JUDGMENT :

SANJIV KHANNA, J.

This common judgment would decide the aforesaid two appeals preferred by the Securities and Exchange Board of India¹[The ‘Board’, for short.], whereby it has challenged the order of the Securities Appellate Tribunal²[The ‘Appellate Tribunal’, for short.] dated 19th June 2013 in Appeal No. 23 of 2013 titled ‘ Sunil Krishna Khaitan and Others v. Securities and Exchange Board of India ’; and the order dated 31st October 2013 in Appeal No. 2 of 2013 titled ‘ Smt. Madhuri S. Pitti and Others v. Securities and Exchange Board of India ’.

2. Primary questions of law raised in these appeals relates to the interpretation of Regulation 10 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997; ³[Hereinafter referred to as ‘Takeover Regulations 1997’.] the power and exercise of the power by the Board under Regulations 44 read with 45 of the Takeover Regulations, 1997; and the power and jurisdiction of the Appellate Tribunal under Section 15T of the Securities and Exchange Board of India Act, 1992. ⁴[For short, the ‘Act’.]

A. Background facts:

I) Appeal No. 23 of 2013 (Sunil Krishna Khaitan’s case)

3. Khaitan Electrical Limited, ⁵[For short, ‘KEL’.] a company incorporated in 1975, listed on BSE Limited and National Stock Exchange Limited, is engaged in the business of manufacturing and marketing of electrical goods.

4. KEL was founded by late Shri Krishna Khaitan (R12 in the appeal), who had passed away on 04th November 2012 and is represented by his legal representatives. The promoter group consists of his family member/relative and associate entities, which include other respondents in the appeal, namely Sunil Krishna Khaitan, M/s. Khaitan Lefin Limited and M/s. The Oriental Mercantile Company Limited (R11st, R13rd and R14th respectively).

5. In the Extraordinary General Meeting held on 23rd March 2006, the shareholders of KEL had approved issuance of 10,00,000 equity share warrants with the face value of Rs. 10/- each at a premium of Rs. 50/- each on preferential basis to the respondents. The warrants were to be converted into equity shares within a period of eighteen months from the date of allotment.

6. In the Extraordinary General Meeting held on 29th November 2006, the shareholders had approved issuance of 10,00,000 warrants with face value of Rs. 10/- each with premium of Rs. 121/- each on preferential basis to M/s. Khaitan Lefin Limited (R13), ⁶[For short, ‘KLL’.] an identified member of the promoter group, to be converted into equity shares within a period of eighteen months. This Extraordinary General Meeting had also approved issuance of 25,00,000 equity shares of face value of Rs. 10/- each at a premium of Rs. 125/- each on preferential basis to strategic investors. However, in this appeal, we are not concerned with the issue of shares to the strategic investors.

7. On 12th March 2007, the respondents acquired 13,00,000 shares in KEL in two tranches i.e., 5,00,000 in one transaction and 8,00,000 shares in the other. Upon receipt of the full consideration in terms of the warrants, KEL had issued shares to the respondents consequent to which the shareholdings of the respondents and the promoter group underwent a change, which are required to be noted and are reproduced :

8. The respondents were served with the show-cause notice dated 26th March 2012 issued by the Board with respect to violation of Regulations 10 and 11(1) of the Takeover Regulations 1997, calling upon them to show cause why suitable directions under Sections 11 and 11B of the Act and Regulations 44 and 45 of the Takeover Regulations 1997 read with corresponding provisions of Regulations 33 and 35 of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011⁷[Hereinafter referred to as the ‘Takeover Regulations 2011’.] should not be issued against them. Violation of Regulation 10 was predicated on