. 20. Justice P.N. Bhagwati Committee was appointed in November, 1995 to review the existing framework of regulations and to suggest amendments in the interest of investors and all parties concerned in the acquisition process. The Committee kept in mind the following principles : i. Equality of treatment and opportunity to all shareholders. ii. Protection of interests of shareholders. iii. Fair and truthful disclosure of all material information by the ac .....

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fer documents. viii. Recognition by all persons connected with the process of substantial acquisition of shares that there are bound to be limitations on their freedom of action and on the manner in which the pursuit of their interests can be carried out during the offer period. ix. All parties to an offer to refrain from creating a false market in securities of the target company. x. No action to be taken by the target company to frustrate an offer without the approval of the shareholders. Just .....

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10. No acquirer shall acquire shares or voting rights which (taken together with shares or voting rights, if any, held by him or by persons acting in concert with him), entitle such acquirer to exercise fifteen per cent or more of the voting rights in a company, unless such acquirer makes a public announcement to acquire shares of such company in accordance with the regulations. Acquisition of control over a company. 12. Irrespective of whether or not there has been any acquisition of shares or .....

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o acquire shares or voting rights exceeding the respective percentage specified therein .… Submission of letter of offer to the Board. 18. (1) Within fourteen days from the date of public announcement made under regulation 10, 11 or 12 as the case may be, the acquirer shall, through its merchant banker, file with the Board, the draft of the letter of offer containing disclosures as specified by the Board. (2) The letter of offer shall be despatched to the shareholders not earlier than 21 .....

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s received any complaint or has initiated any enquiry or investigation in respect of the public offer, the Board may call for revised letter of offer with or without rescheduling the date of opening or closing of the offer and may offer its comments to the revised letter of offer within seven working days of filing of such revised letter of offer. (3) The acquirer shall, while filing the draft letter of offer with the Board under sub-regulation (1), pay a fee as mentioned in the following table, .....

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the board of directors and to all the stock exchanges where the shares of the company are listed. (3) The acquirer shall ensure that the letter of offer is sent to all the shareholders (including non-resident Indians) of the target company, whose names appear on the register of members of the company as on the specified date mentioned in 1 Inserted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002, w.e.f. 9-9-2002. Page 47 of 75 the public announc .....

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sets otherwise, not being sale or disposal of assets in the ordinary course of business, of the company or its subsidiaries; or (b) issue 2 [or allot] any authorised but unissued securities carrying voting rights during the offer period; or (c) enter into any material contracts. Withdrawal of offer. 27. (1) No public offer, once made, shall be withdrawn except under the following circumstances:- (a) [***] (b) the statutory approval(s) required have been refused; (c) the sole acquirer, being a na .....

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motu upon its own knowledge or information, in the interest of the securities market or investors interest, for any breach of the regulations; (c) to ascertain whether the provisions of the Act and the regulations are being complied with for any breach of the regulations. 22. In Nirma Industries Limited (Supra), the acquirer after making PA sought withdrawal therefrom on the ground of embezzlement of funds by the target company. SEBI rejected the application with the observation that the acquir .....

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e of takeover code was held to be as follows: 59. A conspectus of the aforesaid Regulations would show that the scheme of the Takeover Code is: (a) to ensure that the target company is aware of the substantial acquisition; (b) to ensure that in the process of the substantial acquisition or takeover, the security market is not distorted or manipulated; and (c) to ensure that the small investors are given an option to exit, that is, they are offered a choice to either offload their shares at a pri .....

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gulation 27(1). 23. As regards the scheme of Regulation 27, it was further observed : 62. A bare perusal of the aforesaid Regulations shows that Regulation 27(1) states the general rule in negative terms. It provides that no public offer, once made, shall be withdrawn. Since clause (a) has been omitted, we are required to interpret only the scope and ambit of clauses (b), (c) and (d). The three sub-clauses are exceptions to the general rule and, therefore, have to be construed very strictly. The .....

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th a natural disaster. Clearly clauses (b) and (c) are within the same genus of impossibility. Clause (d) also being an exception to the general rule would have to be naturally construed in terms of clauses (b) and (c). Mr. Divan has placed a great deal of emphasis on the expression such circumstances and in the opinion to indicate that the Board would have a wide discretion to permit withdrawal of an offer even though it is not impossible to perform. We are unable to accept such an interpretati .....

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to the Board by the legislature realising that it is impossible to anticipate all the circumstances that may arise making it impossible to complete a public offer. Therefore, certain amount of discretion has been left with the Board to determine as to whether the circumstances fall within the realm of impossibility as visualised under clauses (b) and (c). In the present case, we are not satisfied that circumstances are such which would make it impossible for the acquirer to perform the public o .....

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exit route when the appellants have acquired substantial chunk of shares in the target company. He has correctly emphasized in his submissions that the orderly development of the securities market as a whole requires that public offers once made ought not to be allowed to be withdrawn on the ground of fall in share price of the target company, which is essentially a business misfortune or a financial decision of the acquirer having gone wrong. SEBI as well as SAT have correctly concluded that w .....

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s are designed to ensure that public announcement is not made by way of speculation and to protect the interest of the other shareholders. Very solemn obligations are cast on the Merchant Banker under Regulation 24(1) to ensure that- 24. (1)(a) the acquirer is able to implement the offer; (b) the provision relating to escrow account referred to in Regulation 28 has been made; (c) firm arrangements for funds and money for payment through verifiable means to fulfil the obligations under the offer .....

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rior to the public announcement. It is, therefore, not possible to accept the submission of Mr Shyam Divan that the appellants are to be permitted to withdraw the public announcement based on the discovery of certain facts subsequent to the making of the public announcement. In such circumstances, in our opinion, the judgments cited by Mr Shyam Divan are of no relevance. 24. As regards the effect of delay on the part of SEBI, it was observed: 94. A perusal of the aforesaid Regulation clearly sho .....

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the letter of offer is dispatched to the shareholders. But there is no obligation to do so. Under the second proviso, the Board may call for revised letter of offer in case it finds that the disclosures in the draft letter of offer are inadequate or the Board has received any complaint or has initiated any enquiry or investigation in respect of the public offer. It is important to notice that in the first proviso the Board does not have any obligation to specify any change in the draft letter of .....

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with other requirements of the Takeover Regulations. The appellants, in fact, were prevaricating and did not agree with the interpretation placed on Regulation 27(1)(d) by the Merchant Banker. We, therefore, reject the submission of Mr Shyam Divan that there was delay on the part of SEBI in approving the draft letter of offer. 25. In M/s. Akshya Infrastructure Pvt. Ltd. (supra), this Court held that SEBI is not justified in causing delay in dealing with the issuance of its comments on a letter o .....

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C.U. Singh. Mr Singh has sought to explain the delay on the ground that information sought by the appellant was not given by the respondent. In our opinion, this was no ground for the appellant to delay the issuance of comments on the letter of offer, especially not for a period of 13 months. In the event the information was not forthcoming, the appellant had the power to refuse the approval of the public offer. It is true that under Regulation 18(2), SEBI was required to dispatch the necessary .....

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hat SEBI is the watchdog of the securities market. It is the guardian of the interest of the shareholders. It is the protective shield against unscrupulous practices in the securities market. Therefore, SEBI like any other body, which is established as a watchdog, ought not to act in a lackadaisical manner in the performance of its duties. The time-frame stipulated by the Act and the Takeover Regulations for performing certain functions is required to be maintained to establish the transparency .....

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eholders. The only reason put forward by the respondent for withdrawal of the offer is that it is no longer economically viable to continue with the offer. Mr Nariman has referred to a tabular statement and data to show that there is no substantial variation in the share prices that ensued making of the public offer. Having seen the Table, we find substance in the submission of Mr Nariman that there is hardly any variation in the shares of the target company from 20-10-2011 till 30-11-2011. The .....

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public offer. This very submission has been rejected in Nirma Industries Ltd. We reiterate our opinion in Nirma Industries Ltd. that under Regulations 27(1)(b), (c) and (d), a public offer, once made, can only be permitted to be withdrawn in circumstances which make it virtually impossible to perform the public offer. In fact, the very purpose for deleting Regulation 27(1)(a) was to remove any misapprehension that an offer once made can be withdrawn if it becomes economically not viable. We are .....

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e DLO. No doubt, in a given case timeline prescribed under the Regulations may not be adhered to when the SEBI justifiably takes time in dealing with the complaints, as rightly submitted by Shri Datar, in the present case, the stand of the SEBI itself is that it could not go into the complaints for which the right forum was CLB. As regards the time taken in dealing with the complaints against the acquirers, the SEBI could have promptly proceeded with the matter. However, mere upholding of findin .....

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ugh SEBI was not justified in causing delay in giving its comments on public offer, this by itself is not enough to justify withdrawal from public offer so long as the case does not fall under Regulation 27. First question is answered accordingly. Re. Question (ii) 27. As already observed above, under the scheme of the regulations public offer has to be made after due diligence (Regulation 22). Obligation of the board of directors under Regulation 23 against alienation of assets, issuance of uni .....

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Highlight: Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification

TMI Note: Certain ICDS provisions are inconsistent with judicial precedents. Whether these judicial precedents would prevail over ICDS.

Highlight: Provisions of ICDS shall prevail w.e.f. AY 2017-18 to the transactional issues dealt therein over earlier judicial pronouncements.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

News: Voluntary Reporting of Estimated Current Income and Advance Tax Liability

TMI Note: In case of conflict between ICDS and other specific provisions of the Income-tax rules, 1962 governing taxation of income like rules 9A, 9B etc. of the Rules, which provisions shall prevail.

TMI Note: Does ICDS apply to computation of Minimum Alternate Tax (MAT) u/s 115JB of the Act or Alternate Minimum Tax (AMT) u/s 115JC of the Act.

TMI Note: Where a term has not been defined under ICDS, nor under the Act, but has different interpretations given to it by the courts in tax cases, and in ICAI Accounting Standards, which interpretation would prevail while interpreting ICDS.

TMI Note: Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

TMI Note: In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

TMI Note: ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

Notification: Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

Forum: Input credit of gst paid on urd

Forum: Wrong quote of GSTIN no of buyer in GSTR-1

Forum: Getting upload error message.Cannot upload json file for GSTR1 even after using offline tool V 1.2..

Forum: Issue of Payment Voucher

Forum: filing of unaudited financial accounts

Forum: GST on Notional rent

Forum: need of extention of agm in case of non filing

News: RBI Reference Rate for US $

Highlight: GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC

Highlight: Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC

Highlight: Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC

Highlight: Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission

Highlight: TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC

Highlight: Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC

Highlight: Exemption u/s 11 - education activities - transport and hostel facilities surplus cannot be considered as business income of the assessee society

News: Draft Notification for insertion of new rule 39A in the Income-tax Rules, 1962 – comments and suggestions-reg.

Highlight: Genuineness of labour wages expenses, embroidery charges, fabrication expenses etc. - getting work done through small workmen who do not have any permanent place of residence - disallowance of ad hoc expenditure deleted.

Highlight: Project import - Since the goods were never used for the purpose for which it was imported, the actual user condition has been violated - Redemption fine and penalty imposed.

Highlight: Penalty u/s 112 (a) - CHA - Lack of due diligence and failure to take more precautions can not, by itself, bring in penal consequences

Highlight: Import of services - GST - The fact that those services were received outside India will not change the fact that the services have been paid for by the beneficiary appellant, who is located in India. - Demand confirmed.

Notification: SEZ for IT/ITES at Madhurwada Village, Visakhapatnam District in the State of Andhra Pradesh - denotified.

Highlight: Merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange.

Highlight: Merely vehicle numbers was not mentioned on the invoices cannot be the reason to deny Cenvat Credit

Highlight: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017 - Circular

Circular: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017

News: Auction for Sale (Re-issue) of Government Stocks

Article: TDS APPLICABILITY ON GOVERNMENT CONTRACTS UNDER GST (Under Section 51 of the CGST Act, 2017)

News: Manmohan takes potshots at note ban, 'hasty' rollout of GST

News: GST on petrol, diesel requires wider discussion: Nitish

Article: WHEN CAN ONE TAKE ITC FOR RCM CASES?

Notification: TDS liability under Section 51 of CGST, 2017 come into force w.e.f. 18-9-2017 - Persons liable to deduct TDS from payment made or credited to the supplier of taxable goods or services specified

Notification: Central Goods and Services Tax (Seventh Amendment) Rules, 2017

Notification: Seeks to extend the last date for filing the return in FORM GSTR-3B for the months of August to December, 2017

Circular: Filing of Special Leave Petition against Orders of Hon'ble High Courts staying Collection of Tax under GST- reg.

Highlight: Exemption u/s 54F - LTCCG - once entire net consideration is invested, the absence of completion certificate cannot be a ground to deny the benefit of deduction.

Highlight: Deduction u/s 10B - initial AY - Mere authorization to enable the Assessee to import material or export produce in the earlier date would not ipso facto tantamount to commencement of substantial activity of ‘manufacture’/’production’.

Circular: Sub:- Procedure to be followed for Import under DEEC/EPCG Scheme- reg.



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