HARINARAYAN G BAJAJ Vs. UNION OF INDIA

JUDGEMENT

(1.) We have heard the learned counsel for the parties.

(2.) This Writ Petition filed by the petitioner challenges the decision of the Appellate Authority under Section 20 of the Securities and Exchange Board of India Act, 1992, which dismissed the appeal preferred by the petitioner against the order dated 6th March, 1997 passed by the Securities and Exchange Board of India (S.E.B.I.) in the case of SESA Goa, which rejected the complaint lodged by the petitioner in the matter of acquisition of Sesa Goa Co. Ltd. by MITSUI & Co. of Japan through Finsider International Co. Ltd. It was the case of the petitioner that the said acquisition was in violation of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1994 (hereinafter referred to as "the Regulations of 1994") and in violation of the provisions of Clauses 40A and B of the Listing Agreement of the Stock Exchange.

(3.) In a nutshell, the facts of the case are that respondent No. 4, Finsider International Company (FINCO), held 51% shareholding in respondent No. 3, which is called "M/s. SESA Goa Limited" (SESA Goa). Respondent No. 4 is a 100% subsidiary of EARLY GUARD, which, in turn, is a 100% subsidiary of respondent No.5, Mitsui & Company (MITSUI). Before respondent No. 4 became a 100% subsidiary of EARLY GUARD, it was a 100% subsidiary of LIVA, which was owned by a consortium of companies held by RIVA Group. In the course of time, the shareholding of respondent No. 4 changed hands from LIVA to EARLY GUARD. The control and management of respondent No. 3, therefore, passed on from RIVA Group to the MITSUI Group, and, therefore, the MITSUI Group now controls respondent No. 4. At the relevant time, the petitioner filed an application on 5th November, 1996, before respondent No. 2 challenging the acquisition of respondent No. 3 by respondent No. 5 through respondent No. 4 on the ground that the same was in violation of Regulations of 1994 and was also in violation of the provisions of Clauses 40A and B of the Listing Agreement of the Stock Exchange. As there was no response from respondent No. 2, the petitioner moved this Court in its Writ Jurisdiction, and by order dated 17th December, 1996 in Writ Petition No. 2385 of 1996, respondent No. 2 was directed to decide all questions arising out of the complaint, and pass final order after hearing all the concerned parties. It is pursuant to the order dated 17th December, 1996 passed by this Court that the petitioner and others were heard by the Chairman of respondent No. 2, who by his order dated 6th March, 1997 held that the provisions of the Takeover Regulations of 1994 would not be applicable in the facts and circumstances of the case, as the said Regulations did not contemplate any concept of change in the control and management requiring public offer. The Chairman of respondent No. 2 further held that the provisions of Clauses 40A and B could not be applied in this case, as there is no change in the position regarding the control of respondent No. 4 visavis respondent No. 3. This order dated 6th March, 1997 was challenged by the petitioner by way of appeal before the Appellate Authority constituted under Section 20 of the Securities and Exchange Board of India Act, 1992. By order dated 15th December, 1997, the Appellate Authority disallowed the appeal preferred by the petitioner, and held that the acquisition of respondent No. 4 by respondent No. 5 from the RIVA Group had not resulted in a change in control of respondent No. 3 insofar as the Indian shareholders of respondent No. 3 were concerned; and thus, the provisions of the Regulations of 1994 were not attracted.