2014 Supreme(SC) 359

SUPREME COURT OF INDIA
SURINDER SINGH NIJJAR, A.K. SIKRI, JJ.
Securities & Exchange Board of India – Appellant
Versus
M/s. Akshya Infrastructure Pvt. Ltd. – Respondent
Civil Appeal No. 6041 of 2013
Decided On : 25-04-2014

IMPORTANT POINT
In view of deletion of Regulation 27(1)(a) withdrawal of public offer on it becoming unviable cannot be permitted.

Headnote:(a) SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 – Regulation 11 – Respondent making creeping acquisition – Public offer made – Request for withdrawal – SEBI right in considering non-compliance of Regulation 11 – SEBI not offering comments for 13 months, then denying permission to withdraw the public offer – No significant variation in share prices in relevant period – Even then impact of public offering on share market is immediate – Notwithstanding the delay rejection justified. (Para 25, 27, 32)

       (b) SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 –Regulation 27 – Triggered public offer and voluntary public offer – Have to be considered on equal footing – Respondent failing to give necessary information to SEBI regarding earlier 3 acquisitions – Regulation 18(2) not applicable – Regulation 27 as prevailing and not the original one has to be applied. (Para 28, 29)

       (2013) 8 SCC 20 – Relied upon

       (2004) 8 SCC 524 – Referred

       (c) SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 –Regulation 11 – Takeover regulation – Has to be interrelated applying principle of ejusdem generis. (Para 30)

       (d) SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 –Regulation 27(1)(b)(c) and (d) – Public offer once made cannot be withdrawn unless it becomes impossible to perform – Regulation 27(1)(a) providing for withdrawal of public offer on becoming economically unviable was deleted for this reason. (Para 31)

       (2013) 8 SCC 20 – Relied upon

       (e) Natural Justice – Opportunity of hearing denied to respondent – However no prejudice shown to have occurred to them – No injustice meted out. (Para 33, 34)

       (2010) 13 SCC 255 – Relied upon

       (f) SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 – Regulation 27 – Cannot be interpreted by adopting Issue of Capital and Disclosure Requirements Regulations, 2009 – Takeover Regulations have to interpreted by correlating these regulations to the provisions of the SEBI Act. (Para 37)

       Facts of the case:

       The fundamental issue which arises in this appeal is whether an open offer voluntarily made through a Public Announcement for purchase of shares of the target company can be permitted to be withdrawn at a time when the voluntary open offer has become uneconomical to be performed.

       The respondent, M/s Akshya Infrastructure Pvt. Ltd., is a part of the Promoter Group of MARG Limited (‘the Target Company’).

       As a consequence of their acquisitions, the acquirers breached the 5% creeping acquisition limit and were required to comply with the provisions of Regulation 11 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

       On 20th October, 2011, the respondent made a voluntary open offer through a Public Announcement under Regulation 11 of the Takeover Regulations wherein the public shareholders of the Target Company were given an opportunity to exit at an offer price of Rs.91/- per equity share. The tendering period was scheduled to commence on 1st December, 2011 and conclude on 20th December, 2011. The consideration for the tendered shares was to be paid on or before 4th January, 2012.

       The respondent by letter dated 29th March, 2012 addressed to SEBI, contending that the open offer in question had become outdated, thereby outliving its necessity and, therefore, sought to be permitted to be withdraw the same.

       The prayer was rejected.

       Finding of the Court:

       Nirma Industries Ltd. does not need reconsideration.

       Result: Appeal allowed.