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TMI Blog2002 (4) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... aims to belong to the Katta family, whereas respondents 4 to 8 are said to be from Haridass family. It is alleged that, as time passed by, the Haridass family started asserting and dominating over the other two families and ultimately the petitioner s family was left with no alternative except to leave the company. That resulted in a Memorandum of Understanding MOU dated 27-9-1996 between the petitioner s family and the Haridass family. 3. The MOU provided for transfer of the shares of the petitioner and his family in favour of Haridass family for consideration stipulated therein. It is also stated that on account of certain controversies relating to working out of the MOU, the petitioner approached the CLB (the Principal Bench, at New Delhi), by filing C.P. No. 78 of 2000. 4. The complaint in this writ petition is that clause 9 of the MOU provided for compliance with the regulations framed under the Securities and Exchange Board of India, 1992 (the SEBI Act ) and the transfer of the shares of the petitioner and his family was effected in violation of the regulations. The petitioner contends that compliance with regulation 10 was mandatory and non-compliance with the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the facts and circumstances of the case, it cannot be said that respondents 1 and 2 have failed to discharge their duties. 8. The petitioner claims to represent the Katta family. Whether the petitioner, who filed the writ petition in his individual capacity, can be said to be representing the family, is an issue that is very much relevant. However, the parties did not canvass the same. For the purpose of this writ petition, it will be taken as though the petitioner is challenging the transfer of entire Rs. 9.76 lakhs shares belonging to his family, irrespective of his individual holding, he seeks a writ of mandamus for declaring the transfer of the shares as violative of regulation 10 and, consequently, to direct retransfer of the same. Before proceeding further to discuss the merits of the matter, it is better to have a bird s eye view of the scope and ambit of the writ of mandamus. This becomes relevant in the context of the learned counsel for the respondents taking a serious objection as to the maintainability of the writ petition on the facts of the case, particularly when there is a separate enactment and a specialised agency to resolve such controversies. The co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch a case, whether there are any stumbling blocks in the way of the Court granting the relief. 10. The complaint of the petitioner is that the transfer of shares has taken place in violation of regulation 10. Regulation 10 reads as under : "10. Acquisition of Fifteen per cent or more of the shares or voting rights of any company. No acquirer shall acquire shares or voting rights which (taken together with shares or voting rights, if any, held by him or by persons acting in concert with him), entitle such acquirer to exercise fifteen per cent or more of the voting rights in a company, unless such acquirer makes a public announcement to acquire shares of such company in accordance with the regulations." It is a matter of record that the transfer of shares in question has taken place in March and May 1997. SEBI Regulations, 1997, have come into force with effect from 20-2-1997. Therefore, the SEBI Regulations, 1997 are applicable to the said transaction. Regulation 10 deals with the obligations of acquirer and the procedure to be followed by him, while acquiring the shares exceeding 15 per cent of the voting right in a company. The term acquirer is defined under regulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner. This question does not need any further ascertainment. Once respondents 3 to 8 answer the definition of promoters , they are exempted from the requirement of making public announcement as contemplated under regulation 10. It is also not difficult to see the justification behind this regulation. The purpose of requiring an acquirer of shares or voting rights to the extent of 15 per cent to make public announcement is to ensure that the existing shareholders of the company are alerted to enable them to take such steps as are necessary to ensure that, the voting rights and thereby the managerial powers do not get into the hands of 3rd parties. Where the proposed transfer is among the promoters, such requirement is naturally superfluous. 13. Therefore, regulation 10 has no application for the transaction or proceedings in question. 14. The learned counsel for the petitioner made an attempt to submit that the transaction in question is governed by the SEBI Regulations, 1994, whereunder the promoter is not per se exempted, and an order by the competent authority is required to be passed granting exemption. Since the transfer of shares has taken place subsequent to comin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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