AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 917
X X X X Extracts X X X X
X X X X Extracts X X X X
.... referred to as "the MCFL") constituting 24.46 paid up share capital of the MCFL on the Bombay Stock Exchange. 3. The first transaction of the acquisition of the shares was by way of the purchase of shares conducted through bulk and block deals. It was followed by press release dated 3.7.2013 by Deepak Fertiliser and Petrochemicals Corporation Limited filed with the Stock Exchanges, in compliance with the requirements of the Listing Agreement. 4. On the second acquisition of the shares on 23.04.2014 the appellants made a purchase order in the open market for the purchase of up to 20 lacs equity shares representing 1.7 percent shares of the MCFL. Subsequently, an open offer in terms of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (for short, "the Regulations, 2011") was made for acquiring up to 26 percent of shares of the MCFL. 5. The appellants filed a notice disclosing details of the first acquisition and notifying the second acquisition under Section 6(2) of the Act with the Commission on 22.04.2014 within thirty days of the public announcement pursuant to the Regulations, 2011 for the acquisition of 1.7 percent of the MCFL. The Competition Comm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t acquisition of shares was notifiable. It could not have been termed solely as an investment. Reliance has been placed on Press Release issued on 3.7.2013, which referred investment being "very strategic", and the appellant also notified to the public that they "look forward to working closely with MCFL in the future". The knowledge of acquisition by the Zuari group of 9.72% shares in MCFL on 2.4.2013 was admitted in the reply filed by the appellants. There was the acquisition of a large number of shares on the same day through the block and bulk deals. MCFL was not very profitable. Therefore, purchase of shares could not be said to be a sound investment by a prudent investor. 9. To appreciate the rival submissions, it is necessary to refer to certain provisions contained in the Act. Section 6 of the Act deals with regulation of combinations and the same is extracted hereunder: "Section 6: Regulation of combinations (1) No person or enterprise shall enter into a combination, which causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India and such a combination shall be void. (2) Subject to the provisions contained in subs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f transactions not likely to have an appreciable adverse effect on competition in India. Regulation 5 deals with the form of notice for the proposed combination. Regulation 5(8) provides that "other document" in section 6(2)(b) to mean any binding document by whatever name called, conveying an agreement or decision to acquire control, shares, voting rights or assets. Rule 5(8) is extracted hereunder : "5. Form of notice for the proposed combination (1) ...... (8) The reference to the "other document" in clause (b) of subsection (2) of section 6 of the Act shall mean any binding document, by whatever name called, conveying an agreement or decision to acquire control, shares, voting rights or assets: Provided that if the acquisition is without the consent of the enterprise being acquired, any document executed by the acquiring enterprise by whatever name called, conveying a decision to acquire control, shares or voting rights shall be the "other document". Provided further that where a public announcement has been made in terms of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, for the acquisition of shares, voti....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the penalty considering the facts and circumstances of the case. 16. First, we deal with the acquisition of the shares of MCFL by the appellants on 3.11.2013. There was the acquisition of 24.46% equity share capital of MCFL on a single day of which 19.9% were acquired through the block and bulk deals. The contemporaneous Press Release dated 3.7.2013 issued by the appellants filed with the stock exchanges, in compliance with the requirement of the Listing Agreement indicated that the objective was not to make an investment in MCFL. The Press Release referred "investment is very strategic and a good fit with the company's business". There was a pointer in the Press Release of its intent when it stated that DFPCL looks forward to working closely with MCFL to "enhance longterm value for the shareholder of both companies". Not only the appellants but another player Zuari group also made a significant purchase of shares of MCFL i.e. 9.72% on 2.4.2013 is also not in dispute. Thus, it is apparent that the appellant's first acquisition was a part of the longterm plan to try and take over MCFL, which was simply not an investment. The purchase of 24.46% equity stake, vested power to exe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tice to the Commission are of the 'proposed combination' and the specific provisions contained in section 6(2A) of the Act provides that no combination shall come into effect until 210 days have passed from the date on which notice has been given or passing of orders under section 31 by the Commission, whichever is earlier. The intent of the Act is that the Commission has to permit combination to be formed, and has an opportunity to assess whether the proposed combination would cause an appreciable adverse effect on competition. In case combination is to be notified expost facto for approval, it would defeat the very intendment of the provisions of the Act. 20. When the transaction has been completed and acquisition has been made and the latter transaction has exceeded holding more than 25% by the second purchase, obviously prior permission was required, as discussed hereinabove, as its total shareholding increased to 25.3%. Thus, we have no hesitation to hold that the notification under section 6(2) of the Act has to be exante. 21. The factum of the approval of the combination subsequently by the Commission is not going to provide an insulation when the provisions of the Act hav....