Decided on August 01,2003



C.Achuthan, - (1.) THE present appeal is directed against the Respondent's order dated 19.2.2002. As per the said order the Appellant 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 also in violation of certain provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 1994 (the 1994 Regulations) and Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 1997 (the 1997 Regulations). By the impugned order the Appellant "and the persons acted in concert if any with him,", were directed to: "Disinvest shares in the Target Company acquired in violation of the Listing Agreement and the 1994 Regulations (i.e. beyond 21.38% held prior to the acquisition in violation of the Regulations)through an offer for sale to public in terms of an offer document subject to the following: (a) that for the purpose the Appellant appoint a registered merchant banker; (b) that the offer price shall be 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 the Appellant and "persons acted in concert, if any" with him to 21.38%, held prior to the acquisition in violation of the regulations; (d) that the offer document for the purpose shall be filed with SEBI within 3 months from the date of the impugned order.
(2.) It was also ordered to initiate adjudication proceedings against the Appellant and the "persons acted in concert, if any, with him", under section 15A and 15H of the Securities and Exchange Board of India Act, 1992. (the SEBI Act). The Target Company is a public limited company. Its core business is the manufacture of alcoholic beverages such as whisky, brandy, vodka etc. The Target Company's paid up capital is Rs. 9,52,23,230 comprising 95,22,323 equity shares. Face value of each share is Rs. 10/- The shares are listed on National Stock Exchange, Delhi Stock Exchange, Bangalore Stock Exchange, and Ahmedabad Stock Exchange. "Chhabria Group" and "Mallya Group" are stated to be holding substantial quantum of shares in the Target Company.
(3.) ACCORDING to the Respondent the order is based on the following facts: (a) The Appellant acquired 121495 shares representing about 1.3% of the share capital of the Target Company. As a result thereof the Appellant's holding in the Target Company's capital increased from 21.38%(according to the Appellant it is 21.83%) to 23.25% by 30.11.1994. Other promoters of the Target Company increased their total shareholding from 0.87% in January 1993 to 2.41% during the year 1994. By 31.12.1994, the holding of shares in the capital of the Target Company by the Appellant along with persons acting in concert (PAC) increased from 21.38% to 25.66%. But no public offer was made complying with the requirements of clause 40A and 40B of the Listing Agreement. (b) The Appellant, through a scheme of merger and acquisition of 4 companies- viz. East Coast Investments Ltd. (East Coast) Endeavour Investments Ltd., (Endeavour), Golden Investments Ltd., (Golden) and Consolidated Investments Ltd., (Consolidated)-- with United Breweries Ltd., (UBL) which is a Mallya group company, acquired 2,49,950 shares of the Target Company representing approximately 2.5% of its paid up capital during December 1994 and September 1995. But no open offer in terms of regulation 10(2) of the 1994 Regulations was made. (c) The Appellant by a stratagem of granting interest free loan to Prasam Trading and Finance P. Ltd., (Prasam) acquired 2,50,000 shares of the Target Company representing approximately 2.52% in the year 1995, in violation of regulation 10 of the 1994 Regulations; (d) The Appellant did not file declarations as required under regulation 6 and 8 of the 1994 Regulations and the 1997 Regulations.;

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