Decided on September 30,2003



C.Achuthan, - (1.) THE Respondent, based on the information in its possession decided to appoint an Adjudicating Officer to inquire into and adjudge under section 15A of the Securities and Exchange Board of India Act, 1992 (the SEBI Act) the alleged contravention of sub regulation (2) of regulation 15 and sub regulation (3) of regulation 24 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the Takeover Regulations) by the Appellant with reference to its role as the merchant banker in the context of the public offer made by Allianz International Pvt. Ltd., (the Acquirer) on 27.8.2001 to acquire 2, 00, 000 shares representing 20% of the equity share capital of a company viz. Adhbhut Industrial Resources Ltd., (the Target Company). THE Appellant was the merchant banker appointed for the purpose of the said public offer. THE Respondent appointed an Adjudicating Officer for the purpose vide its order dated 5.12.2001. THE Adjudicating Officer after inquiry viewed that the Appellant had failed to comply with the requirements of regulation 15(2) read with regulation 24(3) of the Takeover Regulations in as much as a copy of the public announcement was filed with the Respondent, after the publication of the same, as against the requirement of filing it atleast two days in advance of its publication. In that context the Adjudicating Officer imposed a penalty of fifty thousand rupees on the Appellant. THE Appellant claiming to be aggrieved by the said order, preferred the present appeal.
(2.) Shri Dinesh Agnani, learned Counsel appearing for the Appellant explained the factual matrix relating to the case. He submitted that since the Acquirer had decided to acquire the shares of the Target Company and also the control over the company, in terms of regulation 10 read with regulation 12 of the Takeover Regulations, the acquirer was required to make a public announcement offering to purchase not less than 20% of the paid up capital of the Target Company and for that purpose, the Appellant, a Category I Merchant Banker, was appointed. He submitted that in terms of regulation 15(2), a copy of the public announcement is required to be submitted to SEBI, atleast 2 working days before its issuance, that the public announcement in the instant case was made on 27.8.2001, that on 31.8.2001 the Respondent informed the Appellant that it had not received the copy of the announcement as required to be submitted to it vide regulation 15(2). In that context the Appellant tried to find out the cause as to why the copy of the announcement did not reach the Respondent, though steps had already been taken to submit the same well in time. He submitted that on making enquiries it was found that copies of public announcement which were to be sent to the office of the Respondent had been handed over by the Appellant to its receptionist Ms. Mona Bisht for being delivered to the office of the Respondent, that Ms. Mona Bisht could not post it as her relative suddenly expired on that day and she went to the hospital where the said relative was admitted leaving the office without giving instructions to anyone to post the same and thereafter she continued to remain absent. It was only when a call was received from the office of the Respondent, the Appellant came to know about not posting the copy of the public announcement and on realising the lapse on the part of the official, immediately a copy of the public announcement was sent to the Respondent. Requesting to condone the delay on humanitarian ground and as an exceptional case because it was not the intention of the Appellant not to submit the copy of the announcement in time, and the Appellant also assured that it would take extra precaution and care in future. Learned Counsel submitted that it is also a fact that after the receipt of the copy of the public announcement the Respondent did not point out any error or deficiency in the public announcement. Learned Counsel submitted that the Appellant in its reply to the show cause notice had clearly explained the circumstances in which the copy of the public announcement did not reach the Respondent's office in time but after a delay of 3 days, and that the delay was caused due to unavoidable circumstances for the reasons explained therein. The Respondent was also informed that the public announcement made by the Appellant met all the requirements as required under law and from the observation letter dated 19.2.2001 sent by the Respondent's office also it is clear as the same did not offer any comments thereon. The Appellant was neither asked to make any corrigendum to the public announcement nor any objection was raised during the currency of the offer. The Appellant in its reply had further stated that all the formalities regarding the offer in question had been completed and the Appellant had successfully discharged all the obligations relating to the said offer and no share holder was adversely affected due to the late submission of the copy of the announcement by 3 days. Since there was no malafide involved and the delay was attributable to unavoidable circumstances, the Appellant once again requested the Respondent to condone the delay of 2 to 3 days involved, that in the said letter the Appellant had stated the entire activity chart demonstrating meticulous compliance of the requirements of the regulations.
(3.) THE factual position made it clear that there has been no default on the part of the Appellant and all the regulations were duly complied with and functions discharged by the Appellant and still the Respondent decided to penalise the Appellant purely on technical grounds ignoring the factual position.;

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