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Issues: Whether, under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1994 and Clauses 40-A and 40-B of the Listing Agreement, an indirect acquisition of a foreign unlisted holding company that controls a listed Indian company triggers the obligation to make a public offer; and whether the impugned orders rejecting the complaint called for interference.
Analysis: The Court held that the 1994 Regulations operated on acquisition of shares in a listed target company and did not contain the later, express concepts of indirect acquisition or acquisition of control introduced by the 1997 Regulations. Regulation 3(d) excluded acquisitions of shares in companies whose shares were not listed on any stock exchange, and the acquisition in question was only of shares in a foreign unlisted company, not of any shares in the listed Indian company. The Court further held that Regulation 9(3) could not be stretched to treat securities of the foreign holding company as securities of the listed target company. On the proper construction of the 1994 framework, the change in ownership of the foreign holding company, without acquisition of shares in the listed company, did not attract the takeover code or the corresponding listing agreement provisions.
Conclusion: The indirect acquisition did not trigger the 1994 Takeover Regulations or Clauses 40-A and 40-B of the Listing Agreement, and the challenge to the SEBI and appellate orders failed.
Final Conclusion: The Court affirmed that the pre-1997 takeover regime did not cover indirect acquisition of control through an unlisted foreign holding company, and the complaint was not maintainable on merits.
Ratio Decidendi: Under the 1994 takeover code, a public offer obligation arose only on acquisition of shares in the listed target company, and indirect acquisition of control through purchase of an unlisted holding company was outside its scope unless expressly brought within the regulatory text.
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