2025 INSC 189
SUPREME COURT OF INDIA
(HON’BLE
SANJIV KHANNA, CJI. AND HON’BLE SANJAY KUMAR, JJ.)
DIGVIJAY LAXHAMSINH
GAEKWAD (DANNY ...
Petitioner
VERSUS
SAPNA GOVIND RAO
Respondent
Civil
Appeal No. 2196-2197 of 2025 (arising out of SLP(C) No. of 2025) (@ Diary No.
6576/2025) With Civil Appeal No. OF 2025 (arising out of SLP(C) No.3726 of
2025)-Decided on 07-02-2025
Civil
Securities and
Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011, Regulations 20(1) and 20(9) – SEBI - Public announcement of
an open offer -
Question of competing offers in terms of Regulation 20 - Main question that
arises and has to be decided by the SEBI relates to the date of public
announcement of the open offer, as contemplated in Regulation 20(1) of the 2011
SEBI Regulations - The second question would be whether or not to grant
exemption, if the situation requires it - Third issue relates to the public
offer price - It is pointed out by the
private respondents that they deposited a sum of ₹330 crores way back on 26.09.2023
in an escrow account - The appellant, or their nominee/applicant before SEBI,
as suggested by his counsel, shall deposit a sum of ₹600 crores in terms of the
2011 SEBI Regulations, in the form of cash and/or bank guarantee, on or before
12.02.2025 - In case the amount is not deposited by the said date, the
directions in the present order shall be automatically vacated without further
reference to the Court - The public
offer, which is to close today, will be continued till 12.02.2025 - In case the
appellant, or their nominee/applicant before SEBI, deposits ₹600 crores in terms of
the 2011 SEBI Regulations, the offer will continue till the end of third day
post the date of the order to be passed by SEBI on the application of the
appellants - A party aggrieved by the order passed by SEBI would be entitled to
take recourse to an appropriate remedy -
Present directions are in the nature of an interim order - Proceedings
pending before the High Court and SEBI will be decided on merits and as per law
- Further, this order is without prejudice to the rights and contentions of the
parties and will not be construed as an expression of opinion as to any of the
issues and contentions noted above - Lastly, this order has been passed in the
peculiar facts and circumstances of the present case and shall not be read as a
precedent.
(Para
9 and 10)
ORDER
1.
We have heard learned counsel for the parties, including the learned Solicitor
General appearing for the Securities and Exchange Board of India[“SEBI”, for short.], at some length on
the question of competing offers in terms of Regulation 20 of the Securities
and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011[“2011 SEBI
Regulations”, for short.]. Regulations 20(1) and 20(9) of the 2011 SEBI
Regulations read as under: -
“20. (1)Upon a public
announcement of an open offer for acquiring shares of a target company being
made, any person, other than the acquirer who has made such public
announcement, shall be entitled to make a public days of the date of the
detailed public statement made by the acquirer who has made the first
public announcement.
xxx xxx xxx
(9) Upon the public
announcement of a competing offer, an acquirer who had made a preceding
competing offer shall be entitled to revise the terms of his open offer provided
the revised terms are more favourable to the shareholders of the target
company:
Provided that the
acquirers making the competing offers shall be entitled to make upward
revisions of the offer price at any time up to one working day prior to the
commencement of the tendering period.”
2.
The primary issue which arises for consideration is the date on which a public
announcement of an open offer, in terms of clause (1) to Regulation 20, has
been made. It is the case of the private respondents, M/s. Puran Associates
Private Limited, M/s. VIC Enterprises Private Limited, M/s. M.B. Finmart
Private Limited and M/s. Milky Investment and Trading Company, [“private respondents”, hereinafter.]
that the said date would be 25.09.2023. It is the case of the appellants that
the date on which the public announcement was made would be 18.01.2025. It is
highlighted by the appellants that the private respondents, being non-banking
financial companies, had to seek approval from the Reserve Bank of India, which
was initially not given but was finally granted on 09.12.2024. It is also
highlighted by the appellants that the object and purpose of making a public
offer is to ensure that the members of the public, who hold shares, can offload
and sell their shares to the group which is acquiring shares at the threshold
limit and which may, thereupon, have a say or control over the management of
the company.
3.
It may be noted that the appellants had made an application before SEBI on
22.01.2025 and it is their submission that, as the public offer was dated
18.01.2025, their application would be within the time period, as prescribed by
Regulation 20 of the 2011 SEBI Regulations. It is obviously the case of the
private respondents that the public offer date must be taken as 03.10.2023 and,
therefore, the application filed by the appellants is belated and beyond time.
SEBI has yet to decide the said aspect. SEBI had also asked the appellants to
move an application for exemption under Regulation 11 of the 2011 SEBI
Regulations. As per the appellants, they have moved the said application out of
abundant caution on the request made by the SEBI. Further, the appellants plead
that the public offer should be the higher of the two – the acquisition price
(as on 25.09.2023) or the market price prevailing at the time of the public
offer (as on 18.01.2025).
4.
Clause (9) of Regulation 20 states that, upon the public announcement of a
competing offer, an acquirer who had made the preceding offer shall be entitled
to revise the terms of his open offer provided the revised terms are more
favourable to the shareholders of the target company. Further, the acquirers
making the competing offers shall be entitled to make upward revisions of
the offer price at any time up to one working
day prior to the commencement of the tendering period.
5.
The tendering period, we are informed, has come to an end today, that is, on
07.02.2025. During the course of arguments, it was noted that there have been
several attempts to stall the public offer, but without success. We have noted
the said aspect, but at the same time, we have also taken into account the fact
that the application filed by the appellants is still pending consideration by
the SEBI and has not been disposed of. SEBI would be more concerned about
public investors and their rights and interests.
6.
The main question that arises and has to be decided by the SEBI relates to the
date of public announcement of the open offer, as contemplated in Regulation
20(1) of the 2011 SEBI Regulations. The second question would be whether or not
to grant exemption, if the situation requires it. Third issue relates to the
public offer price.
7.
It is pointed out by the private respondents that they deposited a sum of ₹330 crores way back on
26.09.2023 in an escrow account.
8.
Keeping all the aforesaid facts in mind, we are inclined to pass the following
order: -
1. The appellant,
Digvijay Laxhamsinh Gaekwad (Danny Gaekwad) or their nominee/applicant before
SEBI, as suggested by his counsel, shall deposit a sum of ₹600 crores in
terms of the 2011 SEBI Regulations, in the form of cash and/or bank guarantee,
on or before 12.02.2025. In case the amount is not deposited by the said date,
the directions in the present order shall be automatically vacated without
further reference to the Court.
2. The public offer,
which is to close today, will be continued till 12.02.2025. In case the
appellant, Digvijay Laxhamsinh Gaekwad (Danny Gaekwad) or their nominee/applicant
before SEBI, deposits ₹600 crores in terms of
the 2011 SEBI Regulations, the offer will continue till the end of third day
post the date of the order to be passed by SEBI on the application of the
appellants.
3. A party aggrieved
by the order passed by SEBI would be entitled to take recourse to an
appropriate remedy.
9.
Present directions are in the nature of an interim order. Proceedings pending
before the High Court and SEBI will be decided on merits and as per law.
Further, this order is without prejudice to the rights and contentions of the
parties and will not be construed as an expression of opinion as to any of the
issues and contentions noted above. Lastly, this order has been passed in the
peculiar facts and circumstances of the present case and shall not be read as a
precedent.
10.
The appeals are disposed of in the above terms.
Pending
application(s), if any, shall stand disposed of.
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