BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Order Reserved on: 20.11.2019
Date of Decision
: 11.12.2019
Appeal No. 220 of 2019
Arun Goenka
709, Meadows Sahar Palwai Complex,
J.N. Nagar,
Mumbai – 400 059.

….. Appellant
Versus
1.

Securities and Exchange Board of India,
SEBI Bhavan, Plot No. C-4A, G-Block,
Bandra-Kurla Complex, Bandra (East),
Mumbai – 400 051.

2.

Mr. Pramod Jain,
H-28, Green Park Extension,
New Delhi – 110 016.

3.

Plus Corporate Ventures Pvt. Ltd.
Registered office
L-7, First Floor, Green Park Extension,
New Delhi – 110 016.

4.

M/s J.P. Financial Services Pvt. Ltd.
Regd. Office at 2, Abhoy Guha Road,
Howrah – 711 204.

5.

Golden Tobacco Ltd.
At Darjipura, Post Amaliya,
Vadodara, Gujarat – 390 022.

.…Respondents
Mr. Arun Goenka, Appellant-in-person.
Mr. Kumar Desai, Advocate with Mr. Vivek Shah, Advocate
i/b ELP for Respondent No. 1.
Mr. Manish Chhangani, Advocate i/b Khaitan & Co. for
Respondent No. 4.

2
CORAM : Dr. C.K.G. Nair, Member
Justice M.T. Joshi, Judicial Member
Per : Dr. C.K.G. Nair, Member
1.

Aggrieved by the observation letter dated March 27,
2018 issued by Securities and Exchange Board of India
(‘SEBI’ for short) to the Merchant Banker on the Draft Letter
of Offer (DLOF) submitted by the acquirers, this appeal has
been filed. Appellant disputes the price offered by the
acquirers and seeks to re-examine the open offer and to revise
the price to Rs. 800/- as well as to direct the acquirers to make
payment of interest to all shareholders whose shares have
been accepted in the open offer from February 2, 2010 for the
delay in implementing the open offer from 2010 to 2018.

2.

Appellant is an investor and holds 5000 shares (jointly
with his wife) in the Target Company, namely, Golden
Tobacco Limited (‘GTL’ for short; Respondent No. 5).
Consequent to certain acquisition made by one Shri Pramod
Jain and others, the acquirers (Respondent Nos. 2 – 4) came
out with a public announcement proposing a voluntary open
offer pursuant to Regulation 10 and 12 of the SEBI
(Substantial
Acquisition
of
Shares
and
Takeovers)
3
Regulations, 1997 (‘Takeover Regulations 1997’ for short) to
the shareholders of GTL. On November 12, 2009 public
announcement was made with an offer price of Rs. 101/- per
share for acquiring 25% of the equity shares of GTL.
However, instead of implementing the public announcement,
in August 2011 the acquirers made an application to SEBI,
inter alia, requesting SEBI to permit them to withdraw the
offer on the ground of inordinate delay by SEBI in issuing its
observations. On April 13, 2012 SEBI rejected the said
request. An appeal was filed against the said order of SEBI
before this Tribunal and vide order dated August 6, 2014 the
appeal was dismissed. On November 7, 2016, the Hon’ble
Supreme Court also dismissed a consequential appeal
preferred by the acquirers. Thereafter, a Review Petition was
also filed by the acquirers which was also dismissed by the
Hon’ble Supreme Court on February 1, 2017.
3.

Thereafter, on December 30, 2017 the acquirers came
out with a detailed public statement and on January 28, 2018
a Draft Letter of Offer was published. On March 27, 2018
SEBI communicated its comments to the Draft Letter of
Offer. On April 18, 2018 the Letter of Offer was published.
On April 27, 2018 the offer opened and on May 16, 2018 the
4
offer closed. May 31, 2018 was the last date of dispatch of
consideration to respondents / those who tendered the shares
in the open offer.
4.

The
appellant
appearing
in
person
strenuously
contended that the offer price made by the acquirers was
grossly inadequate as the Target Company GTL had a plot of
land worth about Rs. 2000 crore which was not reflected in
the said valuation. To press home his contention appellant
also relied on submission made by the acquirers in their
appeal before this Tribunal seeking to withdraw the open
offer made that the appellants therein had acquired shares of
the Target Company GTL because of GTL having property
worth about Rs. 2000 crore.
5.

The appellant further submitted that acquirer made a
valuation of its shares on March 20, 2018 @ Rs. 58. 90 which
was a sham valuation report got prepared by the acquirers
through an unqualified Chartered Accountant. Because the
said Chartered Accountant did not have the mandatory ten
years experience at the relevant time to undertake such
valuation tasks. Moreover, it was contended that all the public
shareholders who surrendered the shares are entitled for
interest from 2010 to 2018, since GTL had sought to
5
withdraw the public offer which was implemented only in
2018 consequent to the dismissal of even the Review Petition
by the Hon’ble Supreme Court. In short, the appellant
contends that the shareholders are entitled for a higher price
@ Rs. 800/- per share and they are also entitled for interest on
the same. It is also the contention of the appellant that since a
fresh public announcement was made in 2018 and at that time
the shares of the GTL was infrequently traded a fresh
valuation exercise needs to be done taking into account the
assets of GTL correctly in such a valuation exercise.

6.

The learned counsel Shri Kumar Desai appearing for
respondent no. 1 SEBI submitted that since the entire process
of offer and payment of consideration thereon have been
completed the appeal has become infructuous. He also fairly
submits that though in their reply the issue of locus etc. has
been raised SEBI is not pressing the same.
7.

The learned counsel for respondent no. 1 SEBI further
contended that the trigger date for the public announcement /
open offer was November 12, 2009. At the relevant time the
shares of GTL was frequently traded and therefore the open
offer price had to be fixed in terms of Sub-Regulation 20(4)
of Takeover Regulations 1997. Sub-Regulation 20(5) is not
6
relevant, as submitted by the appellant since that provision is
for infrequently traded scrips. Citing the relevant portion of
the public announcement made by the acquirers dated
November 12, 2009 it was emphasized by the learned counsel
that the maximum offer price applicable at that time was
Rs. 100.15 and the acquirers had offered Rs. 101/- by
rounding of the same. Thereafter though the acquirer sought
to withdraw the open offer which was finally dismissed by the
Hon’ble Supreme Court, the trigger date for the public
announcement / open offer remains the same i.e. November
12, 2009. Therefore as on the trigger date share of GTL was a
liquid scrip, frequently traded on both NSE and BSE and
therefore the price arrived at in terms of Sub-Regulation 20(4)
@ Rs. 101/- per share was appropriate. Moreover, relying on
the order of the Hon’ble Supreme Court in the matter of
Clariant International Limited & Anr. vs SEBI reported in
(2004) 8 SCC 524 the learned counsel for respondent no. 1
submits that shareholders holding securities on the reference
date only would be entitled to interest. This also has been
provided in the open offer by giving interest @ of Rs. 60.25
to the original shareholders and Rs. 0.45 to other than original
shareholders. Therefore, the learned counsel submits that the
valuation report prepared by the Chartered Accountant which
7
arrived at a value of Rs. 58.30 per share or other valuations
done are totally irrelevant to the matter. It was also contended
that the document dated December 30, 2017 was not an offer
letter; instead it was a detailed public statement which SEBI
had asked the merchant banker to issue because of the eight
year gap between the original public announcement and the
open offer to enable the shareholders to be informed about the
full background of the matter. The learned counsel
emphasized the table relating to tentative schedule of
activities in the Detailed Public Statement issued on
December 30, 2017 wherein the original schedule as per 2009
announcement and the revised schedule as per the Detailed
Public Statement are juxtaposed. The learned counsel for the
respondent no. 1 also relied on the order of this Tribunal in
the matter of Arun Goenka vs SEBI (Appeal No. 244 of 2014
decided on 14.10.2014) and contended that only shareholders
of the Target Company who holds the shares on the trigger
date are eligible to get compensated in terms of interest which
was also held in the matter of Clariant International Ltd.
(supra).
8.

Learned counsel Shri Manish Chhangani, appearing for
the acquirer (Respondent No. 4), in addition to supporting the
8
submissions made by the learned counsel for respondent no. 1
SEBI, submits that Regulation 35(2)(c) of the Takeover
Regulations
2011
explicitly
states
that
all
public
announcements made under the Takeover Regulations 1997
have to be completed under the 1997 Regulations itself and
submits that the regulatory provisions are very clear and
without any ambiguity that Sub-Regulation 20(4) of the
Takeover Regulations 1997 and not Sub-Regulation 20(5) is
what is to be complied with in the instant matter and that is
what has been implemented. Relying on the Post Offer Report
dated June 25, 2018 submitted to SEBI by the Merchant
Banker, the learned counsel submits that the said Post Offer
Report also was filed under Sub-Regulation 24(7) of the 1997
Takeover Regulations.
9.

Having heard all the parties and after perusing the
documents on record we find no merit in the appeal. The
appellant, instead of emphasizing the relevant facts overemphasized three valuation reports and the infrequently
traded nature of GTL shares in 2018 which has no relevance
and sought interest to all shareholders etc. which is untenable.
The crux of the matter is simple; whether the price offered by
the acquirers and the interest paid thereon to certain
9
shareholders are in consonance with the applicable regulatory
provisions and Court orders thereon.
10. For convenience we quote Sub Regulation 20(4) of the
Takeover Regulation 1997 and Sub Regulation 35(2)(c) of the
Takeover Regulations 2011:Takeover Regulations 1997
“Offer price.
20(1) The offer to acquire shares under regulation 10,
11 or 12 shall be made at a price not lower than the price
determined as per sub-regulations (4) and (5).
20(2) ……….
20(3) ……….
20(4) For the purposes of sub-regulation (1), the offer
price shall be the highest of—
(a) the negotiated price under the agreement
referred to in sub-regulation (1) of
regulation 14;
(b)
price paid by the acquirer or persons acting
in concert with him for acquisition, if any,
including by way of allotment in a public or
rights or preferential issue during the
twenty-six week period prior to the date of
public announcement, whichever is higher;
(c) the average of the weekly high and low of the
closing prices of the shares of the target
company as quoted on the stock exchange
where the shares of the company are most
frequently traded during the twenty-six
weeks or the average of the daily high and
low of the prices of the shares as quoted on
the stock exchange where the shares of the
company are most frequently traded during
the two weeks preceding the date of public
announcement, whichever is higher:
10
Provided that the requirement of average of
the daily high and low of the closing prices
of the shares as quoted on the stock
exchange where the shares of the company
are most frequently traded during the two
weeks preceding the date of public
announcement, shall not be applicable in
case of disinvestment of a Public Sector
Undertaking.
Explanation.—In case of disinvestment of a Public
Sector Undertaking, the relevant date for the calculation
of the average of the weekly prices of the shares of the
Public Sector Undertaking, as quoted on the stock
exchange where its shares are most frequently traded,
shall be the date preceding the date when the Central
Government or the State Government opens the
financial bid.”
Takeover Regulations 2011
“35(2)
(a)
(b)
(c)
Notwithstanding such repeal, —
…………
………….
any open offer for
announcement has been
repealed regulations shall
continued and completed
regulations.”
which a public
made under the
be required to be
under the repealed
11. Clearly for frequently traded shares Sub Regulation
20(4) is applicable and if an open offer has been made under
Takeover Regulations 1997 that process has to be completed
under the same Regulations as is explicitly stated in Sub
Regulation 35(2)(c) of the new Takeover Regulations 2011.
Here, it is an undisputed fact that the trigger for public
announcement / open offer came on November 12, 2009 and
consequently public announcement was made. Though the
11
open offer was delayed on account of the subsequent stand
(for recalling the public announcement) taken by the acquirers
the original date of trigger does not change. The valuation
done as per the applicable methodology under Regulation
20(4) is not questioned; what is questioned is the valuation in
2018 which is not applicable in the matter. When the offer
price of Rs. 101/- per share was made based on the price
given by the acquirers in 2009 what is implemented here is
the same price. Moreover, since the market price captures the
intrinsic value of the GTL shares including GTL’s properties,
assets etc. in 2009 and since it was a frequently traded share
rightly no valuation was necessary as per the applicable
Regulations.
12. It is also an undisputed fact that interest to original
shareholders who tendered their shares have been given by
the acquirers @ Rs. 60.25 per share and for other shareholders
@ Rs. 0.45. Here, we quote the relevant paragraphs from the
order in Clariant International Ltd. & Another (supra)
where the Hon’ble Supreme Court held:“56. While compensating a person, the court
should see that he is not unjustly enriched.
Interest is directed to be paid on the default of
the acquirer occasioning loss suffered by an
investor of his money. The question of paying
interest by way of compensation to persons who
had not suffered any loss, thus, would not arise.

12
88. We uphold that part of the decision of the
Tribunal whereby it was held that those persons
who were the shareholders till 24-2-1998 and
continued to be shareholders on the closure day
of public offer alone would be entitled to
interest.”
13. In the light of the aforesaid reasons, we find no merit in
the submissions made by the appellant regarding either the
offer price or the entitlement of all shareholders for receiving
interest.
14. For all the above reasons we find no merit in the appeal
and the same is dismissed with no order on costs.

Sd/Dr. C.K.G. Nair
Member
Sd/Justice M.T. Joshi
Judicial Member
11.12.2019
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