Nirma Industries has sought the Supreme Court’s intervention in deciding the scope and extent of discretion conferred on market regulator Sebi in dealing with the issues related to withdrawal of open offers under its takeover code.
Nirma has challenged the Securities Appellate Tribunal’s (SAT) decision which upheld Sebi’s order rejecting the company’s request for withdrawal of the open offer for shares of Ahmedabad-based packing major Shree Rama Multitech Ltd (SRMTL) under the Sebi (substantial acquisition of shares and takeovers) regulations of 1997.
The takeover code regulates substantial acquisition of shares in listed companies and protects investors.
A bench headed by justice SH Kapadia has posted the Nirma’s plea for the final hearing on March 11. According to the petition, the implications of the impugned order were far reaching for investors who invest in the capital market on the basis of publicly available information with all due diligence and also discharge duty with care.
Nirma in its petition said that the tribunal should have noted that the frauds committed by erstwhile SRMTL promoters were came to light only after the public announcement was made, and thus it was a good reason for withdrawal of the open offer under the takeover code.
The Sebi’s impugned order dated April 30, 2007, directed the appellant to persist with an open offer at a determined price without the special facts and circumstances that became known after the offer was announced.
The petition also said that the SAT had failed to note that if Nirma would have conducted due diligence of SRMTL, it would have been barred from acquiring shares of SRMTL under the Sebi (prohibition of insider trading) regulations of 1992.
However, Sebi in its reply said that regulations in this regard have to be followed strictly to ensure fair and equal treatment to all shareholders.