Posted On by &filed under Judgements.


Securities Appellate Tribunal
United Breweries Holdings … vs The Chairman, Securities And … on 1 September, 2003
Equivalent citations: 2003 47 SCL 206 SAT
Bench: C Achuthan


ORDER

1. The Applicants above mentioned, have filed the two Miscellaneous Applications (Review Applications.). The Applications are identical in substance. These are against the common order passed by this Tribunal on 1.8.2003 in Appeal No. 13 and in Appeal No. 14. The Applicants have also filed separate identical Applications ( No. 96/2003 and No. 98/2003) seeking interim order staying the operation of the Tribunal’s order dated 1.8.2003 pending the hearing and final disposal of their Applications. These Applications were filed in the Tribunal on 11.8.2003. The Appellants above mentioned filed affidavit in reply to the Review Applications on 21.8.2003. According to the Appellants these reply affidavits were filed “only for a limited purpose viz. to point out that the review petition filed by the Applicants is not maintainable and that they are not entitled to any interim relief as sought for or otherwise. Identical affidavits dated 25.8.2003 captioned “Limited Affidavit in rejoinder….” made by the Company Secretary of the Applicant United Breweries Holdings Ltd and Reply Affidavit thereto also dated 25.8.2003, from the Appellants were tendered by the respective counsel for the parties at the time of hearing on 25.8.2003.

2. The background of filing of the present Review Applications briefly is as follows:

The Respondent SEBI had passed a common order on 19.2.2002 holding that the Appellants had acquired shares in Herbertsons Ltd., (Target Company) without complying with certain requirements under the listing agreement between the Target Company and the stock exchanges (the Listing Agreement) and certain provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1994 (the 1994 Regulations)/Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the 1997 Regulations). By the said order the Appellant in appeal No. 13/2002 and the Appellant in appeal No. 14/2002 and “the persons acted in concert with them” were directed to:-

* Disinvest shares in the Target Company acquired in violation of the Listing Agreement and the 1994 Regulations (i.e. beyond the then existing threshold limit of 10%) through an offer for sale to public in terms of an offer document, subject to the following:

(a) that for the purpose the Appellants appoint a registered merchant banker

(b) that the offer price shall be at the face value of the shares as on the date of the impugned order or the lowest price at which these shares were acquired, whichever is lower

(c) that the offer for sale shall be for a minimum number of shares so as to reduce the shareholding of the Appellants and persons acted in concert with them in the Target company, to less than 10%

(d) that the offer document for the purpose shall be filed with SEBI within 3 months from the date of the impugned order.

* Adjudication against the Appellants and persons acted in concert with them, under section 15A and 15H of the SEBI Act, was also ordered.

3. The Appellants challenged the said common order by filing two appeals (Appeal No. 13/2002 and 14/2002) in the Tribunal. The Tribunal disposed of those appeals vide its order dated 1.8.2003. The Tribunal, for the reasons stated in the order directed the Appellants to make public announcement to acquire the shares of the Target Company as per the regulations within 3 months from the date of the Tribunal’s order, taking 27.10.1994 as the referral date for the purpose of calculation of offer price and also to pay interest @15% per annum from 24.2.1995 till the date of actual payment to those persons who were holding shares of the Target Company as on 25.1.1995 and continue to be shareholders and eligible to participate in the public offer to be made in terms of the Tribunal’s direction, for the shares held in their name on 25.1.1994 tendered and accepted in the public offer. The Respondent’s order dated 19.2.2002 was modified to the said extent. It is against the Tribunal’s said order the present Review Applications have been filed.

4. In the Review Applications the Applicants have sought the following reliefs:

(a) that the decision of the Tribunal dated 1.8.2003 in Appeal No. 13/2002 and 14/2002 be reviewed and the directions given in paragraph 14.3.1 (modified) of the Respondent’s order dated 19.2.2002 be substituted by the following:

“(i) The Appellants are directed to disinvest the 19.71% shares of the Target Company acquired in breach of regulation 10(2) of the 1994 Regulations through IMFA, Mahameru and Shirish;

(ii) The mode of disinvestments of the said 19.71% acquisition shall be by the expedient of an offer for sale in the ratio of approximately 9 shares for every 10 shares held in the Target Company only to the existing shareholder of the Target Company, other than the Chhabria Group, the Mallya Group and the Plaintiffs in the Bombay High Court Suit No. 3910 of 1997, at the face value of Rs.10/- each.

(b) that the decision dated 1.8.2003 be reviewed and reconsidered to hold that the alleged creeping acquisitions of 2.14% by Imfa, Beethoven and Darrel are in continuation of the illegal acquisitions of 19.71%, and are also illegal acquisition requiring disinvestments in the manner provided in prayer (a) above;

(c) in the alternative to prayers (a) and (b) above, that the decision of the Tribunal dated 1.8. 2003 in Appeal No. 13/2002 and Appeal No. 14/2002 be reviewed and it be clarified that if there has to be an ex-post facto public announcement and offer by the Appellants (as directed) – which should not be the case for reasons stated in the Applications – such announcement and offer must necessarily include the “disputed shares” and also cannot exclude the provision of competitive bids under regulation 23 of the 1994 regulations/ regulation 25 of the 1997 Regulations.

5. Tribunal issued notice to the parties on 13.8.2003 informing that the maintainability of the Miscellaneous Applications including the Applicants’ request for interim relief are posted for hearing on 25.8.2003. The Counsel for the parties were heard on 25.8.2003.

6. Shri Aspi Chinoy, learned Senior Counsel appearing for the Applicants explained the ambit of the Review Applications. He submitted that the Applicant No. 1 i.e. United Breweries Holdings Limited is the single largest shareholder of the Target Company holding 23.59% of its total issued paid up capital and the Applicant No. 2 i.e. Dr. Vijay Mallya is the Chairman and Managing Director of the Target Company. He referred to the objectives of the Takeover Regulations and cited the observation in this regard made in the order passed by the Hon’ble Bombay High Court (DB) in Shirish Finance & Investment P. Ltd. Vs. M. Sreenivasulu Reddy (2002) 2 Comp LJ 386 (Bom)and submitted that the objective of the Regulations is to bring about transparency in dealings in securities, particularly, in relation to takeovers as also to ensure a fair return to a shareholder of the company in case of such acquisition taking place. He submitted that the Hon’ble Court had clearly held in the said case that the Acquirers are forbidden from acquiring shares beyond the limit prescribed unless they make a public announcement to acquire shares at a minimum offer price from the other shareholders of the Company in accordance with the regulations. Learned Senior Counsel further submitted that the Hon’ble High Court had also observed that the “regulatory measures were designed to achieve these objectives. If the regulations relating to acquisition of shares in certain cases, are not treated as mandatory and an acquirer is permitted to acquire substantial shares in any way he likes and in breach of the Regulations, the entire scheme of the Act and regulations will be defeated. The Board will be faced with a fait accompli, and the acquirer will reap the benefit of the illegal transactions. The takeover bids instead of being open and transparent will be clandestine and secretive. The ordinary shareholders will have no participation in the public offer or announcement which is designed primarily to protect his interest, causing him grave injustice…….. .” “The words “shall not acquire in regulations 9 and 10 are mandatory in character, and any breach thereof must render the transaction void. Such acquisition of transfer of shares must be considered to be void under section 6(h) of the Transfer of Property Act as being forbidden by law and opposed to public policy within the meaning of section 23 of the Contract Act………. . It therefore follows that if the transfers are void under section 6(h) of the Transfer of Property Act, the Regulations of 1994 cannot save them from such invalidity”. Learned Senior Counsel further submitted that the Division Bench, had agreed with the observations in the order of the trial Court that if in future, a public offer is made by the defendants that must include the impugned shares, held. He submitted that the Trial Judge, after declaring the law had given the said direction. The Division Bench observed that “Under the Regulations of 1994, a public offer should have been made before the acquisition of the shares. Thus the direction only seeks to relegate the defendants to the same position as they would have occupied had they acted in conformity with law.” In this context Shri Chinoy also referred to the Hon’ble Courts (DB) observation that “These and other considerations which we have discussed earlier in this judgment lead us to the conclusion that the order passed by the Trial judge is a reasonable order protecting the interests of all the parties concerned.”

7. Learned Senior Counsel submitted that the observations made by the Hon’ble High Court was required to be taken into consideration by the Tribunal while deciding the appeals under reference, that the Tribunal is bound by the law declared by the Hon’ble Bombay High Court. Since the decision of the Tribunal is contrary to the law declared by the Hon’ble High Court in his view, since it is an error apparent on the face of the record the Tribunal’s order deserves to be reviewed. In this connection the learned Senior Counsel cited the following observation from the Hon’ble Supreme Court’s decision in East India Commercial Company Ltd. vs. Collector of Customs (AIR 1962 SC 1893) “It would be anomalous to suggest that a tribunal over which the High Court has superintendence can ignore the law declared by that court and start proceedings in direct violation of it. If a tribunal can do so all the subordinate Courts can equally do so, for there is no specific provision, just like in the case of Supreme Court, making the law declared by the High Court binding on the subordinate Courts. It is implicit in the power of supervision conferred on a superior tribunal that all the tribunals subject to its supervision should conform to the law laid down by it. Such obedience would also be conducive to their smooth working; otherwise, there would be confusion in the administration of law and respect for law would irretrievably suffer. We therefore, hold that the law declared by the highest court in the State is binding on authorities or tribunals under its superintendence, and that they cannot ignore it either in initiating a proceeding or deciding on the rights involved in such a proceeding”. Learned Senior Counsel submitted that, as held by the Hon’ble Supreme court, if a decision of the tribunal is contrary to the law declared by the Hon’ble High Court or Hon’ble Supreme Court, it deserves to be reviewed. With reference to “error apparent on the face of the record” as a ground for review in terms of Order 47 Rule 1 of CPC learned Senior Counsel referring to “Sarkar’s The Law of Civil Procedure” (10th Edn-2002 p.2293) submitted that where a proposition of law has been well settled by the Supreme Court which is binding on all Courts or by the High Court, which is binding on all the Courts in the State concerned, decision of a Court overlooking and contrary to such law constitutes an error apparent on the face of the record justifying its review. It s immaterial whether such error occurred by reason of Counsel’s mistake or oversight on the part of the Court. In support of this proposition he cited AIR 1972 Mysore 44 (V59C 18) (The Selection Committee for Admission to the Medical and Dental College, Vs. M.P. Nagraj).

8. Shri Chinoy submitted that for the reason that the Applicants are holding large chunk of shares in the Target Company and that they are in management of the company, they are affected by allowing the Appellants use the illegally acquired shares. He submitted that the Tribunal’s decision dated 1.8.2003 affects the interest of the Applicants. He also submitted that the proceedings culminating in the order was initiated by the Respondent based on the complaints made by the Applicants, that the Respondent had also heard the Applicants on facts in the matter.

9. Learned Senior Counsel referred to the decision of the Hon’ble Supreme Court in Gapabandhu Biswal Vs Kishan Chandra Mohanty & Ors. (1998) 4 SCC 447) and submitted that the Hon’ble Court therein held that review petitioner need not necessarily be a party to the proceedings in which the order sought to be reviewed was passed, that the review applications filed by third parties were maintainable. In this context he referred to provisions of Order 47 Rule 1 CPC and submitted that the Applicants being aggrieved by the Tribunal’s order, are entitled to apply for review.

10. Learned Senior Counsel submitted that time factor is important in this case, as the Appellants have already made a public announcement offering to purchase upto 20% of the Target Company’s shares, the time to make counter offer is available only upto 10.9.2003 and that unless urgent ad-interim order staying the operation of the Tribunal’s order dated 1.8.2003 is granted, grave and irreparable loss, harm and injury will be caused to the Applicants.

11. Shri Kumar Desai, learned Counsel appearing for the Respondent submitted that whether a review petition is maintainable or not would depend on the fact, as to whether the Applicants are entitled to make the application and whether the basis on which review is sought is covered under Order 47. He submitted that in terms of Section 15U of the SEBI Act, for the purposes of discharging its functions, the Tribunal has the same powers as are vested in a Civil Court under the Code of Civil Procedure Code while trying a suit in respect of the matters stated thereunder, that the power to review its orders is one of such matters. Learned Counsel submitted that the Tribunal, therefore has to follow the provisions of Order 47 for the purpose of review of its orders. He referred to the provisions of Order 47 Rule 1 and submitted that in view of the Tribunal’s decision in Ramprasad Somani Vs. Chairman, SEBI (2002) 39 SCL 859 (Sat) that a shareholder adversely affected by an order of the Respondent could be considered as aggrieved person for the purpose of filing appeals before the Tribunal under section 15T, and the Applicants being shareholders of the company, on establishing that they are aggrieved by the order, could be considered as aggrieved persons. He submitted that the Applicants have not made out a case as to on what basis a review application can be made by them. With reference to the contention of the Applicant’s Counsel that review is sought on the basis of ‘error apparent on the face of the record’ and that according to his interpretation of the Hon’ble High Court’s order, the Tribunal had failed to take into consideration the view held by the Court Shri Desai submitted that the error should be apparent and if it is not apparent clearly from the order, the order is not reviewable. Learned Counsel submitted that the Applicant’s Counsel has interpreted certain observations made by the Hon’ble High Court, and based on his interpretation of the order, has contended that the decision of the Tribunal is contrary to the law declared by the Court, little realising that the matter is also open to different interpretations, that what the Court meant while passing an order, as interpreted by the Applicant’s Counsel, cannot be a ground for review under Order 47, that perhaps such an interpretation may be of help when the matter is in appeal, but certainly of no help to get the order reviewed, that the scope of review under Order 47 is restricted. Shri Desai referred to the reliefs sought by the Applicants in their Review Applications and submitted that review of the order is not available on the ground that operative portion of the order is wrong, He submitted that if the order is wrong the remedy is to get the same set aside in an appeal.

12. Learned Counsel in support of his proposition, that review proceedings are not by way of an appeal and the review have to be strictly confined to the scope and ambit of Order 47 Rule 1 referred to the following observations by the Hon’ble Supreme Court in Parsion Devi Vs. Sumitri Devi (1997) 8 SCC 715 that “Under Order 47 Rule 1 CPC a judgment may be open to review interalia if there is a mistake or an error apparent on the face of the record. An error which is not self evident and has to be depicted by a process of reasoning, can hardly be said to be an error apparent on the face of the record justifying the Court to exercise its power of review under Order 47 Rule 1 CPC. In exercise of the jurisdiction under Order 47 Rule 1 CPC it is not permissible for an erroneous decision to be “reheard and corrected”. A review petition, it must be remembered has a limited purpose and cannot be allowed to be “an appeal in disguise”.

13. Shri Desai also cited the observation made by the Hon’ble Supreme Court in State of Gujarat V. Consumer Education and Research Center (AIR 1981 Guj 233) that “…………. an error apparent on the face of the record must be such, as can be seen by one who runs and reads, that is an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. If an elaborate process of reasoning is necessary to arrive at the conclusion that there is an error apparent on the face of the record, it cannot be said that there is an error apparent on the face of the record”.

14. Learned Counsel submitted that the Applicants have not made out a case for review as they have failed to clearly show that there is an error apparent on the face of record.

15. Shri Kapil Sibal, learned Senior Counsel appearing for the Appellants submitted that the first question to be decided in the present case is that whether the Applicants are persons aggrieved in terms of Order 47 Rule 1 of CPC. He referred to the provisions of Order 47 Rule 1 of CPC:

Any person considering himself aggrieved –

(a) by a decree or order from which an appeal is allowed, but from which no appeal has been preferred,

(b) by a decree or order from which no appeal is allowed, or

(c) by a decision on a reference from a Court of small causes,

and who, from the discovery of new and important matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the decree was passed or order made, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason desires to obtain a review of the decree passed or order made against him, may apply for a review of the judgment to the Court which passed the decree or made the order.”

16. Learned Senior Counsel specifically referred to the words “could not be produced by him at the time when the decree was passed or order made” in Order 47 indicate that the review seeker should be a party to the proceedings in which the order was passed against which the review is sought. In this context he also submitted the words “order made against him” is also important. A person is entitled to review an order if it is against him. He submitted that if an order is made against a person and he was not a party in the proceedings in which the order was passed then he is entitled to seek review of that order, provided he establishes that the order passed therein is against him. Learned Senior Counsel submitted that the Tribunal’s order dated 1.8.2003 is not against the Applicants. The order is directed to the Appellants asking them to make a public offer to benefit the shareholders of the Target Company and the Applicants being shareholders of the Target Company are infact beneficiaries of the order. Learned Senior Counsel submitted that the Takeover Regulations are aimed at protecting the rights of the small shareholders and the purpose of public offer is to ensure exit even for small shareholders at a good price, when substantial acquisition of shares or change in control of the target company is in the offing, that the thrust of the Regulations is shareholder interest oriented, that the Applicants have not shown in any manner that the Tribunal’s order is against them, He submitted that the Applicants have sought review of the order based on fear that they will loose control over the Target Company in future, that such an apprehension is not a ground for review under Order 47, that the order must directly affect the person seeking review, that the Takeover Regulations is not concerned as to who is in management of the Target Company. He submitted that the Takeover Regulations does not impose restrictions on takeovers but provides for modalities for takeovers while simultaneously protecting the rights of the small shareholders, that it is certainly not the object of SEBI under the Takeover Regulations to protect those in management or those holding large chunk of shares in the Target Company.

17. With reference to the decision of the Hon’ble Supreme Court in Gapabandhu Biswal (Supra) cited by the learned Senior Counsel for the Applicants Shri Sibal submitted that the view held by the Hon’ble Court is with reference to the facts specific to the said case. He explained the background of the case and submitted the observation was in the context of interpretation of the Service rules and regulations applicable to All India Services, having a bearing on the members of the All India Services, that in fact the Court had made it clear that its observation was in the context of that particular case by observing that “Undoubtedly when the Tribunal interprets service rules and regulations, the interpretation so given may affect other members of that service – past, present or future. One can understand a wider meaning in this context being given to the phrase “person aggrieved” thus enlarging the right of persons to intervene either at the hearing before the Tribunal or in appeal or for filing a review petition”. He submitted that a “party aggrieved” should be a person directly affected by the order. In support he cited the following observation of the Hon’ble Supreme Court from the same Gapabandhu Biswal’s case relied on by the Applicants that “However leniently one may construct the term “party aggrieved’, a person not directly affected cannot be so considered. Otherwise for years to come, every person who becomes eligible for promotion will be considered a ‘party aggrieved’ when the Tribunal interprets any service rule such as in the present case. Only persons who are directly and immediately affected by the impugned order can be considered as “party aggrieved” under Section 22(3)(f) read with Order 47 Rule 1″.

18. Learned Senior Counsel submitted that the Applicants are not persons directly and immediately affected by the Tribunal’s order, that a fear or apprehension does not entitle a person to seek review of the order. With reference to the submission made by Shri Kumar Desai relying on the Somani’s case (supra) the learned Senior Counsel submitted that this Tribunal had made it clear in the said case that whether a person is an aggrieved person or not, depends upon the context of the statute and the content of the order, that the Tribunal had stated this position clearly in the following words:

“The words person aggrieved is no where defined in the Act/Regulations and therefore must be, construed by reference to the context in which it appears. The meaning of the words “person aggrieved may vary according to the context of the statute and that even a stranger may be found to have locus standi although he may not have any personal interest of his own, provided he is not a busy body or middlesom interloper, and although a stranger he moves the Court for a right in common with the general public.”

19. Shri Sibal, submitted that it is not that every shareholder can come and seek review of the order and that for that even non member of the company may also seek review, and if the applications of all those entities are entertained, the end result will be miscarriage of justice. Learned Senior Counsel submitted that the Applicants are not in any way affected by the impugned order and that their case is not some thing special to be treated differently from others, that the fact that the Tribunals order is not to their liking cannot be a matter of concern for the Tribunal to entertain their Review Applications.

20. Shri Sibal submitted that it is not for the first time that the Applicants had attempted to interfere in the matter. In this connection, he referred to the order passed by the Respondent on 31.7.2000, filed with the Affidavit in reply of the Appellants, and submitted that the Applicant’s attempt to interfere at the stage of the proceedings before SEBI was not successful as the Respondent held that the “other parties even though allowed to be present in the hearing will not be allowed to interfere or assail the defence of the parties to the show cause notice.” Though the Applicants direct intervention was rejected by the Respondent, the Applicants did not challenge the said order by way of appeal, that they accepted the order. Learned Senior Counsel submitted that since the Respondent had not allowed the Applicants to be a party in the proceedings in the show cause notice issued to the Appellants, and the Applicants being not parties in the appeal proceedings as well, they are not entitled to file Review Applications now.

21. Shri Sibal submitted that the Applicants had 51% shareholding in the Target Company at one stage but they decided to divest 27% of the same retaining only 24%, that now they are only minority shareholders in the Target Company.

22. Learned Senior Counsel referred to the reliefs sought by the Applicants in their Review Applications and submitted that the prayers made therein itself indicate that they are not persons aggrieved and they are not seeking any relief for themselves. Shri Sibal submitted that the Applicants have interpreted the Hon’ble High Court’s order to meet their goal and has moulded the prayer requiring that if an open offer is to be made by the Appellants the disputed shares also be included therein.

23. Learned Senior Counsel submitted that every acquisition and consequent public offer would raise the acquirers’ share holding in the target company at least to a minimum of 30% of its capital and such block holding of shares with the acquirer may also have an impact on the management, and the Takeover Code also recognises such changes. Shri Sibal submitted that the Takeover Code is basically intended to protect the interest of the shareholders and the Tribunal’s order is in tune with the same. He submitted that the Applicants being shareholders of the Target Company can also sell the shares in the public offer directed to be made by the Tribunal and avail of the benefit like the other shareholders, that the Applicants are also at liberty to come with a counter bid and the Regulations also provide for such counter bid.

24. With reference to Shri Chinoy’s submission that the Hon’ble High Court had declared the law in this matter, Shri Sibal referred to the Courts order and submitted that the Hon’ble Court had expressed only “a primafacie view” as could be noted from the observation that “We may hasten to add that this is only a prima-facie view based on the material on record as they appear. The defendants are yet to file their written statement, and the parties have yet to lead evidence in support of their respective cases. A final finding of fact can be recorded only after evidence is brought on record by the parties. The conclusion reached by us is only prima-facie for the purpose of disposal of the notices of motion”. (para 137 D.B. order). He also referred to the observation that “That apart, we should not make any observation in this order which may even remotely touch upon matters within the jurisdiction of the SEBI. What appropriate order the SEBI may pass in a case of this nature must be left to the SEBI, and we, therefore, do not consider it appropriate to make any observation”. (para 139) Learned Senior Counsel submitted that a prima-facie finding recorded by the Court cannot be considered as a final decision of the Court to be considered as the law declared by the Court.

25. Shri Sibal referred to para 261 of the D.B. decision in Shirish Finance (supra) on which Shri Chinoy had placed heavy reliance in support of his argument that the Tribunal had not considered the Courts order.

“261. It was then submitted on behalf of the defendants that till such time as the SEBI investigated the matter and passed an order, the trial court should not have made the direction, it has made in its impugned judgment. Particular reference was made to the observations in the order of the trial court that if in future, a public offer is made by the defendants, that must include the impugned shares. It is submitted that this should have been left to the discretion of the SEBI. The Trial Judge, after declaring the law, has given this direction. Under the Regulations of 1994, a public offer should have been made before the acquisition of the shares. Thus, the direction only seeks to relegate the defendants to the same position as they would have occupied had they acted in conformity with law. The defendants further contended that in the past, the SEBI had, in many cases, directed the acquirer to make a post facto public offer. This was challenged by Mr. Nariman who sought to distinguish those instances on which reliance was placed by Mr. Chidambaram and Mr. Desai. It is not necessary for us to go into this question because we do not wish to express any opinion on this matter. Since the SEBI has issued notices for breach of the SEBI regulations of 1994, it may not be proper for us to suggest what orders it may pass. We leave it to the SEBI to pass such orders as it may deem fit and proper, and nothing said in this order should be construed as expression of our opinion on the question as to whether the defendants should be permitted to make a post facto public offer or not.”

26. He also referred to following observations made in para 262 of the Court’s order:

“262. Having considered all aspects of the matter, we are satisfied that the balance of convenience is in favour of the plaintiffs. They have made out a prima facie case of breach of the SEBI Regulations by the defendants. Proceedings are pending before the Company Law Board as well as the SEBI apart from the suit. If protection is not given to the plaintiff, on the strength of their illegal acquisition, the defendants may be able to bring about a change in the management of the company, and thereby defeat the very objective of the SEBI Regulations. The shareholders, for whose protection the Regulations have been framed, will be left high and dry and not be able to get a fair value for their shares which they would have got had the defendants made a public offer and invited the shareholders of the company to participate in such public offer. These and other considerations which we have discussed earlier in this judgment lead us to the conclusion that the order passed by the Trial Judge is a reasonable order, protecting the interest of all the parties concerned.”

27. Learned Senior Counsel submitted that from the above observations it is clear that the Hon’ble Court did not pass any direction as to whether acquirer be directed to make a post facto public offer much less the scope of such post facto offer, and the matter was exclusively left to the SEBI. The observation by the Court that “Since SEBI has issued notices for breach of the SEBI regulations of 1994, it may not be proper for us to suggest what order it may pass. We leave it to the SEBI to pass such orders as it may deem fit and proper, and nothing said in this order should be construed as expression of our opinion on the question as to whether the defendants should be permitted to make a post facto public offer or not.” He submitted that the observation is very significant. Learned Senior Counsel submitted that the Tribunal’s order is in tune with the observation made by the Hon’ble High Court that “The shareholders for whose protection the Regulations have been framed, will be left high and dry and not be able to get fair value for their shares which they would have got had the defendants made a public offer and invited the shareholders of the company to participate in such public offer.”

28. Learned Senior Counsel submitted from the facts of the case it is clear that the Applicants cannot come to the Tribunal with Review Applications claiming that they are aggrieved persons and the Review Applications filed by them are not maintainable.

29. Shri C.A. Sundaram, learned Senior Counsel submitted that this Tribunal should first consider the maintainability of the Review Applications and if it is found that the Applicants are not entitled to apply for the review the question of considering interim relief does not arise. He requested the Tribunal to decide the maintainability of the Applications, first and pass an order.

30. Learned Senior Counsel submitted that right to appeal under section 15T of the SEBI Act and the right to make application for review under Order 47 Rule 1 of CPC are not identical, that under section 15T of the SEBI Act any aggrieved person can file appeal against any order passed by the Respondent, that under Order 47, to be eligible to apply for review, the person must be aggrieved directly as a result of the order, that any snow balling effect is not adequate and further that the order sought to be reviewed must be against him. Shri Sundaram submitted that the Applicants have not made out any case in support of their claim that they are parties directly aggrieved by the Tribunal’s order. He submitted that the Applicants have accepted the order passed by the Respondent on 31.7.2000, referred to by Shri Sibal in his arguments, that the proceeding before the Respondent was not an adversorial proceeding. Accordingly the order passed by the Respondent in the said proceeding was not an order against the Applicants, that in any case having accepted the said order, they are now stopped from seeking review of the order passed by the Tribunal in the matter. He further submitted that the Applicants were not parties before the Hon’ble High Court in the Suit No. 3910 of 1997, that the Hon’ble High Court has not given them any right, and the Tribunal has not taken away any of the rights of the Applicants. Learned Senior Counsel referred to the Review Applications and submitted that the Applicants by the said Applications are now asking for an order to give them certain rights. He submitted that creating rights or destroying rights is not the purpose of Order 47, that its scope is rather restricted as has been clearly stated therein, that if the order of which review is sought is not made against the Applicant making the review application, there is no jurisdiction to maintain the same that the present Review Applications are seeking creation of jurisdiction which is not in the ambit of Order 47.

31. Shri Sundaram submitted that neither the Appellants nor the Respondent saw any error apparent on the face of the record and they felt no need to seek a review of the Tribunal’s order, that in that context a third party not directly affected by the order, seeking a review of the order is rather very strange.

32. Learned Senior Counsel submitted that the Applicants are trying to protect their right qua management and not qua shareholding that this position is clear from the averments made in the Review Applications.. In this context he referred to the following portion para 6(e) in the Review Application that “………….. The Applicants are vitally affected since the consequence of the direction has the effect of a takeover and a change of management of the Target Company prejudicial to the interest of the Target Company and its shareholders and affects the management rights of Untied Breweries Holdings Ltd/Dr. Vijay Mallya.”

33. Shri Sundaram submitted that thus the Applicants are stating about a situation that would cause qua management, and their grievance is that their management right is affected, that they have not stated that they as shareholders are directly affected by the Tribunal’s order to satisfy the requirements of Order 47. He submitted that the Applicants are championing public interest rather than pursuing the grievance if any suffered by them, and they have chosen the wrong forum for the purpose, ignoring the legal position. In this context he referred to the following averments in the Review Application that: “The suggestion that the action of ordering disinvestments is neither in public interest or the interest of investors, fails to recognise that it is undoubtedly in the public interest that the law should be obeyed and not violated with impunity. It is also in the public interest that persons like Madanlal D. Chhabria/Kishore R. Chhabria who have brazenly flouted the law, should not be permitted to keep the fruits of their ill gotten gain, and should rather be ordered to disgorge it. On the contrary, viewed in its correct perspective, the Order permitting Madanlal D. Chhabria/Kishor R. Chhabria to keep the 19.7% shares illegally acquired and acquire a further 20%, is exfacie against public interest and the interest of the investors”. According to the learned Counsel, to redress the above said grievance, the proper course is to resort to the Writ jurisdiction and not the review jurisdiction of the Tribunal. He also pointed out that the Applicants instead of seeking any relief to themselves are also seeking to penalise the Appellants.

34. Shri Sundaram referred to the relief sought by the Applicants in the Review Petition and submitted that on a combined reading of prayer a(i) and a(ii) (text extracted in the earlier part of this order) it is clear that the Applicants want disinvestments be done in a manner which would allow them to continue in management, that they are not seeking to restore any right which they have lost as a result of the Tribunal’s order, that in fact they have not lost any of their rights.

35. Shri Sundaram, referred extensively to Somani’s case referred to by Shri Kumar Desai and submitted that the Tribunal had therein made clear that whether a person is aggrieved or not, by an order of SEBI has to be decided depending on the facts and circumstances specific to each case. He submitted that in view of the wider scope of section 15T of SEBI Act and narrow scope of Order 47 Rule 1 of CPC, it cannot be said that all those persons who claim to be aggrieved by the order of SEBI and eligible to file appeal under section 15T of the SEBI Act are also persons aggrieved for the purpose of making application under Order 47 Rule 1 of CPC. He said that it is not a requirement of Section 15T that the order appealed against should be one made against the person preferring the appeal.

36. Shri Sundaram, refuted the Applicants contention that the Tribunal had prohibited them from presenting the case before the Tribunal in the proceedings in appeal No. 13/2002 and 14/2002, and submitted that they did not make any application in the open court to get themselves impleaded as parties in the proceedings.

37. Shri Sundaram submitted that since Review Applications are based on fallacious grounds, the same need be dismissed.

38. I have very carefully considered the Applications and the Affidavits filed by the parties and the submissions made by the learned Counsel for the parties. In the earlier part of this order I have already extracted the gist of the order passed by the Respondent on 19.2.2002, and order as modified by the Tribunal and the reliefs sought by the Applicants. Since the Applicants have attributed certain statements to the Presiding Officer of the Tribunal, I would like to state the factual position to keep the records straight:

The Applicants in para 6(b) of the Applications have stated as follows:

“The aforesaid two Appeals were heard by this Hon’ble Tribunal on 16th, 17th , 18th 24th and 26th July, 2002 at which hearings Counsel for Madanlal D. Chhabria, Kishore R. Chhabria and SEBI only were permitted to be heard and were heard. Counsel for United Breweries Holdings Ltd./Dr. Vijay Mallya were not permitted to argue, but were permitted to remain present during the hearings. The Hon’ble Presiding Officer stated that only parties to the Appeal would be heard, but any member of the public including the representatives of United Breweries Holdings Limited/Dr. Vijay Mallya could remain present at the hearings, but would have no right of audience”. In the “limited affidavit in rejoinder to the Appellants affidavit”, by Shri Patanjali Subramani made on 25.8.2003, it has been inter alia stated that
“……….. I say that on making enquiries with the concerned officers as also with the Counsel representing the Applicants who actually made the oral application to which reference has been made in para 6(b) of the Review Petition, I have been informed that as a matter of fact such an application was made and that the Hon’ble Presiding Officer did indeed make the observation as set out in para 6(b)”

39. Since Shri Kishore Chhabria and Shri Madanlal Chhabria being the Appellants and SEBI being the Respondent in the appeal No. 13/2002 and appeal No. 14/2002 they were heard. The Counsel for the Applicants orally requested for permission to remain present during the hearings. In that context the Tribunal stated that that the proceedings before the Tribunal are open to public and any person desirous of watching the proceedings are allowed to be present and no special permission from the Tribunal is required for the purpose. It was also made clear that only those who are parties to the proceedings alone will be heard. The Applicants to the best of my knowledge, did not make any oral or written application for getting themselves impleaded as parties to the proceedings. Therefore, there was no occasion for the Tribunal to consider the question of their impleadment.

40. The proceedings before the Tribunal are regulated by the Securities Appellate Tribunal (Procedure) Rules, 2000. There is no specific provisions therein on the procedure for dealing with the applications filed for review of the Tribunal’s orders. The reasons for not providing for any specific rule in this regard, appear to be that section 15U itself is self explanatory on this aspect. According to section 15U:

“(1) The Securities Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, and of any rules, the Securities Appellate Tribunal shall have powers to regulate their own procedure including the places at which they shall have their sittings.

(2) The Securities Appellate Tribunal shall have, for the purposes of discharging their functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:-

(a) summoning and enforcing the attendance of any person and examining him on oath;

(b) requiring the discovery and production of documents;

(c) receiving evidence on affidavits;

(d) issuing commissions for the examination of witnesses or documents;

(e) reviewing its decisions;

(f) dismissing an application for default or deciding it ex parte

(g) setting aside any order of dismissal of any application for default or any order passed by it ex parte;

(h) any other matter which may be prescribed.

(3) Every proceedings before the Securities Appellate Tribunal shall be deemed to be a judicial proceedings within the meaning of section 193 and 228, and for the purposes of section 196 of the Indian Penal Code (45 of 1860), and the Securities Appellate Tribunal shall be deemed to be a civil court for all the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974).

41. In view of the provisions of section 15U, for the purposes stated therein the principles of natural justice are to be followed, and the provisions of CPC are also to be followed by the Tribunal while reviewing its decisions. It is in this context Order 47 Rule 1 of CPC is followed:

Order 47 is as under:

(1) Any person considering himself aggrieved-

(a) by a decree or order from which an appeal is allowed, but from which no appeal has been preferred

(b) by a decree or order from which no appeal is allowed, or

(c) by a decision on a reference from Court of Small Causes,

and who, from the discovery of new and important matter or evidence which, after the exercise of due diligence was not within his knowledge or could not be produced by him at the time when the decree was passed or order made, or on account of some mistake or error apparent on the face of the record or for any other sufficient reason, desires to obtain a review of the decree passed or order made against him, may apply for review of judgment to the court which passed the decree or made the order.”

42. Order 47 Rule 1 , extracted above is a wholesome one. It specifies as to who can make the review application, it identifies the orders which can be subjected to review, and it explains on what grounds review can be sought.

43. It is clear from the wording of Order 47 Rule 1 that only a person aggrieved by the order is entitled to apply for a review of judgment. It is to be noted that the word used in the opening sentence of Order 47 Rule 1 is that “Any person considering himself aggrieved” and not that “any party to the proceeding considering himself aggrieved”. The expression “person” has a wider meaning than the expression “party” to the proceedings. Therefore in my view, the entitlement to make a review application is not confined only to the parties to proceedings in which the judgment and order is made but open to any person against whom the order is passed and is aggrieved as a result of the same. This view has the support in Hon’ble Supreme Courts decision in Gapabanhdu Biswal. In my view the crucial test is not whether the Applicant is a party or not to the proceedings in which the order passed is sought to be reviewed. The test is as to whether the person aggrieved is directly affected by the order and that the order is made against him. Hon’ble Supreme Court in Gapabandhu Biswal (supra) has made it clear that ” However leniently one may construe the term “party aggrieved” a person not directly affected cannot be so considered”…… “Only persons who are directly and immediately affected by the impugned order can be considered as parties aggrieved under section 22(3)(f) read with Order 47 Rule 1”. Section 22(3)(f) of the Administrative Tribunals Act is in pari materia with section 15(u)(2) of the SEBI Act and therefore the view expressed by the Hon’ble Court referred to above is in equal force applicable to the Applicants case also.

44. This Tribunal in Somani’s case (supra) had in detail considered the scope of the expression “person aggrieved” with reference to section 15T of the SEBI Act in the context of the right to the appeal against the orders passed by SEBI. In that context the Tribunal had noted Lord Dennings observation in Attorney General of the Gambia V. Pierre Sarr N’Jie (196) AC 617 that :

“The words person aggrieved are of wide import and shall not be subjected to a restrictive interpretation. They do not include, of course a mere busy body who is interfering in things which do not concern him; but they do include a person who has a genuine grievance because an order has been made which prejudicially affects his interest”

(emphasis supplied).

45. In Somani’s case the preliminary question which came up for consideration was as to whether Shri Ramprasad Somani, the person who filed the appeal challenging SEBI’s order was an aggrieved person or not in terms of Section 15T of the SEBI Act to be entitled to file an appeal, against SEBI’s order. In the said case SEBI had held that no public offer was required to be made by the acquirer in the context of acquisition of the shares of the Bank of Rajasthan. In that context the Tribunal had observed:

“It is to be noted that the requirement of public offer to the existing shareholders in a target company by an acquirer is to protect the interests of investors. It enables the shareholder to exit from the company, by selling his shares to the acquirers at a price beneficial to him. It is a right flowing from the regulations. Since it is a right under the law it cannot be said that in the event of denial of that right he cannot be considered as an aggrieved person and cannot seek appropriate relief under this Act.”

46. In the Applicants case it is just the opposite, SEBI did not direct the Appellants to make a public offer. But the Tribunal modified SEBI’s order directing the Appellants to make a public offer so as to benefit the shareholders. The Applicants, as shareholders cannot say that the said modified order is not in their interest as shareholders of the Target Company or for that matter as shareholders of the Target Company they are aggrieved by the order. In this context it is to be noted that the requirement of making public announcement to acquire shares from other shareholders of the target company, provided in regulation 10 of the SEBI (Substantial Acquisition of Shares and Takeovers Regulations 1994 is a measure meant for the benefit of the shareholders, and the Tribunal’s order is directed for the said purpose. The Applicants are in the management of the Target company and that by virtue of the public offer, they may loose their control of the management is not a ground for seeking review of the order. It is noted that the Applicants are not interested in the benefit which would reach them in the event the Appellants making the public offer is clear from the relief sought by them that therein they have stated that the disinvestments be made to the exclusion of Chhabria Group, the Mallya Group and the Plaintiffs in the Bombay High igh Hi Court Suit No. 3910 of 1997. On a perusal of the Review Application it is noted that Applicants have not sought any relief to themselves vis–vis any grievance. In fact they have failed to state in the Applications as to how they are aggrieved by the Tribunal’s order. As the Appellants rightly pointed out the Applicants are under the apprehension that if the Appellants are allowed to acquire shares in terms of the regulations, the Applicants will loose their control over the management of the Target Company. It is to be noted that the Tribunal’s order is in the larger interest of the shareholders and in tune with the objective of the Takeover Regulations.

47. It is also noted that in terms of Order 47 Rule 1CPC, a person is entitled to move the Court with an application for review of the decree or order made directly against him. The order passed by the Tribunal on 1.8.2003 is not an order against the Applicants. The Applicants contented that the order passed by the Tribunal is an erroneous one. In this context I would like to refer to the view held by the Hon’ble Gujarat High Court in State of Gujarat Vs. Consumer Education and Research Center (AIR 1981 Guj 233) had held that review power “may not be exercised on the ground that the decision was erroneous on merits. That would be a province of a Court of appeal. A power of review is not to be confused with appellate power which may enable an appellate court to correct all manner of errors committed by the subordinate court.”

48. In the light of the facts of the case the Applicants cannot be considered as persons aggrieved as a result of the order passed by the Tribunal and also that the Tribunal’s order is not against the Applicants, I am of the view that the Applicants are not entitled to apply for review of this Tribunal’s order dated 1.8.2003. Since the Applicants are found not entitled to apply for the review of the Tribunal’s order no further enquiry by the Tribunal on the adequacy or otherwise of the grounds adduced is considered necessary.

49. The review Applications, for the reasons stated above are dismissed.


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