Appeal No. 147 of 2008. Case: 1. Weizmann Limited, 2. Weizmann Financial Resources (Cochin) Private Limited, 3. Om Mitra Securities Limited, Now Dindia Infrastructure Finance Limited, 4. Mitra Fidelity Limited, Now Tapi Energy Projects Limited, 5. Anju Siraj, 6. Dharmendra G. Siraj, 7. S. G. Siraj, 8. Isha Siraj, 9. Sweta Siraj, 10. Chetan D. Mehra, 11. Nirmal D. Mehra, 12. Radhika C. Mehra, 13. Sitex India Private Limted Vs Adjudicating Officer of Securities and Exchange Board of India. Securities and Exchange Board of India
| Case Number | Appeal No. 147 of 2008 |
| Counsel | T. V. Subramanian, Kumar Desai, Daya Gupta, Chloris John |
| Judges | N. K. Sodhi (Presiding Officer) & Samar Ray (Member) |
| Issue | Companies Act, 1956 - Sections 87, 87(2)(b) |
| Judgement Date | July 24, 2009 |
| Court | Securities and Exchange Board of India |
Judgment:
N. K. Sodhi (Presiding Officer), (At Mumbai)
This appeal is directed against the adjudication order dated October 24, 2008 passed against the appellants imposing a penalty of Rs.1,30,000/- on them for violating Regulation 11(1) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (for short the takeover code).
Weizmann Fincorp Limited is the target company and its issued and paid up capital comprises 2,45,000 equity shares of Rs.10 each and 4,75,000 cumulative redeemable preference shares of Rs.100 each. The equity shares are listed on the stock exchange but the preference shares are unlisted. The appellants were holding equity shares comprising 65.67% of the total equity capital of the target company and the remaining shares are held by the Indian public. Weizmann Limited - a public limited company is the promoter of the target company and it holds the entire 4,75,000 cumulative redeemable preference shares of Rs.100 each. The financial year of the target company ends on June 30. It is common ground between the parties that the target company had last declared dividend on the preference shares at its annual general meeting held on 31.1.2001 for the year closing on June 30, 2000. It is also not in dispute that the target company did not declare dividend thereafter on account of paucity of distributable profits.
One Trade Apartments Limited (TAL) had acquired some shares of the target company which triggered the takeover code as a result whereof that company (TAL) made a public announcement and sent its draft letter of offer to the Securities and Exchange Board of India (hereinafter referred to as the Board).
While examining that letter of offer, the Board went into the shareholding pattern of the target company and found that Weizmann Limited, one of its promoters and the appellant herein had acquired voting rights on its 4,75,000 cumulative redeemable preference shares as the dividend due on those shares remained unpaid for an aggregate period of two years as a result whereof the takeover code got triggered. The Board further found that the appellants (appellants no.2 to 13 are persons acting in concert with appellant no.1) were required to come out with a public announcement on the acquisition of the voting rights and not having done so, had violated the provisions of Regulation 11(1) read with Regulation 14 of the takeover code. Accordingly, notices dated 27.4.2007 were issued to the appellants calling upon them to show cause why an enquiry should not be held against them for imposing monetary penalty for their alleged non-compliance with the provisions of the takeover code. Appellant no.1 filed a detailed...
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