TMI Blog2002 (9) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... f the said Bank. SEBI forwarded copies of the complaints to Shri Tayal etc (Tayal group) seeking their comments on the allegations leveled therein. Tayal group responded to the same. In the light of the allegations made by the complainants and the reply thereto from Tayal group, SEBI, on 10.4.2001 issued a show cause notice to Shri Tayal etc. The notice, alleged inter alia that: * Tayal group acquired shares/voting rights of the Bank in violation of regulation 10 of the 1997 Regulations. * Increase in share holding of Tayal group in the Bank from 2.46% to 24.53% through rights issue was in violation of the 1997 Regulations. * Tayal group acquired control over the management and business of the Bank. * Tayal group did not comply with the provisions of regulation 7. 3. Tayal group vide letter dated 28.4.2001 replied to the show cause notice denying the charges. Subsequently, the representatives of Tayal Group and the complainants were heard by SEBI. Thereafter further submissions were made by them. SEBI, after the enquiry came to the conclusion that there was no violation of the provisions of regulations 10 and 12 by Tayal group and no public offer was required to be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 38. Further more the 1st Respondent himself has appreciated the position of the Appellant as such investor and recognized and accepted the locus standi of the Appellant and in view thereof the Appellant was issued notices of hearing and was given an opportunity of being heard. Once the Appellant was a party to the proceedings of investigation he has a locus standi and right of appeal as provided under section 15T of the SEBI Act as the Appellant being a party to the said hearing he can be treated as a party aggrieved if he has a grievance against the order passed by the 1st Respondent. The Securities Appellate Tribunal (Procedure) Rules 2000, by clause 16 thereof provide for the right of the Appellant being heard. In such circumstances there is no substance in the contention that the Appellant has no locus standi. ................. Appellant being a shareholder of the Bank of Rajasthan limited, if any attempts are made by any person to takeover the management of the said Bank in breach and or violation of the provisions of the takeover code, the Appellant has all rights to file a complaint and the question of any damage to Appellants' pecuniary or property rights does not ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the phrase by James L.J. In Re Sidebotham Ex p. Sidebotham ((1880) 14 Ch D 458 CA). It was observed that the words 'person aggrieved' in Section 71 of the Bankruptcy Act of 1869 meant: not really a person who is disappointed of a benefit which he might have received if some order had been made. A 'person aggrieved' must be a man who had suffered a legal grievance, a man against whom a decision has been pronounced which had wrongfully deprived him of something, or wrongfully refused him something or wrongfully affected his title to something. The important words in this definition are 'a benefit which he might have received' and 'a legal grievance' against the decision which 'wrongfully deprives him of something' or affects 'his title to something'. 8. The definition was held in later cases to be not exhaustive and several other features of the phrase were pointed out. Thus under the Bankruptcy Acts, where the Board of Trade summoned to support the validity of the appointment of a trustee, went before the judge, and failed, it was considered a 'person aggrieved' on the principle that a person who is brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These observations again show that the person must himself suffer a grievance, or must be aggrieved by the very order because it affects him. 9. Two cases which may usefully be seen in the same context, may next be mentioned. In Fennings v. Kelly ((174) AC 206) in relation to the Government of Ireland Act, 1920, Lord Wright did say that if a person was treated in certiorari proceedings as a competent party and notice was served on him as being a proper party he would be a 'person aggrieved'. The point to bear in mind is that the person must be treated as a party. However the force of the observation was considerably weakened because the party there was ordered to pay costs and the right of appeal was held to be available on that limited ground. Further qualification is to be found in In Re Riviere, (1884) 26 Ch D 48 where Lord Selborne observed: ....... it must be legal grievance, it must not be a stet pro ratione voluntas; the applicant must not come merely saying I do not like this thing to be done', it must be shown that it tends to his injury, or to his damage, in the legal sense of the word. The locus standi of the person aggrieved must be f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o see if there are general principles which can be extracted which will guide the court in approaching the question as to what the words 'person aggrieved' mean in any particular statute. If I may say respectfully I fully endorse this approach. I am now in a position to examine the Advocates' Act but before I do so I must refer to a case near in point to this case, than any considered before. 10. Shri Chinoy also cited the following paras: 12. The Queen v. The Keepers of the Peace and Justices of the Country of London (25 QBD 357, 361.) was a case of an appeal by an informant against the judgment of a justice of the peace upon the hearing of an information or complaint by the vestry of the parish against a person for unlawfully and willfully obstructing the free passage of a certain highway. The relevant section provided : If any person shall think himself aggrieved by .... Any order, conviction, judgment, or determination made, or by any matter or thing done by any justice or other person in pursuance of this Act..... such person may appeal to quarter sessions. 11. In holding that an informant had no right of appeal Lord Coleridge , C.J. said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 68(1) of the Public Health Act, 1925, laid down that: Where for the purpose of relieving or preventing congestion of traffic it appears to the local authority to be necessary to provide within their district suitable parking places for vehicles. Then that authority may, subject to certain conditions, provide those parking places and might acquire land suitable for use as parking place. The proviso to the section however laid down that no such order shall authorize the use of any part of a street so as unreasonably to prevent access to any premises adjoining the street, or the use of the street by any person entitled to the use thereof, or so as to be a nuisance, or be made in respect of any part of a street without the consent of the authority or person responsible for the maintenance of the street. Sub-section (2) of the section provided that where a local authority proposes to acquire land for the purpose of using it as a parking they are to give notice of the proposal specifying the land and notify the date within which any objection is to be sent to them and the notice is to state that a right of appeal was conferred by the section.. Sub-section (3) provided tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a right of appeal to any person who has made an objection to the proposal and has received notices that that objection has been overruled. 15. In Ealing Corporation v. Fones, (1959 (1) QB 384 at 390) Lord Parker, C.J., remarked that it was easier to say what will not constitute a person aggrieved than it was to say what person aggrieved included. He observed that a person was not aggrieved when being a public body it had been frustrated in the performance of one of its public duties. He amplified this by saying that: If costs have been awarded in a case against a local authority, it is clear on the authorities that the local authority would be an aggrieved person, equally, if the result of the decision has been to put some legal burden on the public body concerned, that has been held to make it a person aggrieved. According to Donovan, J., in the same case: The word 'aggrieved' connotes some legal grievance, for example, a deprivation of something, an adverse effect on the title to something, and so on, and I cannot see that this is so here. The local planning authority has simply been told that it cannot enforce the discontinuance of the present use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Regulations also provide for communication of findings of the investigation officer to the acquirer, seller, target company, merchant banker etc. He reiterated the version that there is no locus standi for a complainant or informant as a party to the regulatory proceeding, that he may or may not be heard, that it is only a proceeding between SEBI and the person proceeded against. Shri Chinoy submitted that if a person is not entitled to be heard in the proceedings before SEBI, he cannot be heard in an appeal before the Tribunal. He submitted that if the Appellate Tribunal is to take up the role of SEBI then the Appellate proceedings will become the original proceeding that the scheme of the Act does not provide for the same. Shri Chinoy submitted that to come under the ambit of section 15T, one must be a party who is directly affected by the order. He submitted that it is possible that an order of SEBI may affect the target company and its shareholders, but if a view is taken that their legal rights are affected, then the order itself will get vitiated for the reason of not having followed the principles of natural justice in as much as opportunity to all the share holders to put ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmission made and action sought was at a macro level pointing out the irregularities involved in acquiring the shares/control of the Bank by Tayals, and the request was to take appropriate action in the matter. Shri Desai further submitted that the Appellant was not a noticee and he was called only to assist SEBI. He submitted that the proceedings before SEBI, are based on several other factors. He further submitted that the Appellant should not be allowed to make use of the Appellate forum for vindictive purposes. Shri Desai submitted that the Appellant's contention that he is a share holder of the Bank and as such entitled to prefer the complaint, is untenable, as the order has not in any way affected adversely his rights as a shareholder, that in case he feels that his right as a share holder has been affected as a result of the acquisition of shares/control of the Bank, he has other avenues to seek the remedy. 18. Shri Shyam Divan, learned counsel appearing for Respondent Nos.3 4 also adopted Shri Chinoy's submissions and further stated that the Appellant is not a person entitled to prefer an appeal is clear from the provisions of section 15T itself, as the sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e referred to the provisions of regulation 39 and submitted that it is clear from the said regulation as to who are all the persons entitled to the notice, that a complainant based on whose complaints the investigation was ordered is not one among them. He also referred to regulation 42, which enumerates the persons who are entitled to have a copy of the investigation report, that a complainant is not one among them. He submitted that the complainant has no right even to participate in the investigation proceedings before SEBI, unless SEBI permits him to participate and that participation is only to assist SEBI in its investigation and not for any other purpose, that he gets only a restricted role of participation. Learned Counsel submitted that wherever the complainants are to be given recognition as a party to the proceedings, law provides for the same as has been done in the Monopolies and Restrictive Trade Practices Act, 1969. Learned Counsel submitted that the scope of investigation is restricted by the show cause notice and not by a complainant. Shri Paras Kuhad submitted that the scope of section 15T is restricted to those who are entitled to get a copy of the order and thos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y by the impugned order. Learned Counsel submitted that he was not an alien to the proceedings before SEBI, that the Appellant's complaint was taken cognizance of and he was given notice, that he participated in the proceedings, and that, that participation also gave him a right to be considered as a party to the proceedings and SEBI has also accepted him as a party to the proceedings. Shri Mishra submitted that since the Appellant's complaint has not been properly investigated and by holding that Tayal group is not required to make a public offer, the Appellant has been denied of the benefit arising as a result of the public offer. He submitted that section 15T of the Act and regulation 46 of the 1997 Regulations enable any person aggrieved by an order to prefer an appeal, that the said right cannot be restricted only to selected entities mentioned in regulation 39 or 41, that the Appellant being aggrieved by the order, is entitled to prefer the appeal. 22. I have carefully considered the submissions made by the counsel for the parties on the maintainability of the appeal and my views thereon are as under: It is not in dispute that the Appellant is a shareholder in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... high and low of the closing prices of the shares of the target company as quoted on the stock exchange where the shares of the company are more frequently traded during the 26 weeks preceding the date of public announcement. 25. It could be seen from the pricing formula stated above, that it is meant to protect the interest of investors who prefer to exit from the company in the context of substantial acquisition of shares/takeovers and they are assured of a fair price even if the acquisition is underpriced. 26. It is to be noted that 1997 Regulations were framed based on the recommendations of an expert committee. The object of the Regulations is clear from the committee's following words- The Committee was of the view that the Regulations for substantial acquisition of shares and takeovers should operate principally to ensure fair and equal treatment of all share holders in relation to substantial acquisition of shares and takeovers . The Committee has set out certain general guiding principles for the purpose of interpretation and operation of the Regulations which include - (i) equality of treatment and opportunity to all shareholders, (ii) protection of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. (3) Every appeal under subsection (1) shall be filed within a period of forty-five days from the date on which a copy of the order made by the Board or the Adjudicating Officer, as the case may be is received by him and it shall be in such form and be accompanied by such fee as may be prescribed: Provided that the Securities Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period. (4) On receipt of an appeal under sub-section (1), the Securities Appellate Tribunal may, after giving the parties to the appeals, an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against. (5) The Securities Appellate Tribunal shall send a copy of every order made by it to the Board, the parties to the appeal and to the concerned Adjudicating Officer. (6) The appeal filed before Securities Appellate Tribunal under sub-section (1) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within six months f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grieved' are found in several statutes. The meaning of the word 'person aggrieved' will have to be ascertained with reference to the purpose and the provisions of the statute. Some times it is said that the words 'person aggrieved' correspond to the requirement of locus standi which arises in relation to judicial remedies. 32. Where a right of appeal to courts against an administrative or judicial decision is created by statute, the right is invariably confined to a person aggrieved or a person who claims to be aggrieved. The meaning of the words a person aggrieved may vary according to the context of the statute. One of the meanings is that a person will be held to be aggrieved by a decision if that decision is materially adverse to him. Krishan Iyer J. in his concurring judgment in the Dhabolkar (supra) had observed that Each statute has a personality and a message. Judicial interpretation is not blood less and sterile exercise in spinning subtle webs, some times cobwebs out of words and phrases otherwise simple, but to uphold the scheme of the legislation insight fully, sense its social setting and read the plain intendment . 33. Lord Denning in At ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Court had viewed that to be considered as an aggrieved person, by an order, the order must cause him a legal grievance by wrongfully depriving him of something. The ratio in the Official Receiver (Supra) relied by Shri Paras Kuhad is also the same. The Hon'ble Madras High Court in the said case had held a person against whom a decision has been pronounced which has wrongfully refused him some thing which had a right to demand would be an aggrieved person . The grievance may not be personal or pecuniary and yet be a legal grievance . It is noticed that in both the cases relied on by the Respondents Courts had accepted that a person who has been deprived of a right which was available to him under law, is an aggrieved person. The position of the Advocate General in Gandhi's case and Official receiver in the other case cited by counsel is not comparable to the position of the Appellant as is evident from the facts of the cases. 36. I agree with the Shri Chinoy's submission that by virtue of making a complaint to SEBI or by assisting SEBI in a proceeding by itself will not entitle a person to challenge an order of SEBI in an appeal under section 15T. The righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the earlier part of this order, the scheme of the Regulations, and in particular the provisions of Chapter III thereof. 38. The mandatory requirement of making public announcement to acquire shares from the other share holders in the target company at a predetermined price provided in regulations 10, 11 12, is intended to benefit the shareholders in the context of substantial acquisition of shares/takeovers of the target company. Therefore, the argument that SEBI is the regulator entrusted with the task of regulating substantial acquisition of shares and takeovers of companies and as such any decision taken by SEBI relating to substantial acquisition of shares or takeover of companies, having adverse effect on the investors is immune from challenge in an appeal by the affected investor is unacceptable. 39. As already mentioned above, the words person aggrieved used in section 15T have to be given a purposeful meaning. The meaning has to be ascertained with reference to the purpose for which the Act is made. The purpose of the Act is discernible from the preamble to the Act, which states that it is An Act to provide for the establishment of a Board to protect the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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