KISHORE RAJARAM CHHABRIA Vs. CHAIRMAN SECURITIES EXCHANGE BOARD OF INDIA
SECURITIES APPELLATE TRIBUNAL
Click here to view full judgement.
(1.) BOTH the appeals preferred under section 15T of the Securities and Exchange Board of India Act, 1992 (the SEBI Act) are directed against the order dated 19.2.2002 passed by the Respondent (the SEBI) holding that the Appellants had acquired shares in Herbertsons Ltd., (the Target Company) without complying with certain requirements under the listing agreement between the Target Company and the stock exchanges (the Listing Agreement) and certain provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1994 (the 1994 Regulations)/Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the 1997 Regulations). By the impugned order the Appellant in appeal No.13/2002 (KRC) and the Appellant in appeal No.14/2002 (MDC) and "the persons acted in concert with them" were directed to:-
Disinvest shares in the Target Company acquired in violation of the Listing Agreement and the 1994 Regulations (i.e. beyond the then existing threshold limit of 10%) through an offer for sale to public in terms of an offer document, subject to the following:
a that for the purpose the Appellants appoint a registered merchant banker
b that the offer price shall be at the face value of the shares as on the date of the impugned order or the lowest price at which these shares were acquired, whichever is lower
c that the offer for sale shall be for a minimum number of shares so as to reduce the shareholding of KRC and MDC and persons acted in concert with them in the Target Company, to less than 10%
d that the offer document for the purpose shall be filed with SEBI within 3 months from the date of the impugned order.
Ordered to initiate adjudication against KRC and MDC and persons acted in concert with them, under section 15A and 15H of the SEBI Act.
(2.) The acquisition of shares by the Appellants and persons stated to have acted in concert with them covered by the impugned order can be broadly grouped in relation to the period of acquisition as follows:
1 acquisition prior to the notification of the 1994 Regulations
2 acquisition after the notification of the 1994 Regulations and before the notification of the 1997 Regulations
3 acquisition after the notification of the 1997 Regulations.
The Target Company is a public limited company. The company's core business is the manufacture of alcoholic beverages such as whisky, brandy, vodka etc. Its total paid up capital is Rs.9,52,23,230, comprising 95,22,323 equity shares, each with a face value of Rs.10/-. The shares are listed on National Stock Exchange, Bombay Stock Exchange, Delhi Stock Exchange, Bangalore Stock Exchange and Ahmedabad Stock Exchange. 'Chhabria group' and 'Mallya group' hold substantial quantum of shares in the Target Company.
(3.) BRIEF facts of the acquisition of shares covered in the impugned order are as follows:
i On 14.12.1993 six subsidiaries of Galan Finvest Private Ltd., (Galan) purchased 26% shares in the capital of the Target Company from companies stated to be belonging to Shri Vijay Mallya(Shri Mallya). Shri Mallya is stated to be the principal promoter of the Target Company. In addition to the purchase of the said shares, on 14.12.1993 one of the subsidiaries of Galan also purchased 75,000 Fully Convertible Debentures (FCDs) from another company also stated to be belonging to Shri Mallya. These FCDs were subsequently converted into 3,75,000 shares. Thus the holding of Galan subsidiaries in the paid up capital of the Target Company was 25,90,800 shares representing 27.21% of the paid up capital of the Target Company.
ii IMFA Hodings Pvt. Ltd., (IMFA) purchased 10,39,341 shares representing 10.91% of the paid up capital of the Target Company during the period 27.10.1994 to 22.11.1995.
iii Mahameru Trading Company Pvt. Ltd., (Mahameru) purchased 4,73,100 shares representing 4.97% of the paid up capital of the Target Company during the period 14.11.1995 to 28.10.1996.
iv Shirish Finance and Investment Pvt. Ltd., (Shirish) purchased 3,64,750 shares representing 3.83% of the paid up capital of the Target Company during the period 27.8.1996 to 13.2.1997.;
Copyright © Regent Computronics Pvt.Ltd.