TMI Blog2017 (5) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, September 5, 2014 and October 20, 2014 were not exempted from the open offer obligations. Further, vide e-mail dated December 4, 2015 addressed to the Manager to the Open Offer it was stated that Regulation 10(1)(a)(ii) of SAST/Takeover Regulations, 2011 was triggered. As such, there is no ambiguity in the order as the provision relating to exemption of inter-se promoter transfers from the open offer obligations is available only under Regulation 10(1)(a)(ii) of SAST/Takeover Regulations, 2011. An interpretation provided under the Scheme by an official of department of SEBI cannot be used against the correct interpretation of law (in the instant matter SAST/Takeover Regulations, 2011). Thus no reason to interfere with the impugned direction of SEBI dated May 5, 2016. As a result, the appeals fail. - Misc. Application No.147 of 2016, Misc. Application No.148 of 2016 Misc. Application No.178 of 2016, Appeal No.123 of 2016, And Appeal No.124 of 2016 - - - Dated:- 5-4-2017 - Mr. J.P. Devadhar, And Mr. Jog Singh, JJ. For The Appellant : Mr. J.J. Bhat, Senior Advocate with Mr. Animesh Bisht and Ms. Sahana Ramesh, Advocates i/b. Cyril Amarchand Mangaldas For The Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a simple interest of 10% p.a. from the trigger dates to those shareholders who were holding shares in the target company on the date of inter-se promoter transfers and whose shares are accepted in the open offer. 3. The intervening Miscellaneous Applications are filed by some shareholders in the target company who seek to secure their interest in the open offer. Their prayer is that many of the open offers get into long litigations without fructifying to the detriment of the investors interests. Accordingly, they seek to protect their interest by praying to this Tribunal to direct the Appellants herein to either implement the open offer at ₹ 6.30 or at the undisputed price of ₹ 3.20 per share keeping the disputed part of ₹ 3.10 per share in an escrow account or in any other manner this Tribunal would deem fit. 4. Facts in these appeals are not disputed. However, in order to provide the full background of the matter the relevant facts are given as follows: * India Bulls Real Estate Limited ( IBREL for short) was incorporated on April 4, 2006 and listed on the Bombay Stock Exchange Limited ( BSE for short) and National Stock Exchange of India Limited ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res amongst- (i) to (iii) .. (a) .. (b) qualifying promoters Provided that the transferor(s) as well as the transferee(s) have been holding shares in the target company for a period of at least three years prior to the proposed acquisition. (i) (ii) .. Regulation 10 of the SAST/Takeover Regulations, 2011 General exemptions. 10. (1) The following acquisitions shall be exempt from the obligation to make an open offer under regulation 3 and regulation 4 subject to fulfillment of the conditions stipulated therefor,- (a) acquisition pursuant to inter se transfer of shares amongst qualifying persons, being,- (i) (ii) persons named as promoters in the shareholding pattern filed by the target company in terms of the listing agreement or these regulations for not less than three years prior to the proposed acquisition; (iii) (2) to (4) .. (5) In respect of acquisitions under clause (a) of sub-regulation (1), and clauses (e) and (f) of sub-regulation (4), the acquirer shall intimate the stock exchanges where the shares of the target company are listed, the details of the proposed acqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the stock exchanges. (e) Similar details were filed by the target company on June 30, 2014 also with the stock exchanges. (f) All these filings, both by the parent company and the Target Company, show that the promoters of the parent company IBREL and the target company were the same. As such there has been no change in the promoter group since 2009-10 and this information was in public domain even though the target company was listed only in 2012 and as per the listing agreement filing of shareholding pattern is available for less than 3 years in 2014. Since there was no change in the promoter group and the information was available to the public for more than 3 years there is no violation of SAST/Takeover Regulations, 2011. Since the target company was incorporated on November 9, 2010 the target company itself was in existence for more than 3 years as on 9th July, 2014, the first date of inter-se promoter transfer, though the target company was listed on 30th July, 2012. Accordingly, based on an interpretation of both Regulation 3(1)(e)(iii) and proviso there under of SAST/Takeover Regulations, 1997 and under Regulation 10(1)(a)(ii) of SAST/Takeover Regulations, 2011 the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there in the 2011 (SAST Regulations, 2010) nor in the informal guidance of Weizmann, Commercial Engineers and Future Capital, nor in the Takeover Regulation Advisory Committee Report nor even in the impugned order. Changes made in the SAST/Takeover Regulations, 1997 through the 2011 Regulations is only to the extent that a declaration under the listing agreement has been mandated in the 2011 Regulations but there is nothing to suggest that it has to be for 3 years post listing. (k) In conclusion it was submitted that the inter-se promoter transfers during 2014 were eligible for exemption from open offer obligations on correct interpretation of the SAST/Takeover Regulations of 1997 and 2011; on a correct reading of the intention behind the amendment to the Takeover Regulations in terms of the report of the Takeover Regulations Advisory Committee 2010 and in terms of the applicability of the informal guidance issued by SEBI to Weizmann Forex Ltd. on October 25, 2012. As such SEBI cannot ask the Appellants to go for a public offer from the date of those inter-se transfers made in 2014. (l) Learned senior counsel for the Appellants also relied upon the judgments of the Apex Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the shareholding pattern filed by the target company in terms of its listing agreement has to be available for a minimum of 3 years post listing. In the instant case, the target company filed its shareholding pattern in terms of its listing agreement on July 30, 2012. The inter-se transfers were made during July to October, 2014 and as such the company had filed the relevant details only for 2 years post listing whereas the requirement is not less than 3 years post listing. A straight forward reading of Regulation 10 of Takeover Regulations 2011 unambiguously shows that the Appellants were not eligible for exemption. When a straight forward reading of the Regulation/law is available that is the only way it should be read. In the instant matter no other interpretation is actually possible. 10. When the statute is clear, informal guidance should not be relied on. Informal guidance scheme cannot be used to reduce the importance of the statute itself. Under the SEBI Informal Guidance Scheme, 2003, the guidance is the view of the concerned department of SEBI and will not be binding on the Board. The letter issued by a department under this scheme should not be construed as a conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances issued by SEBI officials in the present matter are not approved by the board of SEBI and as such the cited judgments have no relevance here. Rather the learned senior counsel for the respondent relied on the judgment of this Tribunal in the case of Deepak Mehra vs. Securities and Exchange Board of India (Appeal No. 140 of 2009 dated 28th August, 2009) wherein the legal validity of the informal guidances was examined by this Tribunal. It was held that informal guidances were views of a department of SEBI and cannot be construed as law and as such not amenable for appeal before this Tribunal. 14. We do not find any merit in the arguments put forth by the learned senior counsel for the Appellants. SAST/Takeover Regulations, 2011 is the law during the relevant time. It states as follows:- 10. (1) The following acquisitions shall be exempt from the obligation to make an open offer under regulation 3 and regulation 4 subject to fulfillment of the conditions stipulated therefor,- (a) acquisition pursuant to inter se transfer of shares amongst qualifying persons, being,- (i) ; (ii) persons named as promoters in the shareholding pattern filed by the tar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that because nothing untoward has happened the benefit of law should be available to an entity. Compliance of law has to be the starting point, not the end result. 17. This Tribunal also sought to know as to whether it is essential to declare the history of promoter holding in the listing agreement as part of the format of the relevant filing. It was clarified by learned senior counsel for the respondent that such declarations are not part of the format. This fact also underscores that the promoter holding pattern prior to listing is not a relevant factor to be reckoned with for this purpose. Hence, it is irrelevant whether the same promoters were holding the same shares for over a long period either in the target company or in the parent company or both, prior to listing the target company. The only relevant factor is date of listing the target company and the promoter holding filed by the target company as part of the listing agreement. In the present appeal, it is an undisputed fact that the target company was listed only on July 30, 2012 and the inter-se promoter transfers were made first on July 9-10, 2014 and subsequently on September 5 and October 20, 2014. Therefore, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the correct interpretation of law (in the instant matter SAST/Takeover Regulations, 2011).This Tribunal s order in the matter of Deepak Mehra vs. SEBI (supra) also had held this view. 20. For the reasons stated above, we do not find any reason to interfere with the impugned direction of SEBI dated May 5, 2016. As a result, the appeals fail. Appellants are directed to proceed with implementing the open offer immediately. Miscellaneous Applications, therefore, become infructuous and are disposed of accordingly. No order as to costs. 21. After the judgment was pronounced, counsel for the Appellants sought stay for a period of four weeks on implementation of the public offer so as to enable the Appellants to move the Apex Court. The Appellants in their open offer had agreed to purchase shares from the public at ₹ 3.20 per share, whereas, SEBI has directed the Appellants to make the open offer at ₹ 6.30 per share. Since the appeal is dismissed, the Appellants must at least make good the amount payable as per their own open offer. It is not in dispute that the amount payable as per the open offer made by the Appellants comes to ₹ 115 crore. As ordered the Appe ..... 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