Case: In Re: OCL India Limited Vs. Securities and Exchange Board of India

JudgesK.M. Abraham, Member
IssueCompany Laws
Judgement DateJanuary 28, 2010
CourtSecurities and Exchange Board of India

Order:

K.M. Abraham, Member

  1. Securities and Exchange Board of India (hereinafter referred to as SEBI) issued a show cause notice to the promoters of OCL India Limited (hereinafter referred to as the target company) namely, Mr. Raghu Hari Dalmia, Mrs. Padma Dalmia, Mr. Mridu Hari Dalmia, Mrs. Abha Dalmia, Ms. Sharmila Dalmia Parivar Trust, Mr. Gaurav Dalmia, Kanupriya Trust, Devanshi Trust, Aryamanhari Trust, Aanyapriya Trust, Raghu Hari Dalmia Parivar Trust, Ms. Vrinda Dalmia, Mr. Gautam Dalmia HUF, Vasumana Trust, Mrs. Kanu Priya Somany, Mr. Raghu Hari Dalmia HUF, Mr. Mridu Hari Dalmia HUF, Mridu Hari Dalmia Parivar Trust, Mrs. Usha Devi Jhunjhunwala, Ms. Rasalika Dalmia, Ms. Saudamini Dalmia (hereinafter collectively referred to as the acquirers) as they allegedly contravened Regulation 11(1) of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as the Takeover Regulations) in respect of their acquisition of 12.44% voting rights of the target company. The said show cause notice was an outcome of the examination of the matter by SEBI, pursuant to the Order dated February 7, 2007 of the Hon'ble High Court of Delhi made in Writ Petition (Civil) No. 16007/2006 in the matter of Jindal Securities Private Limited v. Securities and Exchange Board of India and Ors., wherein, the Hon'ble Court directed "This petition is disposed of with the direction that the petition be treated as a complaint/representation made to the respondent No. 1 (SEBI). The Learned Counsel appearing on behalf of the respondent No. 1 states that it shall so consider this petition and shall deal with it in accordance with law indicating the outcome to the proceedings undertaken by the SEBI to the petitioner. This is without prejudice to the rights and contentions to the parties." The said writ petition was inter alia filed for a direction for quashing the decision of the target company to open the rights issue alleging that the same was done inter alia in violation of the Takeover Regulations. It was inter alia stated that the petitioner (Jindal Securities Private Limited), vide letter dated July 30, 2005 had informed the target company that the shareholding of its promoters mentioned in the offer document indicated the violation of Regulations 11(1) and 11(2) of the Takeover Regulations. It was further stated that the target company, vide letter dated September 3, 2005 had informed the petitioner that the main reason for increase in shareholding of promoter was because of the buy back of shares by the target company. In terms of the petition, it was stated that even if, the increase in the shareholding of promoters had occasioned on account of the buy back of shares, the law mandatory puts a obligation on such promoters to make an open offer for further acquisition of 20% shares.

  2. In compliance with the direction of the Hon'ble High Court, the matter was examined by SEBI. It was observed that the target company came out with a buy back offer upto 11,83,708 fully paid up equity shares of face value of Rs. 10/- each in the year 2003. The said offer opened on March 14, 2003 and closed on April 7, 2003. Consequent to the said buy back offer, the shareholding of its promoters/acquirers in the target company increased from 62.56% to 75% of the voting rights. Though, the said increase in the shareholding of the acquirers triggered the provisions of the Takeover Regulations, they had not made a public announcement as required under Regulation...

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