TaxTMI 
TaxTMI 
2023 (5) TMI 771
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.... A prayer is also made for quashing the complaint, including an order of issuance of process and framing of charges against the applicant. 2. Background facts necessary for the determination of these applications can be stated as under: The accused offered the public to acquire 20% of the capital of M/s. Damania Airways Limited in terms of Clause 40 B of the listing agreement of the Stock Exchange, Mumbai and provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1994 (hereafter "1994 Regulations", for short). The offer was opened on 1 February 1996 and closed on 29 February 1996. Regulation 20(1) of the 1994 Regulations imposes a general obligation on the acquirers to publicly announce to acquire shares only when acquirers have every reason to believe they can implement the offer. 3. On 9 April 1996, a letter was dispatched to the complainant by M/s.LKP Merchant Financing Limited, the Managers to the offer, stating inter alia that the despatches are being carried out by registered post from the office of Registrar at Ahmedabad. Further, vide letter dated 29 April 1996, the Managers of the issue informed the complainant that ou....
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....ant resisted the discharge application by filing a reply. 11. Learned Special SEBI Judge, after appraisal of the contentions in the applicant, reply thereto and material on record as well as submissions canvassed across the bar, was persuaded to reject the application. Learned SEBI Special Judge was of the view that accused No. 3 was unable to substantiate his contention of resignation by producing credible material on record and, therefore, there were sufficient grounds to proceed against the applicant. 12. Being aggrieved, the applicant has invoked the jurisdiction of this Court under Section 482 of the Code. 13. I have heard Mr. Venegaonkar, learned Advocate for the petitioner and Mr. Sancheti, learned Senior Advocate and Mr. Subramaniam, learned Senior Advocate for respondent No. 2. 14. Mr. Venegaonkar, a learned Advocate for the applicant, canvassed two-fold submissions. Firstly, the initiation of prosecution under Section 24 of the said Act was vitiated in the absence of holding of investigation under Chapter 5 of the 1994 Regulations. Therefore, according to him, holding of investigation under the said Chapter is sine qua non before launching prosecution under Se....
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....isonment for a term which shall not be less than one month but which may extend to three years or with fine which shall not be less than two thousand rupees but which may extend to ten thousand rupees or with both." 19. Regulations 20, 22, 30, 33 and 39 of the 1994 Regulations reads thus: "General Obligations 20. (1) The announcement of public offer to acquire shares shall be made only when the acquirer has every reason to believe that he shall be able to implement the offer. (2) Within fourteen days of the public announcement of offer, the acquirer must also submit a letter of offer to the Board of Directors of the company, whose shares are being acquired. (3) The acquirer shall state the period for which the offer to acquire shares from the other shareholders shall remain open: Provided that every such offer shall be kept open for a period of not less than four weeks from the date of the offer. (4) The directors of the company of which the shares are being acquired shall not sell or enter into an agreement for sale of assets not being sale or disposal of assets, in the ordinary course of business, of the company or its subs....
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.... information about identity and background of the person acquiring shares, offer price, the plan for revival of the unit and the period for which the offer shall be kept open. (3) The terms of offer shall be forwarded to each of the shareholders in the financially weak company indicating therein a specific mention of the record date and also the acquisition date of the offer. (4) Notwithstanding anything contained in the foregoing regulations, the financially weak company or, as the case may be, the lead institution shall ensure that at no point of time shareholding held by the public is reduced to less than twenty per cent of the paid-up share capital of such company. (5) While accepting the offer from the other shareholders, the person acquiring shares shall offer to acquire from the individual shareholder his entire holdings if such holding is upto hundred shares of the face value of rupees ten each or ten shares of the face value of rupees hundred each." Board's right to investigate 33. (1) Where it appears to the Board so to do, it may appoint one or more persons as investigating authority to investigate and undertake inspection of ....
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....es to the offer, including payment of consideration to the shareholders who have accepted the offer, would be completed within four weeks from the date of closure of the offer. The offer closed on 29 February 1996; Khemkas should have made the payments to the shareholders on or before 28 March 1996. the complainant has produced on record letters from the Manager of the Offer and Khemka Brothers dated 9 April 1996, 25 April 1996, 10 July 1996 and 17 August 1996 wherein it is unambiguously admitting that the acquirers, i.e. Khemka Brothers have not been able to pay the shareholders who have accepted the offer and cited liquidity crunch in the market as the reason for their failure. As has been explained above, the Regulation requires that the payout to the shareholders who have accepted the offer is to be made within four weeks from the closure of the offer. Prima facie failure on the part of the acquirer to meet the obligation amounts to a breach of Regulations 20 and 22. Section 24(1) of the SEBI Act makes it clear that any SEBI Act, Rules and Regulations breach would invite prosecution. 21. In the face of aforesaid material, at this juncture, in my opinion, there was sufficient....