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TMI Blog2015 (3) TMI 1447X X X X Extracts X X X X X X X X Extracts X X X X ..... etropolitan Magistrate, 47th Court, Esplanade, Mumbai in criminal case no. 30/SS/06 and the order passed by the learned Sessions Judge in criminal revision application no. 937 of 2007. 2 The petitioners in both the petitions are accused in criminal case no. 30/SS/2006 and they are facing trial for the offence punishable under section 77A(11) of the Companies Act, 1956. The learned senior counsel Mr. Amit Desai on behalf of the petitioners has submitted that the proceedings were initiated against the petitioners for the same issue by the Securities and Exchange Board of India (SEBI) and that the Board found the petitioners guilty. However, the Securities Appellate Tribunal, Mumbai exonerated the petitioners. The copies of both the orders ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etailed reference has been made in the earlier part of our order we are of the considered view that a company is under no obligation to buy back its securities even if its shareholders have passed a special resolution authorizing it to buy back on the terms and conditions mentioned in the resolution. Section 77(A) of the Act is only an enabling provision and all that it mandates is that no company shall buyback its own securities unless it is authorized by its articles and also by its shareholders. But even where the shareholders pass a special resolution, it does not become obligatory for the company to buyback the shares. The passing of a special resolution by the shareholders is the first step by which they authorize the company and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any had not come out with a public announcement and, therefore, it was open to it not to go through with the buyback." 3 To counter this argument, the learned counsel for the Respondent SEBI has submitted that the judgment of the Securities Appellate Tribunal is based on the regulations which are secondary legislations and cannot overrule the provisions of the Companies Act. In this regard, one may take note of the provisions of section 77A(2) of the Companies Act. It will be apt to reproduce section 77A(1) & (2). "77A. Power to company to purchase its own securities, (1) Notwithstanding anything contained in this Act, but subject to the provisions of subsection (2) of this section and section 77B, a company may purchase its own shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares or other specified securities listed on any recognized stock exchange is in accordance with the regulations made by the Securities and Exchange Board of India in this behalf; (g) the buyback in respect of shares or other specified securities other than those specified in clause (f) is in accordance with the guidelines as may be prescribed." 4 As such considering these provisions of the Act and the regulation, it was necessary for the respondent to demonstrate that there was an offer or public announcement of buyback of equity shares. Unless that is there the offence would not be complete. As already stated, there was no public announcement. Similar view has been taken by the Tribunal also. For these reasons, in my considered opini ..... X X X X Extracts X X X X X X X X Extracts X X X X
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