BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Appeal No.55 of 2011
Date of Decision : 29.8.2011 Northern Projects Limited
6, Old Post Office Street,
Kolkata – 700 001.
…… Appellant Versus
The Adjudicating Officer
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai – 400 051.
…… Respondent Mr. P.N. Modi, Advocate with Mr. Prakash Shah, Advocate for the Appellant.
Mr. Kumar Desai, Advocate for the Respondent.
CORAM : Justice N. K. Sodhi, Presiding Officer
P.K. Malhotra, Member
S. S. N. Moorthy, Member
Per : Justice N. K. Sodhi, Presiding Officer
This order can conveniently dispose of ten Appeals no.45, 55, 57 to 62, 70 and 75
of 2011. Four of these appeals have been f iled by Morgan Securities and Credits Pvt.
Ltd., Northern Projects Ltd., Morgan Ventures Ltd. and Praveen Electronics Pvt. Ltd. on
whom a monetary penalty of ` 40 lacs each has been imposed by the adjudicating officer
for violating the provisions of Regulation 10 of the Securities and Exchange Board of
India (Substantial Acquisition of Shares a nd Takeovers) Regulations, 1997 (hereinafter
called the takeover code) in not making a public announcement as required by the said
provision. Four of the other appeals have been filed by Bl ue Coast Hotels and Resorts
Ltd. seeking, among others, enhancement in the quantum of penalty imposed on the
aforesaid four appellants. Blue Coast Hotels and Resorts Ltd. has filed two more appeals
seeking, among others, imposition of monetary penalties on two companies that have
been let off by the adjudicating officer. Facts giving rise to the appeals are these.
2
- Morepen Laboratories Ltd. (for short the borrower) took a loan of ` 7 crores from
Morgan Securities and Credits Pvt. Ltd. (hereinafter referred to as the lender). In order to
secure this loan, six associate companies of the borrower pledged as collateral security
their 15 lacs shares held by them in Blue Coast Hotels and Resorts Ltd., Goa (hereinafter
called the target company). It is common ground between the parties that the borrower
defaulted in the repayment of the loan as a result whereof the lender invoked the pledge
and got the 15 lacs pledged shares of the target company transferred in its demat account.
Having acquired the pledged shares, the lender started selling them in the market to
recover its dues. The shares were sold in tranches through the price and order matching
mechanism of the exchange during the period from December, 2003 to March, 2004. We
have on record that when the lender sold the shares, the following five companies had
purchased them and the details of their purchases are as under.
Sr.
No.
Name of purchaser No. of
shares
purchase
d
Period during which
shares were
purchased
3,15,000
February 26, 2004 1. Northern Projects Ltd
(Appellant in Appeal no.55 of
2011) 6,55,000
March 5, 2004
45,345 March 26, 2004 to
April 20, 2004
2,00,000
August 2, 2005
- Morgan Ventures Ltd.
(Appellant in Appeal no.70 of
2011)
42,216 August 9, 2005 to
October 13, 2005 - Namedi Leasing & Finance
Ltd.
(Let off by the adjudicating
officer)
1,19,400 July 9, 2004
- Praveen Electronics Pvt. Ltd.
(Appellant in Appeal no.75 of
2011)
3,00,100 July 16, 2004
- Poysha Fincorp Pvt. Ltd.
(Let off by the adjudicating
officer) 48,932 April – June 2007
The five purchasers mentioned in the chart shall be referred to hereinafter as NPL, MVL,
NLFL, PEPL and PFPL respectively. After se lling the aforesaid sh ares, the lender was
left with only nine shares in its demat acc ount. It is alleged that the lender and the
aforesaid five purchasers were connected/associate entities as they had common directors
and shareholders between them and being persons acting in concert, acquired the
3
aforesaid shares the total of which comes to 26.38 per cent of the total paid-up
capital/voting rights in the ta rget company. Out of the total purchases, NPL purchased
14.8 per cent of the total shar e capital/voting rights in th e target company and the
remaining four companies together purchased 11.58 per cent. Since the total acquisition
of the aforesaid purchasers alongwith the nine shares left in the account of the lender was
in excess of fifteen per cent of the share capit al/voting rights in the target company and
they had not made a public announcement to acqui re further shares of that company, the
Securities and Exchange Board of India (for short the Board) initiated adjudication
proceedings against them for violating Regulation 10 of the takeover code. A common
show cause notice dated November 17, 2009 was issued to the purchasers and the lender
alleging that they were persons acting in c oncert and had violated Regulation 10 in not
making a public announcement and they were re quired to show cause why an enquiry be
not held against them and penalty imposed under section 15 H(ii) of the Securities and
Exchange Board of India Act, 1992. All the purchasers and the lender filed their detailed
replies emphatically refuting the allegation that they had acted in concert with each other
while acquiring the shares. It is their case that they acquired the shares of the target
company in the ordinary course of business through their respective brokers on the screen
based mechanism of the stock exchanges without being aware of the counter party broker
or counter party client. NPL has further pleaded that it acquired the shares out of its own
funds and that there has been no transfer of funds between it and the other purchasers. It
has specifically denied its connection with any of the other purchasers and pleaded that
merely because Mr. Prakash Agarwal, one of its directors was re lated to Mr. Suresh
Chand Goyal who was a director in the lende r company and also a director in MVL and
PFPL, it could not be concluded that they were connected entities. On a consideration of
the material collected during th e course of the i nvestigations and the enquiry conducted
by the adjudicating officer and taking note of the replies furnished by the noticees, the
adjudicating officer concluded that NPL, MVL, PEPL and the lender were persons acting
in concert when the shares were acquired and since their acquisition was in excess of
fifteen per cent of the total share capital/voting rights in the target company, they violated
Regulation 10 of the takeover code as they did not come out with a public announcement.
4
He further found that NLFL and PFPL which had also purchased the shares and were
among the noticees were not ac ting in concert with the ot her noticees and these two
companies have been let off. By his separate orders, he imposed a monetary penalty of
` 40 lacs each on NPL, MVL, PEPL and the lender. These companies have filed Appeals
no.55, 70, 75 and 45 of 2011 respectiv ely challenging the orde rs of the adjudicating
officer. We shall first deal with these appeal s before dealing with Appeals no.57 to 62 of
- Appeals no.45, 55, 70 and 75 of 2011
- We have heard the learned counsel for the parties who have taken us through the
record and the impugned orders. Regulation 10 of the takeover code provides that no
acquirer shall acquire shares or voting rights which taken together with shares or voting
rights held by him or by persons acting in concert with him entitle him to exercise fifteen
per cent or more of the voting rights in a company unless he makes a public
announcement to acquire further shares in that company in accordance with the takeover
code. It is, thus, clear that this provision of the takeover code gets triggered when any
person or persons acting in concert with each other acquire shares upto fifteen per cent or
more in a company. The charge against the appellants in this group of appeals is that
they acted in concert with each other and al so with the lender while acquiring the shares,
the total of which exceeded fifteen per cent of the voting rights in the target company and
not having made a public announcement had violated Regulation 10 of the takeover code.
As noticed above, the stand of the appellants is that they did not act in concert with each
other and that they acquired the shares in th e ordinary course of their business and since
none of them had individually acquired fifteen per cent or more of the voting rights in the
target company, Regulation 10 did not get trig gered. From the facts stated hereinabove
which are not in dispute, it is clear that NPL acquired a total of 14.8 per cent of the share
capital/voting rights in the target company. The remaining four purchasers to whom the
show cause notice had been issued including the two companies which have been let off
by the adjudicating officer, acquired a total of 11.58 per cent. If NPL was not acting in
concert with the other purchase rs in acquiring the shares of the target company, as has
been strenuously argued before us, then all acquirers/purchasers including the lender 5
would succeed as none of them individually acquired fifteen per cent or more voting
rights in the target company. Even the four purchasers other than NPL referred to in the
chart in para 2 above cumulatively acqui red only 11.58 per cent of the voting rights
which acquisition does not trigger Regulation 10. We shall, therefore, deal first with the
case of NPL and see whether it was acting in co ncert with other entities when the shares
were purchased/acquired. Person acting in con cert has been defined in clause (e) of
Regulation 2(1) of the takeove r code and the relevant part of the definition reads as
under: “(e) “person acting in concert” comprises,—
(1) persons who, for a common objective or purpose of substantial
acquisition of shares or voting righ ts or gaining control over the
target company, pursuant to an agreement or understanding
(formal or informal), directly or indirectly co-operate by acquiring
or agreeing to acquire shares or voting rights in the target company
or control over the target company.
(2) without prejudice to the gene rality of this definition, the
following persons will be deemed to be persons acting in concert
with other persons in the same category, unless the contrary is
established :
(i) a company, its holding compan y, or subsidiary or such
company or company under the same management either
individually or together with each other;
(ii) to (x) …………………………………………………..”
It is not necessary for us to examine this definition in any great detail as it recently came
up for the consideration of the Supreme Court in Daiichi Sankyo Company Ltd. vs.
Jayaram Chigurupati and Others [2010] 157 Comp Cas 380 (SC) and this is what their
Lordships observed:
“To begin with, the concept of “person acting in concert” under
regulation 2(1)(e)(1) is based on a target company on the one side, and on
the other side two or more person s coming together with the shared
common objective or purpose of substantial acquisition of shares, etc., of
the target company. Unless there is a target company, substantial
acquisition of whose shares, etc., is the common objective or purpose of
two or more persons coming together there can be no “persons acting in
concert”. For, de hors the target company the idea of “persons acting in
concert” is as irrelevant as a cheat with no one as victim of his deception.
Two or more persons may join hands together with the shared common
objective or purpose of a ny kind but so long as the common object and
purpose is not of substantial acquisiti on of shares of a target company
they would not comprise “persons acting in concert”.
The other limb of the concept requires two or more persons
joining together with the shared common objective and purpose of
substantial acquisition of shares, etc. , of a certain target company. There
6
can be no “persons acting in concert” unless there is a shared common
objective or purpose between two or more persons of substantial
acquisition of shares, etc., of the target company. For, de hors the element
of the shared common objective or purpose the idea of “person acting in
concert” is as meaningless as criminal conspiracy without any agreement
to commit a criminal offence. The idea of “persons acting in concert” is
not about a fortuitous relationship co ming into existence by accident or
chance. The relationship can come into being only by design, by meeting
of minds between two or more pers ons leading to the shared common
objective or purpose of acquisition of substantial acquisition of shares,
etc., of the target company. It is another matter that the common
objective or purpose may be in pur suance of an agreement or an
understanding, formal or informal; the acquisition of shares etc. may be
direct or indirect or the persons acting in concert may co-operate in actual
acquisition of shares, etc., or they may agree to cooperate in such
acquisition. Nonetheless, the element of the shared common objective or
purpose is the sine qua non for the re lationship of “persons acting in
concert” to come into being………………………………………………
We may now proceed to the deeming provision as contained in
sub-clause (2) of regulation 2(1)(e). Here, it would be better to restate the
obvious that the deeming provision cannot do away either with the target
company or the common objective or purpose of substantial acquisition of
shares, etc., of the target company shared by two or more persons because
to do so would be destructive of th e very idea of “persons acting in
concert” as defined in sub-clause (1) of regulation 2(1)(e). We, therefore,
see no merit in the submission, as urge d at one stage, on behalf of the
respondents that sub-clause (2) of regulation 2(1)(e) containing the
deeming clause should be seen as a “stand alone” provision, independent
of sub-clause (1) of regulation 2( 1)(e). The deeming provision under sub-
clause (2) operates only within the la rger framework of sub-clause (1) of
regulation 2(1)(e). …………………………………………………………
Regulation 2(1)(e)(2) defines “person ac ting in concert”. It is a deeming
provision. It has to be read in conjunction with regulation 2(1)(e)(1) which
states that person acting in con cert comprises of persons who in
furtherance of a common objective or purpose of substantial acquisition of
shares or voting rights or gaining control over the target company,
pursuant to an agreement or understandi ng (formal or informal), directly
or indirectly co-operate by acquiring or agreeing to acquire shares or
voting rights in the target company or to acquire control over the target
company. The word “comprises” in re gulation 2(1)(e) is significant. It
applies to regulation 2(1)(e)(2) as much as to regulation 2(1)(e)(1). A
fortiori, a person deemed to be acting in concert with others is also a
person acting in concert. In other wo rds, persons who are deemed to be
acting in concert must have the inte ntion or the aim of acquisition of
shares of a target company. It is the conduct of the parties that determines
their identity. Whether a person is or is not ac ting in concert with the
acquirer would depend upon the facts of each case. In order to hold that a
person is acting in concert with the acquirer or with another person it must
be established that the two share the common intention of acquisition of
shares of some target company.”
Applying the aforesaid principl es to the case in hand, NPL could be a person acting in
concert with the other purchasers only if it shared with them a common objective or
purpose for the acquisition of the shares of th e target company. In other words, this
7
relationship between them could come into being only by design and by the meeting of
their minds leading to the sh ared common objective of acqui ring shares of the target
company. Whether they shared this common ob jective is a question of fact which has to
be determined on the basis of the material on the record. We find that there is not even
an iota of evidence on the record to show that they ever shared a common objective of
acquiring shares of the target company. There is no material on the record to suggest that
there was ever a meeting of their minds in this regard and the impugned order does not
refer to any such material. In the absence of any such material we cannot but hold that
NPL did not act in concert w ith the other purchasers and it was not a person acting in
concert with them when it acquired the shares of the target company. The adjudicating
officer has properly analyzed the observations of the Supr eme Court in paragraph 16 of
the impugned order but unfortunately he ha s misdirected himself in applying the
principles to the facts of the present case. He goes on to hold that the two directors
namely, Suresh Chand Goyal and his wife Meera Goyal, who constitute the board of
directors of PFPL are also the directors of the lender and MVL and from this fact he
jumps to the conclusion that the three comp anies are related to each other and are under
the same management and control. Prakash Agarwal holds 2.27 per cent shares of NPL.
He and his father Vishwanath Agarwal were also the directors of this company. They are
also directors of eight body corporates which hold 56 per cent of the shares of NPL. The
adjudicating officer concludes that Prakash Agarwal and his father could be said to be the
majority shareholders of NPL. This conclusi on is not right. Be that as it may, he holds
that Prakash Agarwal is related to Suresh Chand Goyal and his wife Meera Goyal who
are the directors of the le nder, MVL and PFPL and, therefore, all these companies
including NPL are companies under the same management. He resorts to the deeming
provision in Regulation 2(1)(e)(2)(i) of the takeover code and holds that they are ‘persons
acting in concert’. It is clear from the obs ervations of the Suprem e Court that persons
who are deemed to be acting in concert must also have the common intention or objective
of acquisition of shares of the target comp any. As already observed, the fact that they
shared a common objective of acquiring shares is missing in the present case. In this
view of the matter, we are of the considered opinion that NPL was not a “person acting in
8
concert” with the other purchasers and th at the deeming provisions in Regulation
2(1)(e)(2)(i) of the take over code cannot be made applicab le to the facts of the present
case. It follows that its acquisition of 14.8 per cent of the voting rights in the target
company did not trigger Regulation 10 and the question of its violat ion does not arise.
The adjudicating officer has also referred to the provisions of s ection 370 (1B) of the
Companies Act, 1956 to hold that PFPL, MVL, the lender and NPL are companies under
the same management. In our opinion reference to this provision is wholly irrelevant and
the adjudicating officer has again misdirected himself in referring to the same. The
concept of “companies under the same manage ment” as contained in section 370 is only
for the limited purpose of advancing loans by companies to other body corporates under
the same management which is not the case befo re us. We are dealing with the takeover
code which is a separate code in itself. Moreover, clause (6) of section 370 of the
Companies Act states that this provision shall not apply to any company on and after the
commencement of the Companies (Amendment) Act, 1999. The adjudicating officer was
not right in drawing an analogy from this provision. We are also of the view that NPL is
a company totally different and distinct from PFPL, MVL and the lender. NPL is a
company owned by the Agarwals in which Pr akash Agarwal holds 2. 27 per cent of its
share capital. There are eight different co mpanies which hold 56 per cent of the total
share capital of NPL and th ese companies are Hindusthan Udyog Ltd. (6.3%), V.N.
Enterprises Ltd. (1.11%), HSM Investment Ltd. (2.26%), Bengal Steel Industries Ltd.
(7.34%), Neptune Exports Ltd. (9.92%), TEA Time Ltd. (9.97%), Orient International
Ltd. (9.90%) and Asutosh Enterprise Ltd. (9.95 %). Mr. Prakash Agarwal and his father
Mr. Vishwanath Agarwal are the directors in these eight companies as well. We then
have another group of three companies namely, the lender, MVL and PFPL. These three
companies are owned and controlled by Mr. Suresh Chand Goyal and his wife Meera
Goyal who are the directors in these companies. Prakash Agarwal is the son-in-law of
Suresh Chand Goyal and Meera Goyal. Having got married in the Goyal family which
was also in business, the Goyals made their son-in-law (Prakash Agarwal) a director in
the lender company and MVL for name sake without his holding any share capital in any
of those companies. It is pertinent to mention that NPL and the eight body corporates
9
who hold the majority share capital therein belong to the Agarwals and they carry on
business totally distinct from the business of the lender company, MVL and PFPL which
are controlled by the Goyals. None of the Goyals has any concern/connection with NPL
or with the eight companies holding shares therein nor do they hold any share capital in
those companies. The Agarwals also do not hold any share capital in the companies
controlled by the Goyals. Prakash Agarwal is the son-in-law of the Goyals and a name
sake director in the lender company and MV L and this is the only connection between
NPL, MVL and the lender. Th is connection in our opinion is too tenuous to make them
“companies under the same management” even if one were to go by the logic of section
370 (1B) of the Companies Act.
- What emerges from the above discussi on is that NPL neither shared a common
objective with other purchasers while acquiring the shares of the target company nor is it
a company under the same management. In this view of the matter, NPL cannot be said
to be a person acting in concert with the other purchasers. It acquired the shares from its
own funds and since its acquisition was only 14.8 per cent, it did not trigger Regulation
10 of the takeover code. The impugned order dated January 11, 2011 holding NPL guilty
of violating Regulation 10 and im posing a monetary penalty of40 lacs on it cannot, therefore, be sustained. In view of our fi nding that NPL was not acting in concert with the other purchasers as referred to in the ch art in paragraph 2 above, it would follow that the other purchasers even if were acting in concert ac quired only 11.58 per cent of the share capital in the target company and their acquisitions also did not trigger Regulation 10 of the takeover code. The impugned or ders imposing monetary penalties of40 lacs
each on the lender, MVL and PEPL also cannot be upheld. - We may now examine another finding recorded by the adjudicating officer
holding that NPL had a prior meeting of minds with the lender. This is what he has
observed in paragraph 23 of the impugned order:
“However, from the analysis of dema t accounts statement of the Noticee
and other Acquirers and other documents on record it is observed that
NPL acquired 9,70,000 shares from the market on February 26, 2004 and
March 5, 2004 and for 9,66,350 shares the counterparty was MSCPL. I
am of the view that this cannot be a coincidence that 99.6% trades of NPL
matched with same counterparty without any prior arrangement or
understanding. Therefore, the submission of the Noticee that there was no 10
prior meeting of mind with MSCPL with respect to this acquisition is not
acceptable.”
This finding of the adjudicating officer cannot be accepted. He seems to have forgotten
that NPL had purchased all the shares through the market mechanism and it is so stated in
the show cause notice issued to the purchaser s. When trades are executed through the
market mechanism which is commonly known as price and order matching mechanism,
there can never be prior meeting of minds betw een the buyer and the seller. If there is a
prior meeting of their minds, the trades have to be manipulative a nd cannot be through
the market mechanism and this is not the al legation in the present case. It must be
understood that the trading sy stem of the stock exchange is anonymous and does not
permit the buyer to know who the seller is and vice versa. To say that there was prior
meeting of minds between the buyer and the seller in trades executed through the market
mechanism is a contradiction in terms. This finding of the adjudicating officer is not only
contrary to the allegation made in the show cause notice but also to the finding recorded
by him in paragraph 10 of the impugned order where he has observed as under:
“To recover its dues MSCPL invoked the pledge and sold in stages almost
all shares of BCHRL, held by it as collateral, through the mechanism of
stock exchange, during the period from December 2003 to March 2004.”
(emphasis supplied)
We cannot, therefore, hold th at there was prior meeting of minds between NPL and the
lender. - Before concluding with these appeals, we cannot resist expressing our anguish as
to how the adjudicating officer could rope in the lender company as a ‘person acting in
concert’. We have already noticed in the earlier part of our order that when the borrower
defaulted in the repayment of the loan the lender invoked th e pledge and started selling
the shares of the target company to recove r its dues. When the lender was selling the
shares, the purchasers referred to earlier pur chased them through market mechanism and
we have found that they were not acting in concert with each other. Since the lender was
selling the shares, we wonde r how it could be a person acting in concert with the
purchasers/acquirers. One essential element necessary for a person to be treated as person
acting in concert is that it must alongwith others share a common objective of acquiring
the shares. A seller of shares of the target company cannot be a person acting or deemed 11
to be acting in concert with the acquirer for acqui sition of shares. It is absurd to say that
a seller and a buyer had a common objective of acquiring the shares. We wish the
adjudicating officer had applied his mind to this aspect of the matter.
Appeals no.57 to 62 of 2011 - This brings us to the remaining six Appeals no.57 to 62 of 2011 all of which have
been filed by the target company. As al ready observed in paragraph 2 above, the
borrower had taken a loan of ` 7 crores from the lender and six associate companies of
the former had pledged as collateral security 15 lacs shares held by them in the target
company. When the loan was not repaid, the pledge was invoked and the lender after
getting the shares credited to its demat acc ount sold them in the market through the
market mechanism. In these appeals the target company (complainant) has made two
primary prayers. The first prayer is that since the takeover code had been violated, the
purchasers referred to in the chart in paragra ph 2 above should be directed to return the
shares back to their original owners and the second prayer is to enhance the penalty
imposed by the adjudicating officer on the lende r, NPL, PEPL and MVL. A prayer has
also been made that NLFL and PFPL have been wrongly let off by the adjudicating
officer and that adequate penalty be imposed on them as they were also acting in concert.
We are, clearly, of the view that these appeals are not main tainable and that the target
company has no locus standi to file them. It is a total stranger to the issues raised in the
earlier appeals filed by the lender and th e purchasers challenging the imposition of
penalties on them and that it is interfer ing in matters which do not concern it. The
prayers made in these appeals cannot be grante d. As already noticed, the first prayer is
that the pledged shares which have already been sold through the market mechanism be
returned to the original owners who had ple dged them at the time of the raising of the
loan. Since the shares have been sold, they cannot be return ed to the original owners.
On the appellants’ own showing those shares do not belong to it and if they belong to the
original owners, then let the original owners come forward and make a grievance. They
have not come forward and we wonder who they are and how the appellant can fight their
cause. The appeals filed by the target company are motivated and have a sinister
purpose. It cannot be allowed to fight the battle of others. We are al so satisfied that the 12
appellant in each of the appeals is not a pe rson aggrieved. On a complaint made by the
appellant, the Board carried out investig ations and found that the lender and the
purchasers had violated Regula tion 10 of the takeover code and the adjudicating officer
imposed a penalty on them. How is the appe llant concerned with that penalty and how
can it be heard to say that the penalty be enhanced. In Jasbhai Motibhai Desai vs. Roshan
Kumar and Others AIR 1976 SC 578, the learned judges of the Supreme Court were
examining the question of locu s standi of the a ppellants therein and laid down tests to
distinguish between persons aggrieved and strangers and busy body of meddlesome
interlopers. Persons in the la st category were said to be those who interf ere in things
which do not concern them and act in the name of Pro Bono Publico though they have no
interest of the public or even of their own to protect. The target company falls in this
category. The Supreme Court laid down the following broad tests.
“Whether the applicant is a person whose legal right has been infringed?
Has he suffered a legal wrong or injur y, in the sense, that his interest,
recognised by law, has been prejudicia lly and directly affected by the act
or omission of the authority, complained of? Is he a person who has
suffered a legal grievance, a person “against whom a decision has been
pronounced which has wrongfully deprived him of something or
wrongfully refused him something, or wrongfully affected his title to
something? Has he a special and substantial grievance of his own beyond
some grievance or inconvenience suffered by him in common with the rest
of the public? Was he entitled to obj ect and be heard by the authority
before it took the impugned action? If so, was he prejudicially affected in
the exercise of that right by the act of usurpation of jurisdiction on the part
of the authority? Is the statute, in context of which the scope of the words
“person aggrieved” is being considered, a social welfare measure
designated to lay down ethical or professional standards of conduct for the
community? Or is it a statute deali ng with private right s of particular
individuals?”
When we apply the aforesaid tests to the facts of the present case our answer to each test
is in the negative. - The second prayer which the target company has made in these appeals is that the
penalties imposed on th e lender, NPL, MVL and PEPL be enhanced. We have already
recorded a finding that they di d not violate the pr ovisions of the takeover code and the
penalty imposed on them was not justified. In these circumstances, the question of
enhancing the penalty does not arise. We also do not agree with the learned senior
counsel appearing for the target company that NLFL and PFPL have been wrongly let off
by the adjudicating officer. For the reasons recorded in the appeals filed by the lender 13
and the purchasers, we hold th at these two companies were also not persons acting in
concert when they purchased the shares a nd, in any case, their acquisition too did not
trigger Regulation 10 of the takeover code. The findings recorded by the adjudicating
officer in this regard are affirmed.
For the reasons recorded above, Appeals no.45, 55, 70 and 75 of 2011 are allowed
and the impugned orders therein set aside. Appeals no.57 to 62 of 2011 filed by the
target company are dismissed with costs which are assessed at ` 50,000 in each appeal
and the parties in the other appeals shall bear their own costs. Sd/-
Justice N.K.Sodhi
Presiding Officer
Sd/-
P.K. Malhotra
MemberSd/- S.S.N. Moorthy Member29.8.2011
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