2015 (6) TMI 946 - AT - Companies Law

Interest on delayed payment of consideration - whether appellant is entitled to interest on the amount which the appellant has received on account of shares sold to the acquires under the open offer. Liability to pay interest under regulation 22(12) of Takeover Regulations, 1997 arises only when the acquire fails to pay the consideration to the shareholders within 15 days from the date of the closure of the offer - Held that - Similarly paying interest to the appellant under regulation 44(i) of Takeover Regulations, 1997 does not arise because liability to pay interest under that regulation arises only when the acquirer has failed to make a public offer or delayed the making of public offer within the time specified under Takeover Regulations, 1997 from the trigger date. Object of regulation 44(i) is to compensate the shareholder who has suffered delay on part of acquirer. Since appellant was not the shareholder on the trigger date i.e. on July 22, 2005, appellant cannot be said to have suffered on account of delay and consequently question of paying interest to the appellant does not arise at all. Apex Court in the case of Clariant International Ltd. 2004 (8) TMI 390 - SUPREME COURT OF INDIA has held that the shareholders contemplated under regulation 44(i) of Takeover Regulations, 1997 must be those shareholders whose shares have been accepted upon public announcement of offer and who had suffered loss owing to blockage of amount by not being able to sell shares held by them. In the present case, appellant was neither the shareholder of the Target Company on the trigger date nor on date when public announcement was made on July 25, 2005 and hence question of paying interest to the appellant does not arise at all. Once a decision is rendered by the Apex Court, it is not open to any person or to any authority to contend that the ratio laid down by the Apex Court cannot be applied on ground that the Apex Court has not considered the matter from any particular angle. - Decided against the appellant.

Summary

Issues:
1. Entitlement to interest on shares sold in an offer.
2. Trigger date for regulation 10 of Takeover Regulations, 1997.
3. Applicability of regulation 22(12) and 44(i) of Takeover Regulations, 1997.
4. Interpretation of the Apex Court's decision in Clariant International Ltd. case.

Entitlement to Interest on Shares Sold:
The appellant challenged the order rejecting their representation for interest on shares sold in an offer. The Tribunal affirmed that interest is due only if the acquirer fails to pay consideration within 15 days of offer closure. As the appellant received payment within the specified time, no interest was owed.

Trigger Date for Regulation 10:
The Tribunal clarified that regulation 10 is triggered when an acquirer gains 15% or more voting rights. The shares were pledged in 2002 but transferred in 2005, granting voting rights. Thus, the trigger date was correctly determined as 2005, not 2002, affecting the appellant's entitlement to interest.

Applicability of Regulations 22(12) and 44(i):
Regulation 22(12) mandates interest if payment delays post-offer closure. Since the appellant was not a shareholder on the trigger date, no delay affected them. Similarly, regulation 44(i) compensates affected shareholders post-public offer announcement, which did not apply to the appellant.

Interpretation of Clariant International Ltd. Case:
The appellant argued that the Clariant International Ltd. case did not consider the capital market angle. However, the Tribunal held that once the Apex Court decides a matter, its application is binding. The appellant's claim of non-applicability based on angles considered in the case was dismissed.

Conclusion:
The Tribunal found no merit in the appellant's contentions, leading to the dismissal of the appeal without costs. The judgment clarified the trigger date for regulations, the conditions for interest entitlement, and the binding nature of Apex Court decisions, providing a comprehensive analysis of the issues raised in the appeal.

This detailed analysis of the judgment covers the key issues raised, the Tribunal's reasoning, and the final decision rendered, ensuring a thorough understanding of the legal aspects involved in the case.