Tribunal quashes open offer order, dismisses heirs' liability. SEBI criticized for delay.

The Tribunal allowed the appeals, quashing the order requiring the acquirers, heirs of deceased, and promoters to make an open offer under SEBI Act and SAST Regulations. The liability of legal heirs for violations by deceased acquirers was dismissed, emphasizing that the obligation ceased with the acquirers' death. The Tribunal found no evidence of promoters acting in concert and criticized SEBI for a 12-year delay in proceedings, deeming it unreasonable. It held that proceedings against deceased persons were illegal and directing an open offer after 12 years was inappropriate. The Tribunal directed each party to bear its costs and stressed SEBI's need for timely proceedings.

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Issues Involved:
1. Delay in filing appeals.
2. Requirement to make an open offer under SEBI Act and SAST Regulations.
3. Liability of legal heirs for violations committed by deceased acquirers.
4. Acting in concert by promoters.
5. Inordinate delay in initiation of proceedings by SEBI.
6. Legality of proceedings against deceased persons.
7. Appropriateness of directions to make an open offer after 12 years.

Detailed Analysis:

1. Delay in Filing Appeals:
The Tribunal condoned the delay in filing the appeals, allowing Misc. application nos. 337 and 360 of 2018 and 525 of 2019.

2. Requirement to Make an Open Offer:
The appeals were against a common order by SEBI's Whole Time Member (WTM) directing the acquirers, heirs of the deceased, and promoters of the target Company to make an open offer under sections 11 and 11 B of the SEBI Act, 1992, and relevant regulations of SAST Regulations, 1997 and 2011. The WTM found that the acquirers collectively acquired more than five percent of shares in the financial year 2005-06, triggering the requirement for an open offer, which they failed to make, resulting in liability for penal action.

3. Liability of Legal Heirs for Violations Committed by Deceased Acquirers:
The WTM concluded that the liability for making an open offer is not personal and continues upon the legal heirs of the deceased acquirers. However, the Tribunal found this assertion erroneous, citing Regulation 27(1)(c) of the SAST Regulations, 1997, which states that the obligation to make a public offer cannot be imposed if the sole acquirer has died. The principle "actio personalis moritur cum persona" (personal action dies with the person) was applicable, and the cause of action ended with the death of the acquirers.

4. Acting in Concert by Promoters:
The WTM concluded that all other promoters were acting in concert. However, the Tribunal found no evidence of a common objective among the promoters and stated that the SAST Regulation of 1997 did not deem promoters to be acting in concert without specific findings.

5. Inordinate Delay in Initiation of Proceedings by SEBI:
The Tribunal noted a significant delay of 12 years in initiating proceedings, which was unreasonable and defeated the purpose of bringing relief to shareholders. The Tribunal emphasized that SEBI's lackadaisical attitude in handling the matter and the delay caused prejudice to the appellants.

6. Legality of Proceedings Against Deceased Persons:
The Tribunal found that initiating proceedings against deceased persons was illegal. SEBI was aware of the deaths of Mr. R.D. Bhanot and Mrs. Krishna Kumari Bhanot but still issued show cause notices to them. The Tribunal held that no direction could be issued to the heirs without bringing them on record and hearing them.

7. Appropriateness of Directions to Make an Open Offer After 12 Years:
The Tribunal concluded that directing an open offer after 12 years was not appropriate. Regulation 44 of the SAST Regulations provides various measures for violations, and the Tribunal found that, given the long lapse of time, the direction to make an open offer was not suitable.

Conclusion:
The Tribunal quashed the impugned order, stating that the inordinate delay in initiating proceedings and the improper handling of the matter by SEBI rendered the order unsustainable. The appeals were allowed, and each party was directed to bear its own costs. The Tribunal also emphasized the need for SEBI to adhere to reasonable time limits in initiating proceedings.

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