BOMBAY DYEING & MFG CO LTD Vs. ARUN KUMAR BAJORIA

JUDGEMENT

(1.) IN this petition filed under section 111A of the Companies Act ('the Act'), the petitioner company has sought for rectification of the Register of members of Bombay Dyeing & Manufacturing Company Limited (the company) by deleting the names of respondents 1 to 6 in respect of the shares impugned in the petition on the ground that these respondents had failed to comply with Regulation 7 of SEBI (Substantial Acquisition of Shares & Takeover) Regulations 1997 (Take Over Code). This petition was originally filed before the Western Region Bench and was later on transferred to the Northern Region Bench with the consent of the parties.

(2.) A summary of the petition is as follows : The petitioner-company was informed by its Registrars Sharepro Services on 28-6-2000 that as per the download of the data received from National Securities Depository Limited (NSDL) the first respondent along with respondents two to six had acquired and were holding shares of the petitioner-company exceeding 5 per cent as on 20-6-2000. As per the letter from Sharepro Services dated 6-6-2000, the collective percentage holding of these respondents as on 20-6-2000, was 5.3 per cent and as on 27-6-2000, it was 5.7 per cent. As per Regulation 7 of the Take Over Code, these respondents, having acquired the shares in concert, should have informed the company about their acquisition beyond 5 per cent within 4 days of such acquisition. However, they had not informed the company. Therefore, the same was reported to the SEBI by a letter dated 7-6-2000 seeking for investigation into the said acquisition. In a letter to the SEBI dated 4-8-2000, the first respondent had intimated that he along with the other respondents held as on 31-7-2000, 5244894 shares constituting 12.7 per cent shares in the company. Since these respondents had not disclosed their acquisition beyond 5 per cent shares in the company, in terms of section 111A(3) of the Act, the Register of members should be rectified by deleting their names from the Register in respect of all the shares acquired by them.

(3.) SHRI Aspi Chinoy, Sr. Advocate appearing for the petitioner, submitted as follows : As per Regulation 7 of the Take Over Code, any acquirer acquiring shares of more than 5 per cent shares in a company has to disclose to the company the aggregate of his shareholding within 4 days from such acquisition. As per Definition 2(b) of the Code, an acquirer means any person acting in concert with such an acquirer. In the present case, the first respondent acting in concert with the other respondents had acquired beyond 5 per cent shares without informing the company. The company came to know from its Registrar on 28-6-2000 that the respondents had exceeded the limit of 5 per cent on 20-6-2000 in which case they should have disclosed the same to the company by 24-6-2000. Since they have failed to do so, there is a violation of the provisions of Regulation 7 of the Take Over Code. Section 111A(3) entitles a company to move the CLB to seek rectification of the Register of Members in case of transfer of shares in violation of any Regulation made by the SEBI. In the present case, since the respondents had not disclosed their aggregate holding beyond 5 per cent within 4 days, the company has filed this petition in terms of section 111A(3).