Appeal No. 157 of 2012. Case: Amit Bhagvatprasad Barot Vs 1. Securities and Exchange Board of India, 2. India Star (Mauritius) Limited, 3. HSBC Securities & Capital Market (India) Private Limited, 4. Mr. Ravi Pratap Singh. Securities and Exchange Board of India

Case Number:Appeal No. 157 of 2012
Party Name:Amit Bhagvatprasad Barot Vs 1. Securities and Exchange Board of India, 2. India Star (Mauritius) Limited, 3. HSBC Securities & Capital Market (India) Private Limited, 4. Mr. Ravi Pratap Singh
Counsel:For Appellants: Mr. P. N. Modi, Senior Advocate with Mr. Joby Mathew and Mr. Deepak Dhane, Advocates and For Respondents: Mr. Kumar Desai, Advocate with Ms. Amrita Joshi, Advocate Mr. Janak Dwarkadas, Senior Advocate with Mr. Rohan Rajadhyaksha and Ms. Neelima Kumar, Advocates Mr. Zal Andhyarujina, Advocate
Judges:J.P. Devadhar, Presiding Officer & A.S. Lamba, Member
Issue:Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997; Securities and Exchange Board of India) Act, 1992 - Section 15T; SAST Regulations 1997 - Regulations 10, 16(v)
Judgement Date:September 03, 2013
Court:Securities and Exchange Board of India
 
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Order:

J.P. Devadhar, Presiding Officer (At Mumbai)

  1. When an investor in shares files complaint before Securities and Exchange Board of India ("SEBI" for short) alleging fraud and misrepresentation in the letter of offer made by "Acquirer" under Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 ("SAST Regulations 1997" for short) and the said complaint is rejected without considering allegations made in the complaint, whether appeal against such rejection is maintainable under Section 15T of the Securities and Exchange Board of India) Act, 1992 ("SEBI Act" for short) is the basic question that falls for consideration in this appeal. According to appellant rejection of his complaint by SEBI vide communication dated 8th June, 2012 constitutes an order which prejudicially affects his interests as an investor and hence appeal against rejection order dated 8th June, 2012 is maintainable.

  2. Appellant as a trader had inter alia held certain shares of Global Offshore Services Limited, formerly known as Garware Offshore Services Limited ("target company" for convenience).

  3. On 7th November, 2007 respondent no. 2 incorporated in Mauritius ("Acquirer" for convenience) made a public announcement under Regulation 10 of SAST Regulations 1997, stating that Acquirer holds 12.02% shares of target company and due to conversion of optionally convertible debentures, became eligible to acquire additional 9.54% of equity shares of target company. Thus total shareholding of Acquirer in the target company became 21.56% (12.02%+9.54%). As per regulation 10 of SAST Regulations 1997 it was mandatory for an Acquirer acquiring shares and voting rights over 15% of paid up share capital of target company to make public announcement and acquire shares from public in accordance with the said regulations. Accordingly by letter of offer dated 12th March, 2008 respondent no. 2 offered to purchase shares of target company at ` 230 per share during the offer period commencing from 19th March, 2008 and closing on 7th April, 2008.

  4. Admittedly, during the offer period appellant did not offer to sell shares of target company held by him to Acquirer.

  5. Three years later, appellant filed Appeal No. 201 of 2011 before this Tribunal, interalia seeking order directing SEBI to order Manager to public offer and the Acquirer to make fresh offer as material facts were suppressed in the letter of offer dated 12th March, 2008 and if those facts were disclosed as required under SAST Regulations 1997, appellant would have offered to sell shares of target company during the offer period specified in letter of offer dated 12th March, 2008. On 4th January, 2012 said appeal was dismissed as withdrawn with liberty to seek appropriate remedy before SEBI.

  6. Accordingly, on 16th January, 2012 appellant filed a complaint before SEBI interalia on ground that in the letter of offer dated 12th March, 2008 Acquirer (respondent no. 2) and Manager (respondent no. 3) had failed to disclose material information with regard to the background of Acquirer and past experience of its Director Mr. Ravi Pratap Singh, as contemplated under the standard letter of offer forming part of SEBI circular dated 3rd August, 2004.

  7. Grievance of appellant in the complaint interalia was that under regulation 16(v) of SAST Regulations 1997, it was mandatory for Acquirer, which is a company, to disclose identity of its promoters and of the persons having control over it and the group, if any, to whom Acquirer company belongs. Similarly, under Clauses 4.1.5 and 4.1.8 of standard letter of offer in SEBI circular dated 8th March, 2004, it was mandatory for Acquirer (respondent no. 2) to disclose in letter of offer, identity of its promoters and/or persons having control over it and the group, if any, to which Acquirer belongs to and details of experience, qualifications, date of appointment of Board of Directors. However, in this...

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