TaxTMI 
TaxTMI 
2023 (4) TMI 1451
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....eal no.7 of 2022. For the reason stated in the application, the delay in the filing of the appeal is condoned. The application is allowed. 2. The appellants are shareholders of Ravi Kumar Distilleries Ltd. and are aggrieved by the order dated 2nd February, 2021 passed by the Whole Time Member ('WTM' for short) refusing to exercise its powers under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (hereinafter referred to as the 'SAST Regulations) for making an open offer, etc. 3. The facts leading to the filing of the present appeal is, that pursuant to an investigation conducted by Securities and Exchange Board of India (hereinafter referred to as "SEBI") in the scrip of Ravi Kumar Distilleries Ltd. a show cause notice dated was issued to R. V. Ravikumar along with PACs, namely Ravikumar Properties Pvt. Ltd., Ravikumar Amrithavalli, S Rajendran, R Ramanujam, V Sivasankar, V Chitra, G Ramaraja, BPJ, Chiraag and Nandlal (together referred to as the Noticees), asking them to show cause as to why appropriate directions under Sections 11(1), 11(4) and 11B of the SEBI Act should not be issued against them for....
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....he said MoU dated September 05, 2012, which the Noticees claim to be the genesis of the subject acquisitions by them, is a crucial preliminary issue which needs to be decided before deciding whether the said acquisitions by the Noticees would trigger open offer obligations or not. I note that the said preliminary issue is intricately linked to the subject matter of various proceedings, both civil and criminal, between Ravikumar group and Anil Agrawal group which are pending before different authorities/courts, as mentioned in the Table under the preceding paragraph. In such a situation, where the facts and circumstances leading to the alleged violation of the provisions of SAST Regulations, 2011 are themselves in dispute, it does not appear appropriate to adjudicate such alleged violations. Since the facts of this case and the transactions in question are intertwined with the allegations and counter-allegations of fraud and forgery which are yet to be conclusively determined, this matter cannot be treated in the same way as any other matter involving the question trigger of open offer obligations under the SAST Regulations, 2011. The provisions of the SAST Regulations, 2011 do not ....
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....e open market, or through an offer for sale under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, and directing the appointment of a merchant banker for such divestiture; (b) directing transfer of the shares, or any proceeds of a directed sale of shares acquired in violation of these regulations to the Investor Protection and Education Fund established under the Securities and Exchange Board of India (Investor Protection and Education Fund) Regulations, 2009; (c) directing the target company or any depository not to give effect to any transfer of shares acquired in violation of these regulations; (d) directing the acquirer or any person acting in concert, or any nominee or proxy not to exercise any voting or other rights attached to shares acquired in violation of these regulations; (e) debarring any person who has violated these regulations from accessing the capital market or dealing in securities for such period as may be directed, having regard to the nature and gravity of the violation; (f) directing the acquirer to make an open offer for acquiring shares of the target com....
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....provision gives discretion to the authority to issue directions under Regulation 32(1) instead of taking action under Chapter VIA and Section 24 of the Securities and Exchange Board of India Act, 1992 in the interest of investors in securities and securities market. The word used is "may". The word "may" is not mandatory and is not "shall" and, therefore, discretion is given to the authority to issue or not to issue any directions under Section 32 of the SAST Regulations depending on the circumstances of the case and the situation that may arise. 12. Regulation 44 of the SAST Regulation, 1997 came up for consideration before the Supreme Court in SEBI vs. Sunil Krishna Khaitan & Ors. in Civil Appeal No.1762 of 2014 decided on 11th July, 2022. The Supreme Court interpreted the word "may" in Regulation 44 to mean that it confers discretion upon the authority. The Supreme Court held that the word "may" and not "shall" in Regulation 44 indicates that the provision is not mandatory and that in each and every case of violation and breach of Regulations 10, 11 and 12, a direction is issued under Regulation 44. The Supreme Court held that discretion is given to the authority which is of ....
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....ovides that the Board is entitled to take measures for regulating substantial acquisition of shares and takeover of companies. Regulation 44 states that the Board while issuing directions, has to keep in mind the interest of the securities market and its role as a protector of interest of investors. We will read the word 'or' between the expression ‗in the interest of securities market or protection of investors' as 'and'. The Board, therefore, when it decides to exercise its power under Regulation 44 and issues directions under the said Regulation has to keep the two facets in mind, namely, (i) interest of the securities market; and (ii) protection of interest of the investors. The exercise of discretion of the Board, in fact, would not be restricted to the two facets mentioned above as the power and functions of the Board are far broader as they include promotion, development and regulation of securities market as a whole and regulating substantial acquisition of shares and takeover of companies. 71. Discretion is an effective and an important tool which the legislature confers and vests with the executive for effective and good governance, administration, and in t....