Appeal No. 244 of 2014. Case: Arun Goenka Vs Securities and Exchange Board of India. Securities and Exchange Board of India

Case NumberAppeal No. 244 of 2014
CounselFor Appellant: B.B. Parekh and Bhavna Bhartia, Advocates and For Respondents: Kumar Desai, Mihir Mody, Rushin Kapadia, Somasekhar Sundaresan and Ravichandra Hegde, Advocates
JudgesJ.P. Devadhar, J. (Presiding Officer), Jog Singh and A.S. Lamba, Members
Judgement DateOctober 14, 2014
CourtSecurities and Exchange Board of India


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

  1. Whole Time Member ("WTM" for short) of Securities and Exchange Board of India ("SEBI" for short) by his order dated May 26, 2014, while rejecting the representation made by the appellant has held that the appellant is not entitled to interest on the amount received by the appellant towards shares of the Target Company sold by appellant to the acquirers in the offer which opened on January 16, 2014 and closed on January 16, 2014. Challenging that order present appeal is filed.

  2. Facts relevant for the present appeal are:-

    1. Shree Rama Multi-Tech Ltd. ("Target Company" for convenience) is a company incorporated under the Companies Act, 1956. Shares of the Target Company are listed on the Bombay Stock Exchange ("BSE") and The National Stock Exchange of India Ltd. ("NSE").

    2. Three closely held unlisted companies belonging to promoter group of the target company namely East-West Polyart Limited, Shree Rama Polysynth Private Limited and Ideal Petro Products Limited ("Issuer Companies" for convenience) had issued Secured Redeemable Optionally Fully Convertible Premium Notes ("Premium Notes" for short) to Nirma Industries Private Limited ("NIPL" for short) in terms of a subscription agreement dated March 22, 2002. As per the public announcement, Premium Notes were held by both NIPL and Nirma Chemical Works Private Limited ("Acquirers" for convenience).

    3. In order to secure the Premium Notes issued to NIPL, promoters of the Target Company had pledged 1,42,88,700 shares ("the Pledged Shares" for convenience) of the Target Company in favour of NIPL in terms of the deeds of pledge dated March 22, 2002.

    4. As the Issuer Companies failed to redeem the outstanding Premium Notes, acquirers vide their respective notices dated June 10, 2005 intimated the Issuer Companies to redeem the outstanding Premium Notes within 30 days from the date of notice, failing which they would exercise their rights in respect of pledged shares.

    5. Consequent to the invocation of pledge, 1,42,88,700 shares were transferred to the demat account of NIPL on July 22, 2005 which represented 24.25% of the paid up and voting capital of the Target Company. Since the above acquisition of shares triggered regulation 10 of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 ("Takeover Regulations, 1997" for short) the acquirers were obliged to make a public announcement for acquiring...

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