Tribunal Upholds Violation of SEBI Takeover Regulations: Acquiring Shares in Concert without Public Announcement

The Tribunal upheld the Adjudicating Officer's findings that the appellants violated Regulation 10 of the SEBI Takeover Regulations by acquiring shares in concert without making a public announcement. The Tribunal affirmed the penalty imposed on each entity, emphasizing the coordinated effort and common objective in acquiring the shares. The appeal was dismissed, with the Tribunal distinguishing a previous case and finding no merit in the appellants' arguments.

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Issues Involved:
1. Violation of Regulation 10 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
2. Determination of "persons acting in concert" (PAC) under Regulation 2(1)(e) of the Takeover Regulations, 1997.
3. Imposition of penalty under Section 15H(ii) of the SEBI Act, 1992.

Issue-wise Detailed Analysis:

1. Violation of Regulation 10 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997:
The appellants were found to have acquired 32.02% shares/voting rights of Axon InfoTech Ltd. (AIL) on April 5, 2006, without making a public announcement as required under Regulation 10 of the Takeover Regulations, 1997. The investigation revealed that eight entities, including the appellants, acted in concert to acquire these shares, thereby crossing the threshold limit of 15%. The Adjudicating Officer (AO) concluded that the appellants violated Regulation 10 by failing to make the necessary public announcement, thus attracting a penalty under Section 15H(ii) of the SEBI Act, 1992.

2. Determination of "persons acting in concert" (PAC) under Regulation 2(1)(e) of the Takeover Regulations, 1997:
The appellants contested the finding, arguing that the element of a "common objective" was not established. They claimed that their acquisition of shares was individual and not concerted. However, the AO provided substantial evidence demonstrating a coordinated effort among the entities. The AO highlighted that shares were transferred from the same individual, Dhiren Shukla, to all eight entities at the same rate and in a similar quantity, indicating a common objective. Additionally, the AO detailed the interconnected relationships and shared management among the entities, further establishing that they acted in concert.

3. Imposition of penalty under Section 15H(ii) of the SEBI Act, 1992:
The AO imposed a penalty of Rs. 12,57,500 on each of the eight entities for the violation. The appellants argued that the evidence was insufficient to prove a common objective. However, the Tribunal upheld the AO's findings, noting that the detailed factual matrix and the relationships among the entities convincingly demonstrated that they acted in concert. The Tribunal found no legal infirmity in the AO's order and upheld the penalty imposed.

Conclusion:
The Tribunal dismissed the appeal, affirming the AO's findings and the imposed penalties. The Tribunal emphasized that the appellants acted in concert with a common objective to acquire shares of AIL, thereby violating Regulation 10 of the Takeover Regulations, 1997. The judgment in the case of Triumph International Finance India Ltd. was distinguished, as the facts and evidence in the present case clearly established the appellants' concerted actions. The appeal was found to be without merit and was dismissed with no order as to costs.

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