2013 (6) TMI 864 - AT - Companies Law

Summary

Issues Involved:
1. Nature of the impugned letter dated November 30, 2012.
2. Validity of the impugned letter and the right to withdraw the public offer.
3. Alleged violations of Regulations 11(1) and 11(2) of the Takeover Regulations of 1997.

Summary:

Issue 1: Nature of the Impugned Letter
The Tribunal examined whether the impugned letter dated November 30, 2012, was merely advisory or constituted an "order" u/s 15T of the SEBI Act. The Tribunal concluded that the letter was binding in nature, as it mandated changes and warned of appropriate action for non-compliance, thereby qualifying as an "order" under Section 15T of the SEBI Act. This interpretation aligns with the Tribunal's previous rulings, emphasizing that every order passed by SEBI is subject to appeal to ensure that aggrieved parties have a forum for redressal.

Issue 2: Validity of the Impugned Letter and Right to Withdraw the Public Offer
The Appellant made a Public Announcement on October 20, 2011, to consolidate its shareholding in the Target Company. The Respondent delayed its comments on the Draft LO, rendering the open offer outdated. The Tribunal found that the Appellant's request to withdraw the offer was bona fide, as the offer had become redundant due to the delay. Regulation 27 of the Takeover Regulations of 1997 allows withdrawal under certain circumstances, including when the offer has outlived its purpose. The Tribunal noted that the Respondent failed to act within the prescribed timeframe under Regulation 6(2) of the ICDR Regulations, which mandates SEBI to issue comments within 30 days. The Tribunal held that the Respondent's inaction justified the withdrawal of the public offer, thereby allowing the appeal on this ground.

Issue 3: Alleged Violations of Regulations 11(1) and 11(2)
The Respondent alleged that the Appellant violated Regulations 11(1) and 11(2) of the Takeover Regulations on three occasions. The Tribunal observed that such allegations could have adverse monetary consequences and should be addressed through lawful proceedings as per the SEBI Act and Takeover Regulations. The Tribunal noted that the Respondent did not follow the due process for investigation and adjudication as required by Regulations 15I and 15J of the SEBI Act and Chapter V of the Takeover Regulations. Consequently, the Tribunal allowed the appeal in terms of prayer clauses (a), (b), and (c) of para 7, without making any observations on the merits of the alleged violations.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned letter, permitting the withdrawal of the open offer, and directing the return of the escrow amount. The Tribunal emphasized the need for SEBI to follow due process in making allegations and taking actions against entities. No costs were awarded.