Open offer withdrawal is limited to exceptional impossibility; commercial disadvantage, delay, and valuation changes do not justify exit.

Withdrawal of an open offer under Regulation 27(1)(d) was confined to circumstances akin to statutory impossibility and could not be justified merely because the acquisition became commercially unattractive. The absence of a personal hearing did not invalidate SEBI's decision where the acquirer had already presented its case in writing, no oral hearing was requested, and no prejudice was shown. Alleged fraud, post-announcement fall in share price, processing delay, and a fresh valuation did not warrant relief, because the regulations did not require post-offer reassessment and the acquirer remained bound to complete the offer under the takeover code.

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Issues: (i) Whether rejection of the request to withdraw the open offer under Regulation 27(1)(d) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 was lawful; (ii) whether the absence of a personal hearing vitiated the SEBI decision; (iii) whether the alleged fraud, subsequent fall in share price, delay in processing the draft letter of offer, or a fresh valuation justified relief to the acquirer.

Issue (i): Whether rejection of the request to withdraw the open offer under Regulation 27(1)(d) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 was lawful.

Analysis: Regulation 27 makes withdrawal of a public offer an exception to the general rule that an offer, once made, cannot be withdrawn. Clauses (b) and (c) deal with situations of impossibility, and clause (d) is controlled by the same class of circumstances. The expression "such circumstances" was read in the light of the associated clauses, and could not be stretched to cover a case where performance had merely become economically unattractive. The scheme of the takeover regulations is to ensure transparency, market integrity, and an exit option to shareholders; it does not permit an acquirer to abandon the offer because the transaction later appears unprofitable.

Conclusion: The refusal to permit withdrawal of the open offer was upheld.

Issue (ii): Whether the absence of a personal hearing vitiated the SEBI decision.

Analysis: The material relied upon by the acquirer had already been placed before the merchant banker and SEBI in writing, and no request for a personal hearing had been made in the relevant communications. The regulations did not, either expressly or by necessary implication, require an oral hearing before deciding a request for withdrawal. Since the acquirer had an opportunity to present its case in writing and no prejudice was shown, the decision was not invalidated on the ground of natural justice.

Conclusion: The challenge based on breach of natural justice failed.

Issue (iii): Whether the alleged fraud, subsequent fall in share price, delay in processing the draft letter of offer, or a fresh valuation justified relief to the acquirer.

Analysis: The Court held that the alleged fraud and adverse financial condition did not make the public offer impossible. The acquirer had proceeded with knowledge of the target company's litigation and financial difficulties, and the later discovery of more serious irregularities did not convert a bad bargain into a ground for withdrawal. The plea of delay was also rejected because the regulations did not impose the asserted obligation on SEBI, and the acquirer itself had caused part of the delay. A fresh valuation under Regulation 20 was also found inappropriate because that provision governs pre-offer pricing, not post-announcement reassessment.

Conclusion: No additional relief was warranted on the grounds of fraud, delay, or fresh valuation.

Final Conclusion: The takeover regulations were construed as a self-contained code requiring strict adherence to the open-offer regime, and the acquirer was held bound to complete the offer.

Ratio Decidendi: Withdrawal of a public offer under Regulation 27(1)(d) is permissible only in circumstances akin to impossibility falling within the statutory exceptions, and not merely because the offer has become economically burdensome or commercially disadvantageous.

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