TaxTMI 
TaxTMI 
2015 (9) TMI 1070
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....ith the order which is subject matter of the earlier appeal. It goes without saying that the latter appeal will follow the fate of the main appeal. 2. Before adverting to the issues of law raised on behalf of the appellant, the essential facts may be noticed only in brief. The appellant, Kosha Investments Ltd., acquired shares of another company Snowcem India Ltd. (hereinafter referred to as 'SIL') from one of the original promoters of SIL and thus itself became one of the promoters. An investigation by SEBI covered the period June 1999 to August 1999 when there was an initial upward movement in the price of shares of SIL and also substantial increase in the volume of their trade. As a result of such investigation the appellant faced charges in another proceeding under SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 and was also served with a show cause notice dated 14.11.2002 for alleged breach of provisions of Regulation 44 and 45(6) of the Regulations of 1997 read with provisions of Section 11 and 11B of the SEBI Act. The proposed action under Regulations of 1997 was based upon report of investigation showing that ap....
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....99 till the date of actual payment of consideration for the shares to be tendered and accepted in the offer directed to be made by the Acquirers. 17. It is also noted that an order dated 3.12.03 was passed by me restraining the Kosha Investments Ltd. from buying, selling or dealing in securities in any manner, directly or indirectly, for a period of two years for violating the provisions of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995. However, I direct the said order dated 3.12.2003 shall not hamper the implementation of this order." 3. The appellant preferred an appeal before the Securities Appellate Tribunal to challenge the order dated 27th January 2004 passed by Whole Time Member of SEBI. The main contention of the appellant before the Tribunal is recorded in paragraph 7 of the impugned judgment and is as follows : "Learned counsel for the appellant argued that KIL had been regularly purchasing and selling shares of SIL. He also argued that KIL had not acquired 5% or more than 5% shares or voting rights in respect of shares of SIL at any point of time in the period of 12 months. He submitted that out of....
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....king acquisition of only up to 5% of the paid up capital of target company was no doubt to be reckoned during a period of 12 months, that is, a financial year but the requirement of Regulation 11(1) of the Regulations of 1997 of making a public announcement was triggered not only on actual acquisition beyond the 5% limit but even on entering into an agreement for such acquisition or deciding to acquire such volume of shares or voting rights, in view of provisions of Regulation 14(1) of the Regulations of 1997. A strong emphasis was laid on Regulation 14(1) which requires the public announcement referred to in Regulation 10 or Regulation 11 to be made by the acquiring company (through its merchant banker), not later than four working days of the agreement or decision to acquire the requisite number of shares or voting rights which by itself triggers the requirement of Regulation 11. (emphasis added) Let us conceptualize the case of an entity holding 20 per cent of shareholding in a target company on 1st April of a given year. If it were to increase its holding by say 3 per cent and subsequently reduce it to 2 per cent. It at that point it intended to purchase 4 per cent shares again....
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....transfer of control over a target Public Sector Undertaking. (2) In the case of an acquirer acquiring securities, including Global Depository Receipts or American Depository Receipts which, when taken together with the voting rights, if any already held by him or persons acting in concert with him, would entitle him to voting rights, exceeding the percentage specified in regulation 10 or regulation 11, the public announcement referred to in sub-regulation (1) shall be made not later than four working days before he acquires voting rights on such securities upon conversion, or exercise of option, as the case may be." 7. A careful reading of the aforesaid Regulations discloses that the public announcement should not be delayed beyond four working days of the agreement or decision to acquire the requisite number of shares or voting rights. We are in agreement with the finding of the Tribunal on this issue and find no merit in the contentions of the appellant. If the plea of appellant will be accepted then an acquirer can keep on violating Regulation 11(1) with impunity on as many occasions as he/it wants and avoid letting the public have the required knowledge through publ....