Legal Reference Library

In Pramod Jain Vs. Securities and Exchange Board of India,  the question before the Hon'ble Supreme Court of India was :- (i) To what extent is the timeline laid down under the Takeover Regulations required to be adhered to and effect of delay by SEBI in the present case? (ii) To what extent unilateral action of the target company in dealing with the property of the company after a hostile public offer is made furnish cause of action to the acquirers to withdraw the public offer and whether in the present case, decision not permitting withdrawal of public offer is justified? The Hon'ble court held that :- i) The withdrawal has to be dealt with under Regulation 27, as held by this Court. The general principle is that public offer once made cannot be withdrawn. Exception to the rule is the specified situations under the Regulation as laid down by this Court in above decisions particularly in Nirma Industries Limited (Supra). In the present case, though SEBI was not ...

In a setback to Adel Landmarks Limited, a real estate enterprise, the SEBI directed the company and its directors to refund the money collected from the public under its ‘pre-booking of plots’ scheme. Adel, without registration and approval under SEBI’s Collective Investment Schemes (CIS) Regulations, collected the money from the public for purchase /acquisition of future land for development of residential colonies. Adel contended that it collected the money for pre-booking of plots being developed on the land already owned by it either directly or through subsidiaries. The SEBI through its whole time member, on the other hand, examining the agreements by Adel with perspective buyers and other materials on record found that Adel was pooling money to purchase future land which amounts to scheme/arrangement under S. 11AA(2)(i) of the SEBI Act, 1992. He observed that the Company has solicited investments with a promise of refund of investment amount along with return in the nature of co...

Actual Loss to the investors is not pre-requisite for penalty on non-disclosure under Takeover Regulations The security market regulator imposed penalty of Rs. 4,50,000 on M/s. Khatau Exim Limited (the company) for non compliance with Takeover Regulation, 1997 and Sec. 15A(b) of the SEBI Act, 1992. The company was found guilty for not to make annual filing to the stock Exchanges where the company’s shares were listed in respect of the holdings of the promoters or person(s) having control over the company. The adjudicating officer of SEBI while considering the quantum of penalty relied on the decisions of the Supreme Court in SEBI v.  Shri Ram Mutual Fund in which it was ruled that, “penalty is attracted as soon as the contravention of the statutory obligation as contemplated by the Act and the Regulations is established and hence the intention of the parties committing such violation becomes wholly irrelevant…”. Adjudication Order in the matter of M/s. Khatau Exim Limited, ORD...

Stock market regulator Securities and Exchange Board of India (SEBI) does not have locus to intervene in a Scheme Petition under Sections (391 and 394) of Companies Act, the Bombay High Court has held in a recent judgment by Justice Kathawalla. Sections 391 and 394 of the Companies Act deal with issues relating to merger, amalgamation, restructuring of companies. SEBI had applied to the Bombay High Court to set aside the High Court’s earlier order sanctioning a scheme of arrangement and amalgamation in a matter relating to Ikisan Ltd and Kakinada Fertilizers . SEBI had contended in its application that a fraud had been perpetrated on the Court by suppression and/or misrepresentation of facts and documents relating to the court sanctioned composite scheme between Kakinada Fertilizers, erstwhile Nagarjuna Fertilizers and Chemicals Ltd (NFCL), Ikisan Ltd and Nagarjuna Oil Refinery Ltd (NORL). Under this composite scheme, the oil business of the erstwhile NFCL was demerged into NORL an...