IN
THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
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Date of Decision
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24.04.2006�
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In the matter of :
Appeal No. 23 of 2002
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RamPrasad Somani
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Appellant � Represented by
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Mr.B. K. Sinha,
Advocate
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Versus
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�Securities & Exchange Board of India
& Ors.
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RespondentsNo.1 Represented
by Mr.
Kumar Desai, Sr. Advocate along with ��Ms. Daya Gupta,
Mr. Paras Kuhad, Advocates for
Respondent No.2,3,4,6 & 7.
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Coram:
����������� Justice N. K. Sodhi, Presiding Officer
����������� C. Bhattacharya, Member
����������� R. N. Bhardwaj, Member
Per:���� Justice N. K. Sodhi, Presiding Officer(Oral)
����������� The present dispute
relates to the Bank of Rajasthan (for short the Bank) which �is the target company. The appellant is the
shareholder of the Bank and he along with some others had filed complaints
before the Securities & Exchange Board of India (for short �the Board�)
alleging that P. K. Tayal and other persons acting in concert with him held
shares of the Bank exceeding the requisite�
percentage prescribed in the Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (for short
�the Regulations�) and that they did not disclose their shareholding of the
Bank to the Bank.� It was also alleged
that the Tayal group� gained control of
the Bank on 28/9/1998 when five of its directors were elected on the Board of
Directors �of the Bank and that after
gaining control the �group did not make a
public announcement as required by Regulations 10 and 12 of the
Regulations.� The complaints were looked
into by the Board and after thorough investigation it came to the conclusion
that Tayal group had not violated the provisions of Regulations 10 and 12 and
that the shareholding which it acquired in excess of the requisite percentage
was exempt under Regulation 3 (1)(b)(ii) from the applicability of Regulations
10 and 12 of the Regulations.� The Board
however, found that Tayal group had violated Regulation 7 in as much as it did
not disclose to the Bank its percentage of shareholding in the Bank as was
required by the said Regulation. �The
complaints were accordingly disposed of by �order dated 16th January, 2002.��� It is against this order that the present
appeal has been filed under section 15T of the Securities and Exchange Board of
India Act, 1992 (for short �the Act�)
2.������ We have heard the learned counsel for the
parties.� The primary grievance of the
appellant is that five directors who were nominees of Tayal group were elected
as directors on the Board of Directors of the Bank on 28/9/1998 and that this group thereby gained control over the management of the
Bank without complying with the Regulation 12.��
The argument is that the moment Tayal group gained control, it ought to
have made a public announcement in terms of Regulation 12 of the
Regulations.� We are unable to accept
this contention.� It is common ground
between the parties that the Board of Directors of the Bank as on 28/9/1998 consisted of 14 directors, two of which were nominees of Reserve Bank
of India and the remaining 12
were elected directors.�� With five directors
on the board which had 14 directors, we do not think that Tayal group gained
control of the management of the Bank.�
They were in a minority and, therefore, the group did not gain control
and Regulation 12 did not get triggered.��
The learned counsel for the appellant very strenuously urged that the
remaining 7 elected directors had been removed from the Board by separate
orders passed by the Reserve Bank of India under the Banking Regulations
Act� and since they were not on the
board, the Tayal group was controlling the Bank.� He referred to the order dated October 21, 1997 passed by the Deputy Governor of the Reserve Bank
of India.� We have perused this order and find that only
one Keshav Bangur who was then a director of the Bank had been ordered to be
removed and not all the elected directors.�
Even with his removal the five nominees of the Tayal group did not gain
control as they were still� in a minority
on the Board of Directors of the Bank.�
The learned counsel then urged that the remaining elected directors had
been restrained from continuing as directors on the Board of Directors of the Bank
and, therefore, Tayal group was in control of the Bank.� This contention also can not be accepted
because nothing has been placed on the record to show that the remaining
elected directors on the board had been restrained from acting as such under
the orders of any competent authority.�
In this view of the matter we have no hesitation in holding that the
Tayal group did not gain control by merely getting five of its nominees elected
on the Board of Directors of the Bank on 28/9/1998 and, therefore, Regulation
12 did not get triggered.
3.������ The next argument of the learned counsel
for the appellant is that the shareholding of the Tayal group as on 28/9/1998 w as 11.55% of the total shareholding of the Bank and, therefore, it
was incumbent upon the group to have complied with the provisions of Regulation
10.� It may be mentioned that at the
relevant time Regulation 10 required that an acquirer who acquired 10% or more
of the voting rights in a company had to make a public announcement to acquire
the shares of the company in accordance with the Regulations.� This grievance appears to have been raised
before the Board as well.� The Board has
found that the total shareholding of Tayal group as on 28/9/1998 was less than 10% and, therefore, the said Regulation did not get
triggered.� The learned counsel has
however, pointed out that on 26/7/1998 the said group (Tayal
group) acquired 1,25,580 shares and again another lot of 89,850 shares.�� According to the appellant 1,30,450 shares
and another lot of 1,25,550 shares were acquired by Tayal group on 10/9/1998. According to the appellant all these shares put together along with
the shares already held by the group came to 11.55% of the total shareholding
of the Bank and, therefore, Regulation 10 ought to have been complied.� Persons who acquired these shares are said to
be acting in concert with Mr. P. K. Tayal.�
This fact is seriously disputed by the respondents. The details of such
persons have not been mentioned and �no
material has been placed before us to show that the acquirers of these shares
were persons who were acting in concert with P. K. Tayal.�� It is not in dispute that in pursuance to
the Rights Issue in November, 1999 the Tayal group acquired some shares as per
its entitlement and the total shareholding exceeded the requisite percentage
prescribed in Regulation 10 but that again did not trigger the Regulations
because the same was exempt under Regulation 3 (1) (b) (ii) of the Regulations
and the Board in this regard was right in treating the same as exempt from the
applicability of the Regulations. ��In this view of the matter, no fault can be
found with the findings recorded by the Board in the impugned order.
��������� No other point was raised.
4.������ Before concluding we may mention that
this is an old appeal pending since the year 2002.� It was filed in April, 2002 when the
constitution of the Tribunal was different.�
It was then a one member tribunal.�
During the pendency of the appeal, the constitution of the tribunal
changed and it became a multi member tribunal with the Presiding Officer�� and two members.� The registry then addressed a letter to the
appellant to file two additional copies of the memorandum of appeal.� In response to this the appellant along with
the memorandum of appeal filed a large number of documents without supplying
the same to the respondent.� The Original
appeal as filed in the tribunal also does not contain those documents and no
permission was sought to file additional documents.�� The learned counsel for the appellant
pointed out that copies of these documents were sent to the respondents by post
which fact is disputed by the learned counsel appearing for the
respondents.� They have specifically
stated before us that they did not receive the documents to which the learned
counsel now sought to make a reference.�
Be that as it may, the appellant had not been granted any permission to
file additional documents nor did he ever seek such permission and, therefore,
we did not permit him to make a reference to those documents.
5.������ In the result, we find no merit in the
appeal and the same stands dismissed with no order as to costs.
���������
������������������ Sd/-
N. K. Sodhi
Presiding
Officer
Sd/-
C.
Bhattacharya
Member
�Sd/-
R. N. Bhardwaj
�����
Member
24/04/2006.
Smn 24/04