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TMI Blog2021 (9) TMI 1504X X X X Extracts X X X X X X X X Extracts X X X X ..... der the said ZOCD Agreement. The underlying existing shareholding continued to be in the hands of Mr. Raghav Bahl and the holding entities. It was found that ZOCD Agreement did not carry any voting rights. The voting rights of Mr. Raghav Bahl entities were not stifled by the said agreement. Thus, there was not any effective change in control of NW18 as a result of the execution of the ZOCD Agreement. CCI had observed that in view of the conversion option contained in ZOCD Agreement to receive equity shares of the target company, the said amounted to the indirect acquisition of shares of the target company. The learned WTM considered the same. ZOCDs were in the nature of convertible into equity shares at any time, and only upon conversion of the same IMT would have been able to hold more than 99.99% shares of the diluted equity of the promoter company of NW18 etc. This option however was not exercised at any time before making the public announcement, thus, the ZOCD Agreement itself did not entail into any indirect control of IMT or RIL in NW18 and, therefore, no disclosure was required to be made. In our view, the reasoning of the learned WTM cannot be faulted with. The ZOCD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants. 3. It is necessary to note the facts on record to appreciate the dispute between the parties. On November 22, 2011, a Deed of Trust was executed for the sole beneficiary respondent Nos. 3 RIL,under which Indian Media Trust (hereinafter referred to as IMT ) was floated.One Nirlab Consultancy Pvt. Ltd. (hereinafter referred to as Nirlab Consultancy ) was appointed as a trustee. Nirlab Consultancy was controlled by Mr. Raghav Bahl. This Mr. Raghav Bahl appears to have worn many hats in various transactions concerning the trust and the IMT with his spouse or independently as can be seen herein below. 4. On November 23, 2011, he entered into Single Unit Agreement (hereinafter referred to as SUA ) on behalf of IMT as well as six entities (hereinafter referred to as holding companies ) controlled by him and TV18, NW18. Mr. Raghav Bahl also represented TV18, NW18 . As per the said SUA, the parties thereto were to act as largest Indian shareholders of NW18. Thereafter, again on February 27, 2012, the disputed Investment Agreement i.e. Zero Coupon, Optionally Fully Convertible Debentures Agreement ((hereinafter referred to as ZOCD Agreement ) was entered into betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Agreement. This complaint remains pending before the respondent Nos. 1 SEBI. Vide on November 17, 2014, respondent Nos. 1 SEBI approved that acquisition of shares by respondent Nos. 3 RIL at the price offered by it. Aggrieved by the said decision, the present appellants filed appeal No. 55 of 2015 challenging the said open offer price. During the pendency of the appeal, respondent Nos. 1 SEBI rejected the complaint of the appellants vide communication dated February 9, 2015. The appellants tried to agitate before this Tribunal in the said appeal the issue of rejection of their complaint. The Tribunal declined to consider the issues of rejection of the complaint and dismissed the appeal as regard the open offer price. However, while considering the facts, this Tribunal found that the open offer price was based on some clauses of ZOCD Agreement. Therefore, the said agreement was perused by the Tribunal. The, prima-facie, conclusion was drawn that vide the said ZOCD Agreement control over NW18 was indirectly divested in favor of IMT. The Tribunal also observed that the communication issued by the respondent Nos. 1 SEBI rejecting the complaint had not considered the clauses contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Mr. Mihir Mody, Mr. Arnav Misra, Mr. Mayur Jaisingh, the learned counsel for the respondent Nos. 1 SEBI and Mr. Janak Dwarkadas, the learned senior counsel with Mr. Rohan Rajadhyaksha, Ms. Sonali Mathur, Mr. Vivek Shetty, Ms. Cheryl Fernandes, Mr. Harshit Jaiswal, Mr. Amey Nabar, the learned counsel for the respondent Nos. 3 RIL through video conference. 9. Mr. Victor Fernandes, the appellant no.1, arguing for both the appellants, minutely took us through the terms of IMT Trust Deed, SUA and ZOCD Agreement. He submitted that these terms of SUA and ZOCD Agreement would clearly show that total control of TV18, etc. was divested to IMT of which the sole beneficiary is respondent Nos. 3 RIL. He further submitted that the CCI has also closely scrutinized all the transactions and had observed that indirect control vested with respondent Nos. 3 RIL through IMT. In the circumstances, he submitted that the appeal be allowed. 10. On the other hand, the learned counsel for the respondents submitted that the appellants are indulging into speculative litigation. It was submitted that the present appeal is the 5th round of litigation In the first round of litigation the issue of open off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aghav Bahl entities were not stifled by the said agreement. Thus, there was not any effective change in control of NW18 as a result of the execution of the ZOCD Agreement. 13. CCI had observed that in view of the conversion option contained in ZOCD Agreement to receive equity shares of the target company, the said amounted to the indirect acquisition of shares of the target company. The learned WTM considered the same. He observed that the ZOCDs were in the nature of convertible into equity shares at any time, and only upon conversion of the same IMT would have been able to hold more than 99.99% shares of the diluted equity of the promoter company of NW18 etc. This option however was not exercised at any time before making the public announcement as detailed (supra) and, thus, the ZOCD Agreement itself did not entail into any indirect control of IMT or RIL in NW18 and, therefore, no disclosure was required to be made. 14. In our view, the reasoning of the learned WTM cannot be faulted with. The ZOCD Agreement was in the nature of investment by IMT in the holding companies of TV18, NW18. Said ZOCD Agreement had given right to IMT, the subscriber of the ZOCDs to convert ZOCDs i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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