121A

BEFORE THE SUPREME COURT OF INDIA

AT NEW DELHI

Civil Appeal No.___/ 2016

DREAMSELLERS LTD. (REPRESENTED BY DIRECTOR)

APPELLANT
v
SECURITIES AND EXCHANGE BOARD OF INDIA (REPRESENTED BY LEGAL OFFICER)
RESPONDENT

2016

MEMORIAL ON BEHALF OF THE APPELLANT

TABLE OF CONTENTS

List of Abbreviations ................................................................................................................. 5

Index of Authorities ................................................................................................................... 7
Statement of Jurisdiction............................................................................................................ 9
Statement of Facts .................................................................................................................... 10
Issues Raised ............................................................................................................................ 12
I.

Whether the provisions of Regulation 23 of the 2011 Takeover Regulations relating to

withdrawal of open offer could be applied to an open offer made under the 1997 Takeover
Regulations? ......................................................................................................................... 12
II. Whether it can be said that the Appellant had failed to exercise due diligence and the
facts relating to the fraud were known or could have been known by the Appellant, if
the Appellant had exercised proper due diligence? .......................................................... 12
III.

Whether the Respondent had violated the principles of natural justice in the present

case while passing its order rejecting the application to withdraw the open offer without
hearing the Appellant? ......................................................................................................... 12
IV.

Whether Regulation 27(1)(d) of the 1997 Takeover Regulations is to be given an

interpretation whereby, the words such circumstances as in the opinion of the Board merit
withdrawal are to be read ejusdem generis with the other provisions of Regulation 27(1)
of the said code i.e. as circumstances where it is impossible to perform the open offer? ... 12
Summary .................................................................................................................................. 13
Arguments Advanced............................................................................................................... 15
I.

The provisions of Regulation 23 of the 2011 Takeover Regulations relating to

withdrawal of open offer can be applied to an open offer made under the 1997 Takeover
Regulations. ......................................................................................................................... 15
i.

The application for withdrawal of the offer is not saved under Regulation 35(2) (b)

of the 2011 Takeover Regulations. .................................................................................. 15

ii. Withdrawal of an open offer does not fall within the ambit of Regulation 35(2)(c) of
the 2011 Takeover Regulations. ...................................................................................... 16

iii. In any event, the Appellant has not been enabled to initiate fresh legal proceedings
in respect of any right, privilege, obligation, liability, penalty, forfeiture or punishment
incurred under the repealed 1997 Takeover Regulations. ............................................... 17
II. The Appellant exercised due diligence and the facts relating to the fraud were not
known or could not have been known even if the Appellant had exercised due
diligence. .............................................................................................................................. 18
i.

The Appellant did not fail to exercise due diligence before making the open offer. 18

ii. The facts leading to the knowledge of the siphoning and embezzlement of the funds
were not known or could not have been known even after the exercise of proper due
diligence by the Appellant. . ............................................................................................ 19
III.

Respondent has violated the principles of natural justice while passing its order

rejecting the application to withdraw the open offer without hearing the Appellant. ......... 20
i.

The Respondent ought to have complied with the principles of natural justice. ...... 21

ii. Personal hearing is a necessary element of natural justice in such proceedings. ...... 21
iii. The Appellant has suffered prejudice due to the observations issued by the
Respondent. ...................................................................................................................... 22
IV.

In any case, the words such circumstances as in the opinion of the Board merit

withdrawal appearing in Regulation 27(1)(D) of the 1997 Takeover Regulations should

not be read ejusdem generis with the preceding clauses of Regulation 27(1). .................... 23
i.

Regulation 27(1)(d) should be given a contextual interpretation. ............................. 24

ii. The tests for the application of the principle of ejusdem generis are not fulfilled. ... 24
a. The indications of a different legislative intent make the rule inapplicable. ............ 25
b. A restrictive interpretation would curtail the wide powers given to SEBI to regulate
the securities market. ....................................................................................................... 25
c. Placing a narrow interpretation upon Regulation 27(1)(d) would be contrary to the
scheme of the 1997 Takeover Regulations. ..................................................................... 26
d. Ejusdem generis interpretation cannot be placed upon Regulation 27(1)(d) to defeat
the objective and purpose of the 1997 Takeover Regulations and the SEBI Act, 1992. . 26
e. Clauses (b) and (c) of Regulation 27(1) do not constitute a distinct genus. ............. 28
iii. Regulation 27(1)(d) would be rendered otiose if restrictively interpreted. ............... 28
3

Prayer ....................................................................................................................................... 30

LIST OF ABBREVIATIONS
%

Per cent

&

and

Section

Paragraph

AIR

All India Reporter

All ER

All England Law Reports

Bom CR

Bombay Cases Reporter

Del

Delhi

HL

House of Lords

i.e.

That is

Id.

Idem

Inc.

Incorporated

Kar LJ

Karnataka Law Journal

KB

Kings Bench

Ltd.

Limited

M/s

Messrs

Pvt.

Private

Rs.

Rupees

SAT

Securities Appellate Tribunal

SC

Supreme Court

SCC

Supreme Court Cases

SEBI

Securities and Exchange Board of India

Versus

INDEX OF AUTHORITIES
Judgements
Amar Chandra v Collector of Excise, Tripura, (1972) 2 SCC 472 .......................................... 24
Automotive Tyre Manufacturers Association v Designated Authority, (2011) 2 SCC 258 ........
........................................................................................................................................ 21, 22
Balram Kumawat v Union of India, (2003) SCC 7 628 .......................................................... 24
Canara Bank v V.K. Awasthy, (2005) 6 SCC 321................................................................... 20
Hamilton Gell v White, [1922] 2 KB 422................................................................................ 16
Harinarayan Bajaj v Union of India, 2008 (2) Bom CR 780 ................................................... 18
Hasan Nurani Malak v Assistant Charity Commissioner, Nagpur, AIR 1967 SC 1742 ......... 15
Indian Dental Association, Kerala v Union of India, 2004 (1) Kar LJ 282 ............................. 25
K.V. Muthu v Angamuthu Ammal, (1997) 2 SCC 53 ............................................................. 26
Kolhapur Canesugar Works Ltd. v Union of India, (2000) 2 SCC 356................................... 15
M/s Universal Imports Agency v The Chief Controller, AIR 1961 SC 41.............................. 16
Maharashtra University of Health Sciences v Satchikitsa Prasarak Mandal, (2010) 3 SCC 876
........................................................................................................................................ 26, 28
Maneka Gandhi v Union of India, (1978) 1 SCC 248 ............................................................. 21
Nathi Devi v Radha Devi Gupta, (2005) 2 SCC 271 ......................................................... 24, 28
Nirma Industries Ltd. v SEBI, (2013) 8 SCC 20 ..................................................................... 23
P.N. Balasubramanian v Union of India, AIR 1975 Del 258 ............................................ 15, 16
Qudarat Allah v Municipal Board of Bareilly, (1974) 1 SCC 202 .......................................... 15
Ram Chander v Union of India, (1986) 3 SCC 103 ................................................................. 22
Russel v Scott, 1948 2 AII ER 1 (HL) ..................................................................................... 28
Sahara India v Commissioner of Income Tax, (2008) 14 SCC 151 ........................................ 21
Shri Bhagwan v Ram Chand, AIR 1965 SC 1767 ................................................................... 21
Siddeshwari Cotton Mills Pvt. Ltd. v Union of India, (1989) 2 SCC 458 ............................... 28
State of Punjab v Harnek Singh, (2002) 3 SCC 481 ................................................................ 17
State of Uttar Pradesh v Maharaja Dharmander Prasad Singh, (1989) 2 SCC 505 ................. 22
Travancore Rayons v Union of India, (1969) 3 SCC 868 ....................................................... 21
Udayan Chinubhai v R.C. Bali, (1977) 4 SCC 309 ................................................................. 25
Union of India v Alok Kumar, (2010) 5 SCC 349 ................................................................... 24
Union of India v S.H. Seth, (1977) 4 SCC 193........................................................................ 25

Other Authorities
Justice

P.N.

Bhagwati

Committee

Report

on

Takeovers,

(1997),

available

at

http://www.sebi.gov.in/commreport/bagawati-report.html. ................................................ 27
Report of the Takeover Regulations Advisory Committee Under the Chairmanship of Mr. C.
Achuthan,

(2010),

available

at

http://www.sebi.gov.in/cms/sebi_data/attachdocs/1287826537018.pdf.............................. 27
Regulations
SEBI ([PROHIBITION OF] INSIDER TRADING) REGULATIONS, 1992 ........................................... 19
SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997 ..............
.................................................................................................................................. 16, 18, 26
SAT and SEBI Orders
Dr. Vijay Mallya v The Chairman, SEBI, SAT Appeal No. 15 of 2002 (August 3, 2002),
available at http://www.sebi.gov.in/cms/sebi_data/attachdocs/1299753151503.pdf.......... 27
Imperial Corporate Finance and Services Pvt. Ltd. v SEBI, SAT Appeal No. 56/2003 (July
30, 2004), available at http://www.sebi.gov.in/cms/sebi_data/pdffiles/12098_t.pdf .......... 19
Luxottica Group SpA v Rayban Holding Inc., SAT Appeal No. 61 of 2002 (August 29,
2003), available at, http://www.sebi.gov.in/cms/sebi_data/attachdocs/1299752868012.pdf
.............................................................................................................................................. 26
Statutes
COMPANIES ACT, 1956 ............................................................................................................. 20
SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 ........................................................ 26
Treatises
2A NORMAN J. SINGER & J.D. SHAMBLE SINGER, STATUTES AND STATUTORY CONSTRUCTION
(5th ed., 2008) ...................................................................................................................... 28
DR. J.C. VERMA, CORPORATE MERGERS, AMALGAMATIONS & TAKEOVERS, (2002)............... 19
OXFORD DICTIONARY OF ENGLISH (3d ed., 2010) .............................................................. 17, 28

STATEMENT OF JURISDICTION
The Appellant most humbly and respectfully submits to the jurisdiction of this Honourable
Court under Section 15Z of the SEBI India Act, 1992 read with Order XIX, Rule 1 and 40 of
the Supreme Court Rules, 2013.

STATEMENT OF FACTS
The Promoters of Artemis Ltd. (hereinafter Target Company), a listed company, borrowed
a sum of Rs. One Hundred Crores from Dreamsellers Ltd. (hereinafter Appellant) on
January 30, 2009, and pledged its equity shares as security. Upon the Target Companys
failure to pay the debt within the prescribed period, the Appellant invoked the pledge on July
22, 2010. This entitled the Appellant to 12.5% equity shares in the Target Company.
The Appellant was unsure of the invocation of the pledge alone paying off the debt, as the
Promoters of the Target Company were under financial stress. Hence, the Appellant decided
to make a voluntary open offer under Regulation 10 of the SEBI (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997 (hereinafter 1997 Takeover Regulations) to
acquire up to 37.6% equity shares in the Target Company. This could increase their share in
the Target Company up to 50.1%.
On October 1, 2010, the Appellant made a public announcement for the proposed open offer
after going through the publicly available documents on the financial position of the Target
Company, as provided by its promoters. A Draft Letter of Offer was filed with the SEBI
(hereinafter Respondent) through a merchant banker. The lenders to the Target Company
were meanwhile pressurising its Board of Directors to review the operations of the Target
Company. An internal audit of the Target Companys operations and financial statements
was conducted upon insistence by the independent directors. It showed irregularities in the
financials of the Target Company between 2005 and 2008. A special investigative audit into
the financial affairs of the Target Company for the past 10 years was directed, again upon
pressure from the independent directors. The investigative report dated September 30, 2011,
established that the Promoters of the Target Company had siphoned off and embezzled Rs.
Three Hundred Crores, through fraudulent transactions.
On October 25, 2011, one of the representatives of the lenders on the Board of Directors of
the Target Company, filed the report in on-going legal proceedings in the Delhi High Court.
The report came into the public domain. This resulted in a sharp decline in the price of the
shares of the Target Company.
On October 30, 2011, the Appellant wrote to the Respondent through its merchant bankers,
seeking to withdraw the open offer, on the ground of emergence of extraordinary facts since
the voluntary offer had been made. Alternatively, the Appellant sought that the Respondent

10

should permit re-pricing of the open offer price in view of the new facts that had become
publicly known after the offer had been made, , because of which the market price had been
much higher than what it would have been had those facts been known before.
After a long delay since the filing of the Draft Letter of Offer, the Respondent issued its
observations on it, on November 1, 2011. The Respondent remained silent on the falling
price and the embezzlement of funds. It was merely stated that the request for withdrawal of
the open offer was not being considered favourably. The alternative request for re-pricing of
the open offer price was not mentioned. It was merely stated that the offer once made cannot
be withdrawn and that acquirers should conduct their due diligence before deciding on
whether to make an open offer.
Meanwhile, the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
(hereinafter 2011 Takeover Regulations) had come into force from October 22, 2011.
Aggrieved by the Respondents Order, the Appellant filed an appeal before the SAT, which
was dismissed. SAT, inter alia, held that- the 2011 Takeover Regulations would not be
applicable in the present case; there was no violation of the principles of natural justice; the
Appellant ought to have conducted proper due diligence before making the open offer; and
the words such circumstances as in the opinion of the Board merit withdrawal are to be
read ejusdem generis with clauses (b) and (c) of Regulation 27(1) of the 1997 Takeover
Regulations.
Being aggrieved by the Order of the SAT, the Appellant filed an appeal before the Honble
Supreme Court. The Chief Justice of India has constituted a larger bench to look into the
matter and hence the matter has come before this Court.

11

ISSUES RAISED
I.

WHETHER

THE PROVISIONS OF

REGULATION 23

REGULATIONS RELATING TO WITHDRAWAL

OF THE

2011 TAKEOVER

OF OPEN OFFER COULD BE APPLIED TO

AN OPEN OFFER MADE UNDER THE 1997 TAKEOVER REGULATIONS?

II.

WHETHER

IT CAN BE SAID THAT THE

APPELLANT

HAD FAILED TO EXERCISE DUE

DILIGENCE AND THE FACTS RELATING TO THE FRAUD WERE

HAVE BEEN KNOWN BY THE

APPELLANT,

IF THE

KNOWN

APPELLANT

OR COULD

HAD EXERCISED

PROPER DUE DILIGENCE?

III.

WHETHER THE RESPONDENT HAD VIOLATED THE PRINCIPLES OF NATURAL JUSTICE

IN THE PRESENT CASE WHILE PASSING ITS ORDER REJECTING THE APPLICATION TO
WITHDRAW THE OPEN OFFER WITHOUT HEARING THE APPELLANT?

IV.

WHETHER REGULATION 27(1)(D) OF THE 1997 TAKEOVER REGULATIONS IS TO BE

GIVEN AN INTERPRETATION WHEREBY, THE WORDS
THE OPINION OF THE

BOARD

SUCH

CIRCUMSTANCES AS IN

MERIT WITHDRAWAL ARE TO BE READ EJUSDEM

GENERIS WITH THE OTHER PROVISIONS OF

REGULATION 27(1)

OF THE SAID CODE

I.E. AS CIRCUMSTANCES WHERE IT IS IMPOSSIBLE TO PERFORM THE OPEN OFFER?

12

SUMMARY
I.

THE

PROVISIONS OF

REGULATION 23

OF THE

2011 TAKEOVER REGULATIONS

RELATING TO WITHDRAWAL OF OPEN OFFER CAN BE APPLIED TO AN OPEN OFFER

MADE UNDER THE 1997 TAKEOVER REGULATIONS.

The 1997 Takeover Regulations have been repealed and the application for the withdrawal of
the open offer is not saved under Regulation 35(2)(b) of the 2011 Takeover Regulations, as
the request for withdrawal was made after the 2011 Takeover Regulations came into force.
No right had arisen merely through the making of a public offer that would be saved.
Withdrawal of an open offer does not fall within the ambit of Regulation 35(2)(c) of the 2011
Takeover Regulations, as withdrawal serves neither towards the completion nor the
continuance of a public offer. In any event, the Appellant has not been enabled to initiate
fresh legal proceedings under the 1997 Takeover Regulations in respect of anything done, or
any right or liability incurred under the 1997 Takeover Regulations.
II.

THE APPELLANT EXERCISED DUE DILIGENCE AND THE FACTS RELATING TO THE
FRAUD WERE NOT KNOWN OR COULD NOT HAVE BEEN KNOWN EVEN IF THE

APPELLANT HAD EXERCISED DUE DILIGENCE.

The Appellant had appointed a merchant banker as required by Regulation 13 of the 1997
Takeover Regulations who had carried out the transactions on its behalf and had carried out
due diligence as required under Regulation 24(2) of the 1997 Takeover Regulations. The lack
of due diligence should run from the facts of the case and there must be an enquiry and the
finding regarding lack of due diligence must be sustained by a higher degree of proof than
that required in a civil suit. The Appellant in exercise of due diligence went through the
publicly available documents. No required high degree of proof has been given by the
Respondent to show the lack of due diligence on the part of the Appellant.
Due to Regulation 3 of the SEBI ([Prohibition of] Insider Trading) Regulations, 1992, the
Appellant had no access to the unpublished information of the Target Company and had
access only to the publicly available documents, which was inadequate in the instant case.
The Audit Committee formed under Section 292A of the Companies Act, 1956 has access to
all the information of a company, which is not available to the outsiders. The facts relating to
the embezzlement of funds came out only after the special investigative audit, an
investigation which is beyond the ability of the Appellant.
13

III.

RESPONDENT

HAS VIOLATED THE PRINCIPLES OF NATURAL JUSTICE WHILE

PASSING ITS ORDER REJECTING THE APPLICATION TO WITHDRAW THE OPEN

OFFER WITHOUT HEARING THE APPELLANT.

The principles of natural justice are required to be adhered to while taking any administrative
action, particularly when the action involves civil consequences. The audi alteram partem
rule requires a right of hearing to be granted to the aggrieved party. Though right of personal
hearing is not an absolute right under the principles of natural justice, actions involving
complex issues require that a personal hearing should be given. The Respondent failed to
properly consider all issues in observations made pursuant to the filing of the Draft Letter
of Offer and the letter seeking withdrawal of the open offer. This led to civil consequences
for the Appellant.
IV.

IN

ANY CASE, THE WORDS

BOARD

SUCH

CIRCUMSTANCES AS IN THE OPINION OF THE

MERIT WITHDRAWAL APPEARING IN

1997 TAKEOVER REGULATIONS SHOULD

REGULATION 27(1)(D)

OF THE

NOT BE READ EJUSDEM GENERIS WITH

THE PRECEDING CLAUSES OF REGULATION 27(1).

Regulation 27(1)(d) should not be read ejusdem generis with clause (b) and (c) of Regulation
27(1) to be restricted to the class of impossibility. Conditions required for the application of
the rule of ejusdem generis are not fulfilled. There are indications of a legislative intent to not
restrict the scope of the Regulation. A restrictive interpretation would restrict the wide
powers given to SEBI to regulate the securities market and would be contrary to the scheme
of the 1997 Takeover Regulations. It would defeat the purpose behind the setting up of the
SEBI- the protection of the interests of the investors in the securities market, by shifting the
burden of the fraud of the promoters onto the acquirers. The objective of the 1997 Takeover
Regulations to balance the interest of the various stakeholders shall be defeated. Moreover,
clauses (b) and (c) of Regulation 27(1) do not constitute a distinct genus as they do not
possess the dominant feature of impossibility. Finally, Regulation 27(1)(d) shall be
rendered otiose if restrictively interpreted as the discretion vested in the SEBI to decide the
circumstances that justify withdrawal of an offer shall be rendered superfluous.

14

ARGUMENTS ADVANCED
I.

THE

PROVISIONS OF

REGULATION 23

OF THE

2011 TAKEOVER REGULATIONS

RELATING TO WITHDRAWAL OF OPEN OFFER CAN BE APPLIED TO AN OPEN OFFER

MADE UNDER THE 1997 TAKEOVER REGULATIONS.

The provisions of Regulation 23 of the 2011 Takeover Regulations can be applied to an

open offer made under the 1997 Takeover Regulations. The 1997 Takeover Regulations
have been repealed and the application for the withdrawal of the offer is not saved from
the effects of such repeal.
The argument is in three parts. [i] The application for withdrawal of the offer is not saved
under Regulation 35(2)(b) of the 2011 Takeover Regulations. [ii] Withdrawal of an open
offer does not fall within the ambit of Regulation 35(2)(c) of the 2011 Takeover
Regulations. [iii] In any event, the Appellant has not been enabled to initiate fresh legal
proceedings in respect of any right, privilege, obligation, liability, penalty, forfeiture or
punishment incurred under the 1997 Takeover Regulations.
i.

The application for withdrawal of the offer is not saved under Regulation 35(2)
(b) of the 2011 Takeover Regulations.

Regulation 35(1) of the 2011 Takeover Regulations provides for the repeal of the 1997
Takeover Regulations. An enactment that is repealed is treated as if it had never existed,
except as to transactions that are past and closed.1 An exception to this principle is
provided in the form of savings clauses, which save what has been previously done under
the statute repealed.2 Thus, the pre-existing law continues to govern the things done
before a particular date from which the repeal of such a pre-existing law takes place.3 A
savings clause does not save the provisions of the repealed enactment, but only the rights,
liabilities etc. that may be specified.4
Regulation 35(2)(b) of the 2011 Takeover Regulations is in the nature of a savings clause
and provides that the repeal of the 1997 Takeover Regulations shall not affect- a)
anything duly done or suffered thereunder; b) any right, privilege, obligation or liability
acquired, accrued or incurred under the repealed regulations; c) any penalty, forfeiture or
1

Qudarat Allah v Municipal Board of Bareilly, (1974) 1 SCC 202, 18.

Kolhapur Canesugar Works Ltd. v Union of India, (2000) 2 SCC 356, 37.
3
Hasan Nurani Malak v Assistant Charity Commissioner, Nagpur, AIR 1967 SC 1742, 10.
4
P.N. Balasubramanian v Union of India, AIR 1975 Del 258, 8.
2

15

punishment incurred in respect of any offence committed against the repealed regulations;
e) any investigation, legal proceeding or remedy in respect of any such right, privilege,
obligation, liability, penalty, forfeiture or punishment as mentioned above.
The application made for the withdrawal of the offer by the Appellant to the Respondent
is not covered under any of the foregoing situations. The 2011 Takeover Regulations
came into force on October 22, 2011.5 The application for withdrawal was made on
October 30, 20116, after the repeal of the 1997 Takeover Regulations, which became
effective when the 2011 Takeover Regulations came into force. Hence, the withdrawal
application is not saved as anything done or suffered under the 1997 Takeover
Regulations.
Rights and liabilities accrued under the repealed enactment are saved if they become
complete before the date of the repeal.7 Moreover, the operation of only those parts of the
enactment is saved which is necessary to give effect to those rights and liabilities.8 The
rights sought to be protected are specific rights given to an individual upon the happening
of one or other event specified in the enactment.9
No such right or liability has accrued in the present situation. The mere making of a
public offer, before its completion, does not create any right in favour of the shareholders
and a corresponding liability upon the acquirer. The right accrues only once the offer has
been completed and has been accepted by the shareholders.10
Thus the operation of the provisions of the 1997 Takeover Regulations is not saved and
does not govern the application for withdrawal of the offer made by the Appellant.
ii.

Withdrawal of an open offer does not fall within the ambit of Regulation 35(2)(c)
of the 2011 Takeover Regulations.

Regulation 35(2)(c) provides that an open offer for which a public announcement has
been made under the repealed regulations is to be completed and continued thereunder.

11, Proposition.
10, Proposition.
7
Id.
8
P.N. Balasubramanian v Union of India, AIR 1975 Del 258, 16.
9
Hamilton Gell v White, [1922] 2 KB 422, 431 cited in M/s Universal Imports Agency v The Chief Controller,
AIR 1961 SC 41, 37.
10
See SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997, Regulation 29.
6

16

Oxford Dictionary of English defines complete as finish making or doing.11 It is

apparent from the open offer process as specified in Chapter III of the 2011 Takeover
Regulations and Chapter III of the 1997 Takeover Regulations that the making of the
open offer is completed on the payment of consideration to the shareholders. Regulation
8(1) of the 2011 Takeover Regulations also specifies that the offer period comes to an end
with the payment of consideration to the shareholders The withdrawal of an open offer
does not serve towards the completion of the offer; instead it results in the abrogation of
the offer and relieves the acquirers of their obligations and liabilities. If an open offer is
withdrawn, it cannot thereafter be completed.
Therefore, an open offer does not need to be withdrawn in accordance with the provisions
of the 1997 Takeover Regulations and Regulation 23 of the 2011 Takeover Regulations
shall apply.
iii.

In any event, the Appellant has not been enabled to initiate fresh legal
proceedings in respect of any right, privilege, obligation, liability, penalty,
forfeiture or punishment incurred under the repealed 1997 Takeover Regulations.

Regulation 35(2)(b) provides that any investigation, legal proceeding or remedy in respect
of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as
aforesaid, shall remain unaffected as if the repealed Regulations have never been
repealed. The provision is analogous to Section 6(e) of the General Clauses Act, 1897
which stipulates that the repeal of an enactment shall not affect any investigation, legal
proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty,
forfeiture etc. The effect of clause (e) is to save the proceedings that have already
culminated as well as to save pending proceedings.12 Section 6 further lays down that any
such investigation, legal proceeding or remedy may be instituted or enforced as if the
repealing act had not been passed. Section 6 thus provides that a party may institute
fresh proceedings in relation to anything done, or any right or liability incurred under the
repealed enactment if they wish. But no such stipulation has been made in Regulation 35
of the 2011 Takeover Regulations.
In enactments where a special saving clause has been included, the fact whether liabilities
incurred under the old act continue or not, or what is saved or not, is determined by the
11
12

OXFORD DICTIONARY OF ENGLISH (3d ed., 2010).

State of Punjab v Harnek Singh, (2002) 3 SCC 481, 16-18.

17

special provision and not general principles.13 If the legislature has used different words,
or has omitted certain words, the same cannot be read as emulating the principles of a
similar provision.14
Hence, the provisions of Regulation 23 of the 2011 Takeover Regulations relating to
withdrawal of open offer can be applied to an open offer made under the 1997 Takeover
Regulations.

II.

THE APPELLANT
FRAUD WERE

EXERCISED DUE DILIGENCE AND THE FACTS RELATING TO THE

NOT

KNOWN OR

COULD

NOT HAVE BEEN KNOWN EVEN IF THE

APPELLANT HAD EXERCISED DUE DILIGENCE.

Regulation 13 of the 1997 Takeover Regulations requires that the acquirer should appoint a
merchant banker who would submit a due diligence certificate to SEBI along with the Draft
Letter of Offer under the Regulation 24(2) of the said regulations. The lack of due diligence
should run from the facts of the case and there is no such hard and fast rule to prove it.
The argument is in two parts. [i] The Appellant did not fail to exercise due diligence before
making the open offer. [ii] The facts leading to the knowledge of the siphoning and
embezzlement of funds were not known or could not have been known even after the
exercise of due diligence by the Appellant.
i.

The Appellant did not fail to exercise due diligence before making the open offer.

The 1997 Takeover Regulations require the acquirer to appoint a merchant banker for aiding
in the process of an open offer15 who would submit a due diligence report to SEBI along with
the Draft Letter of Offer.16 The Appellant in the instant case is an acquirer as under the1997
Takeover Regulations17 because it intends to take control of the Target Company18 by
acquiring 50.1% shares of the Target Company19. The Appellant had complied with the

13

Id.
Harinarayan Bajaj v Union of India, 2008 (2) Bom CR 780, 93.
15
SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997.
16
Id., Regulation 24(2).
17
Id., Regulation 2(1)(b).
18
4, Proposition.
19
5, Proposition.
14

18

requirement and had appointed a merchant banker as the transactions on the behalf of the
Appellant were carried out by him.20
No set legal definition has been given by the courts of the process of due diligence.
However, in Imperial Corporate Finance and Services Pvt. Ltd. v SEBI,21 the SAT observed
that it can be safely said that lack of due diligence should run from the facts of each case and
ultimately there can be no hard and fast rule as to what constitutes lack of due diligence.
Further, the general rule when the question of exercise of due diligence arises, is that before
any person is found to have violated the concept of due diligence, there must be an enquiry
and the finding must be sustained by a higher degree of proof than that required in a civil
suit.22 In the present case, the Appellant had gone through the publicly available documents
on the financial position of the Target Company such as the balance sheet, and the profit and
loss account, as represented to them by the promoters of the Target Company.23 The
Respondent has merely claimed that the Appellant has not exercised due diligence, but has
not proved it with the high degree of proof that is required in these types of cases.
Hence, it is contended that the Appellant had exercised due diligence by going through the
documents that were made available by the Target Company and those that were in the
public domain, before making the open offer.
ii.

The facts leading to the knowledge of the siphoning and embezzlement of the funds
were not known or could not have been known even after the exercise of
proper due diligence by the Appellant. .

It is the responsibility of the Target Company that after an initial approach by the offeror, the
Board of Directors of the Target Company should provide the offeror with the commercial
and financial information for evaluation as to whether or not to go ahead with the offer.24 The
Target Company in the present case failed to provide the Appellant with such information.
The Appellant only had access to the published information as the Target Company is a listed
company. The Appellant was not provided with any unpublished information. Due to SEBI
([Prohibition of] Insider Trading) Regulations, 199225, according to which no insider shall
20

6, Proposition.
SAT
Appeal
No.
56/2003
(July
30,
2004),
http://www.sebi.gov.in/cms/sebi_data/pdffiles/12098_t.pdf, 21.
22
Id.
23
Query 2, Proposition Clarification.
24
DR. J.C. VERMA, CORPORATE MERGERS, AMALGAMATIONS & TAKEOVERS, 275 (2002).
25
SEBI ([PROHIBITION OF] INSIDER TRADING) REGULATIONS, 1992, Regulation 3.
21

19

available

at

communicate directly or indirectly any unpublished price sensitive information to any person
who while in possession of such unpublished price sensitive information deals with
securities, the Appellant had no access to the unpublished information which was known to
those who are part of the company. The insider information could not be communicated to
the Appellant by the working of the above rule. Hence the only resort available to the
Appellant was the inadequate information provided by the Target Company.
Section 292A of the Companies Act, 1956, as applicable then, provides for the Audit
Committee, which consists of members of which two-thirds are the directors of the
company.26 This committee has the power to investigate into any matter and will have full
access to information contained in the records of the company.27 The information regarding
the embezzlement and siphoning of the funds came out only after the special investigative
audit by the Board of Directors of the Target Company28 which had access to all the
information of the Target Company. Such an investigation is beyond the abilities of an
outsider. Hence, in light of the above rule it can be seen that the Appellant could not have had
access to information of the nature that could have been connected with the fraud by the
Promoters of the Target Company.
Hence the information that led to discovery of the facts relating to the fraud and
embezzlement of funds was not accessible to the Appellant and as a result of this those facts
were not known or could not have been known, even if the Appellant had exercised due
diligence.
Hence, the Appellant exercised due diligence and the facts relating to the fraud were not
known or could not have been known even if the Appellant had exercised due diligence.

III.

RESPONDENT HAS VIOLATED THE PRINCIPLES OF NATURAL JUSTICE WHILE PASSING

ITS ORDER REJECTING THE APPLICATION TO WITHDRAW THE OPEN OFFER WITHOUT
HEARING THE APPELLANT.

Adherence to the principles of natural justice is of supreme importance when any

administrative action involving civil consequences is in issue.29 The foremost principle of
26

COMPANIES ACT, 1956, 292A(1).

Id., 292A(7).
28
8, Proposition.
29
Canara Bank v V.K. Awasthy, (2005) 6 SCC 321, 10.
27

20

natural justice is the audi alteram partem principle which implies that no one should be
condemned unheard.30 It is submitted that personal hearing should have been granted in the
present case as serious prejudice has been caused to the Appellant.
The argument is in three parts. [i] The Respondent ought to have complied with the principles
of natural justice. [ii] Personal hearing is a necessary element of natural justice in such
proceedings. [iii] The Appellant has suffered prejudice due to the observations issued by
the Respondent.
i.

The Respondent ought to have complied with the principles of natural justice.

Where it appears that the authority has been given the power to determine questions affecting
the rights of citizens, the very nature of the power would inevitably impose the limitation that
the power should be exercised in conformity with the principles of natural justice.31
Unless a statutory provision excludes the application of the principles of natural justice, the
requirement of giving reasonable opportunity of being heard is to be read into the provisions
of the statute.32 This is particularly so when the order has adverse civil consequences, which
cover infraction of property, personal rights and material deprivations for the party affected.33
This principle holds good irrespective of whether the power conferred on a statutory body or
Tribunal is administrative or quasi-judicial.34 Hence, the Respondent, being a statutory body
constituted under the SEBI Act, 1992 needed to adhere to the principles of natural justice
while issuing its observations on the Draft Letter of Offer.
ii.

Personal hearing is a necessary element of natural justice in such proceedings.

Although the right of personal hearing under the principles of natural justice is not absolute in
nature, this Court has, on various occasions, favorably dealt with this issue. Where the
problem was technical and complex questions were raised, this Court remanded the matter to
the authority and directed it to give personal hearing to the company.35 Further, where the
stakes were heavy for the lessees, as they had made large financial investments, and a number
of grounds required ascertainment of factually complex matters, it was held that the authority

30

Maneka Gandhi v Union of India, (1978) 1 SCC 248, 14.

Shri Bhagwan v Ram Chand, AIR 1965 SC 1767, 5.
32
Sahara India v Commissioner of Income Tax, (2008) 14 SCC 151. 19.
33
Automotive Tyre Manufacturers Association v Designated Authority, (2011) 2 SCC 258, 80.
34
Id.
35
Travancore Rayons v Union of India, (1969) 3 SCC 868, 7.
31

21

should have afforded a personal hearing.36 In the present case, a letter seeking withdrawal of
the open offer was addressed to the Respondent subsequent to the extra-ordinary situation of
discovery of fraud and sharp decline in the prices of shares of the Target Company37 which
was a complex matter requiring personal hearing.
This Court has acknowledged that an objective consideration is possible only if the party
affected is heard and given a chance to satisfy the authority regarding final orders that may be
passed against the party and a personal hearing should be given.38 Thus, the Respondent
failed to adhere to the principles of natural justice by not granting a personal hearing which
would have effectively addressed the issues regarding the withdrawal of the open offer.
iii.

The Appellant has suffered prejudice due to the observations issued by the
Respondent.

As stated, when the order has adverse civil consequences, a reasonable opportunity of being
heard needs to be given.39 In the present case, the Appellant has suffered because there was
an inordinate delay by the Respondent in taking action. Under Regulation 18 of the 1997
Takeover Regulations, the Respondents observations was to be issued within 21 days.
However, they were not issued for more than twelve months.40 This materially impacted the
interests of the Appellant as during this period the report of the irregularity in the financials
of the Target Company led to the sharp decline in the prices of shares of the Target
Company.41
Though certain correspondences were exchanged between the Appellant and Respondent
after the Draft Letter of Offer was filed with the Respondent,42 contrary to the observations of
SAT,43 no discussion was made on the Appellants letter dated October 30, 2011 that brought
forth the material change in circumstances and sought to withdraw the open offer.
In its observations issued on the Draft Letter of Offer, the Respondent made no
observations regarding the falling price or the embezzlement of funds and merely stated that

36

State of Uttar Pradesh v Maharaja Dharmander Prasad Singh, (1989) 2 SCC 505, 64.
10, Proposition.
38
Ram Chander v Union of India, (1986) 3 SCC 103, 25.
39
Automotive Tyre Manufacturers Association v Designated Authority, (2011) 2 SCC 258, 80.
40
6, 11, Proposition.
41
7-9, Proposition.
42
11, Proposition.
43
15(e), Proposition.
37

22

the request for withdrawal of the open offer was not being considered favourably.44 Further it
was silent on the alternative request for re-pricing of the open offer price and merely stated
that the offer once made cannot be withdrawn.45 Hence, issues that were material to the
request seeking withdrawal were not properly considered by the Respondent.
In Nirma Industries Ltd. v SEBI,46 the acquirer had sought to withdraw the open offer
subsequent to the fall in prices of the shares of the target company. Similar to the present
case, the fall in price of the shares was due to the public dissemination of the information of
embezzlement of funds. On rejection of the withdrawal request, it was contended by the
acquirer that a personal hearing should have been granted. However, it was observed by this
Court that it was only upon consideration of the entire matter that the request for withdrawal
was rejected. As previously shown, such is not the case in present matter.
Hence, the Respondent has violated the principles of natural justice while passing its order
rejecting the application to withdraw the open offer without hearing the Appellant.

IV.

IN

ANY CASE, THE WORDS

BOARD

SUCH

CIRCUMSTANCES AS IN THE OPINION OF THE

MERIT WITHDRAWAL APPEARING IN

TAKEOVER REGULATIONS

REGULATION 27(1)(D)

OF THE

1997

SHOULD NOT BE READ EJUSDEM GENERIS WITH THE

PRECEDING CLAUSES OF REGULATION 27(1).

Regulation 27(1) of the 1997 Takeover Regulations lays down the circumstances where a
public offer may be withdrawn by an acquirer. Clause (a), omitted by the SEBI (Substantial
Acquisition of Shares and Takeovers) (Amendment) Regulations, 2002, allowed withdrawal
in the event of a competitive bid. Clause (b) allows withdrawal when the requisite statutory
approvals have been denied; clause (c) allows withdrawal upon the death of the sole acquirer;
and clause (d) allows withdrawal in such circumstances as in the opinion of the Board merit
withdrawal. The Appellant humbly submits that the words such circumstances as in the
opinion of the Board merit withdrawal should not be read ejusdem generis with clauses (b)
and (c) of Regulation 27(1).

44

11, Proposition.
11, Proposition.
46
(2013) 8 SCC 20, 38.
45

23

The argument is in three parts. [i] Regulation 27(1)(d) should be given a contextual
interpretation. [ii] The tests for the application of the rule of ejusdem generis are not fulfilled.
[iii] Regulation 27(1)(d) would be rendered otiose if restrictively interpreted.
i.

Regulation 27(1)(d) should be given a contextual interpretation.

Contextual reading is a well-known proposition of interpretation of statutes. The provisions

of a statute should be construed with reference to the context vis--vis the other provisions so
as to make a consistent enactment of the whole statute relating to the subject-matter.47
The interpretation function of the Court is to discover the true legislative intent.48 If the words
used are capable of more than one construction, it would be open to the courts to adopt a
construction on the ground that such construction is more consistent with the alleged object
and policy of the Act.49 The Court must look at the statute as a whole, while keeping in mind
the preamble of the statute, other provisions thereof, pari materia statutes, if any, and the
mischief intended to be remedied, while interpreting a provision.50
Regulation 27(1) (d) can be interpreted both with and without taking the aid of the rule of
ejusdem generis. Hence, it should be contextually interpreted, while taking aid of other
canons of construction to determine which alternative is to be adopted.
ii.

The tests for the application of the principle of ejusdem generis are not fulfilled.

The rule of ejusdem generis applies when the following conditions are cumulatively
fulfilled51(i) the enactment should contain an enumeration of specific words;
(ii) the subjects of enumeration should constitute a class or category;
(iii) that class or category should not be exhausted by the enumeration;
(iv) the general terms should follow the enumeration;
(v) there should be no indication of a different legislative intent.

47

Balram Kumawat v Union of India, (2003) SCC 7 628, 20.

Nathi Devi v Radha Devi Gupta, (2005) 2 SCC 271, 13.
49
Id.
50
Union of India v Alok Kumar, (2010) 5 SCC 349, 61.
51
Amar Chandra v Collector of Excise, Tripura, (1972) 2 SCC 472, 9.
48

24

In the present case, the rule of ejusdem generis is not satisfied as (a) the indications of a
different legislative intent make the rule inapplicable and (b) clauses (b) and (c) of
Regulation 27(1) do not constitute a distinct genus.
a. The indications of a different legislative intent make the rule inapplicable.
In case of a different legislative intent, the rule of ejusdem generis cannot be applied.52 The
legislative intent and object is to be deduced from the language employed by the
Legislature.53 Reliance may also be placed upon external aids like the historical background
of the enactment to discover the real intent of the legislature,54 especially to resolve
ambiguities.55
A contextual reading of Regulation 27(1) (d) reveals that a restrictive interpretation would be
contrary to the legislative intent apparent in the 1997 Takeover Regulations.
b. A restrictive interpretation would curtail the wide powers given to SEBI to
regulate the securities market.
Section 11 of the SEBI Act, 1992 provides that, it shall be the duty of the Board to protect the
interests of investors in securities and to promote the development of, and to regulate the
securities market, by such measures as it thinks fit.
Under Section 11 of the SEBI Act, 1992, the SEBI has been granted extensive powers,
including the power to restrain any person from accessing the securities market from buying,
selling or dealing in securities, to impound and retain the proceeds or securities in respect of
any transaction which is under investigation and to attach after passing of an order on an
application made for approval for a period not exceeding one month, one or more bank
account(s) of any intermediary or any person associated with the securities market in any
manner involved in violation of any of the provisions of the SEBI Act, 1992 or the
rules/regulations framed thereunder.
The ejusdem generis interpretation of Regulation 27(1)(d) would result in restricting the wide
powers granted to SEBI under the SEBI Act, 1992, by confining the discretion vested in them
to determine the situations where the withdrawal of an offer may be allowed.
52

Id.
Indian Dental Association, Kerala v Union of India, 2004 (1) Kar LJ 282.
54
Udayan Chinubhai v R.C. Bali, (1977) 4 SCC 309, 29.
55
Union of India v S.H. Seth, (1977) 4 SCC 193, 79, 83.
53

25

c. Placing a narrow interpretation upon Regulation 27(1)(d) would be

contrary to the scheme of the 1997 Takeover Regulations.
It is known that an acquirer who has withdrawn an open offer shall not be permitted to make
an open offer for a period of six months from the date of withdrawal of the offer.56 The scope
of Regulation 27(1) was clearly not sought to be restricted to a situation of impossibility, as
the same cannot vanish in six months. Thus, the provision is a protection against other
scenarios where withdrawal of an offer is allowed.
Further, in Luxottica Group SpA v Rayban Holding Inc.57 the SAT had allowed the
withdrawal of open offers when the triggering agreement itself was rescinded, recognising
the absurdity that would arise if this was not permitted. The circumstances did not constitute
an impossibility and the SAT had observed that Regulation 27(1)(d) grants an enabling
discretionary power on the Board.
Hence, placing a narrow interpretation upon Regulation 27(1)(d) would lead to absurd results
that would cause injustice to acquirers.
d. Ejusdem generis interpretation cannot be placed upon Regulation 27(1)(d)
to defeat the objective and purpose of the 1997 Takeover Regulations and
the SEBI Act, 1992.
The interpretation placed upon a provision should not be repugnant to the context and should
aid in achieving the purpose behind the enactment.58 The doctrine of ejusdem generis can
thus not be applied to defeat the dominant statutory purpose.59
As per Section 11 of the SEBI Act, 1992 the SEBI is mandated to protect the interests of
investors in securities, and to promote the development of, and regulate, the securities market
by such measures as it thinks fit. Regulating substantial acquisition of shares and takeover of
companies is one of the specific measures SEBI is empowered to take for this purpose.60

56

SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997, Regulation 22(14).
Luxottica Group SpA v Rayban Holding Inc., SAT Appeal No. 61 of 2002 (August 29, 2003), available at,
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1299752868012.pdf, 14.
58
K.V. Muthu v Angamuthu Ammal, (1997) 2 SCC 53, 11.
59
Maharashtra University of Health Sciences v Satchikitsa Prasarak Mandal, (2010) 3 SCC 876, 38.
60
SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992, 11(2)(h).
57

26

The Justice P.N. Bhagwati Committee was set up in 1995 to review the 1994 Regulations,
and the 1997 Takeover Regulations were passed subsequent to their report.61 The Justice P.N.
Bhagwati Committee recognised that the process of takeovers is complex and it would be
unviable to devise regulations to cover the entire range of situations that could arise. A set of
General Principles was instead laid down which would guide the interpretation and operation
of the Regulations.62 Primary among them are Equality of treatment and opportunity to all
the shareholders and Protection of interests of shareholders. The 1997 Takeover
Regulations also had certain objectives like protecting the interests of the investors in
securities and balancing the various, and conflicting, interests of various stakeholders in the
context of substantial acquisition of shares in listed companies.63
The 1997 Takeover Regulations are a piece of beneficial legislation directed to protect the
interests of shareholders in the context of substantial acquisition of shares and takeovers.64
Therefore, the interpretation of the provisions of the Regulations and scrutiny of SEBIs
action as the enforcement authority of the Regulations should be by taking into consideration
the objective of the Regulation as well as the general principles formulated by the
committee.65
Acquirers of a company too are investors in the securities market and the SEBI has to protect
their interests in the securities market and to strike a balance between the various
stakeholders, while ensuring equality of treatment to all. Restricting the scope of Regulation
27(1)(d) would cause prejudice to the interests of the acquirers, like in the present case where
passing the burden to an acquirer, the victim of the same fraud, is against the objective of
equitably protecting their interests, striking a balance between the interests of the various
stakeholders and ensuring equality of treatment.

61

Dr. Vijay Mallya v The Chairman, SEBI, SAT Appeal No. 15 of 2002 (August 3, 2002), available at
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1299753151503.pdf.
62
Justice P.N. Bhagwati Committee Report on Takeovers, 1.2 (1997), available at
http://www.sebi.gov.in/commreport/bagawati-report.html.
63
Report of the Takeover Regulations Advisory Committee Under the Chairmanship of Mr. C. Achuthan,
(2010), available at http://www.sebi.gov.in/cms/sebi_data/attachdocs/1287826537018.pdf.
64
Dr. Vijay Mallya v The Chairman, SEBI, SAT Appeal No. 15 of 2002 (August 3, 2002), available at
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1299753151503.pdf.
65
Dr. Vijay Mallya v The Chairman, SEBI, SAT Appeal No. 15 of 2002 (August 3, 2002), available at
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1299753151503.pdf.

27

e. Clauses (b) and (c) of Regulation 27(1) do not constitute a distinct genus.
For the ejusdem generis principle to apply, the specified things must possess some common
and dominant feature,66 and the collection of items should not be heterogeneous.67
Clauses (b) and (c) of Regulation 27(1) provide for specific circumstances but do not fall in
the genus of impossibility. The Oxford Dictionary of English defines impossible as not
being able to occur, exist, or be done.68 The death of an acquirer or the non-granting of
statutory approvals cannot be categorised as impossible in this sense. In the event of the death
of an acquirer, the legal heirs, if any can continue with the offer. Similarly, statutory
approvals, even though not granted at one stage, may be granted later on, depending upon the
circumstances. The two situations cannot be said to possess the dominant characteristic of
impossibility to the extent that it can be described as a proper class.
iii.

Regulation 27(1)(d) would be rendered otiose if restrictively interpreted.

The purpose of the doctrine of ejusdem generis is to reconcile any incompatibility between
specific and general words so that all words in a Statute can be given effect and no word
becomes superfluous.69
It is also one of the cardinal canons of construction that no enactment can be interpreted in
such a way as to render a part of it otiose.70 Effort should be made to give effect to each and
every word used by the Legislature. The courts always presume that the Legislature inserted
every part of an enactment for a purpose and the legislative intention is that every part of the
statute should have effect.71
If the doctrine of ejusdem generis is applied to Regulation 27(1)(d), the discretion conferred
on the SEBI would be rendered superfluous as withdrawal of an offer will not be allowed in
such circumstances which in the opinion of the Board merit withdrawal, but only in those
circumstances where it becomes impossible to continue with the offer. The inclusion of
Regulation 27(1)(d) will thus become redundant.

66

Siddeshwari Cotton Mills Pvt. Ltd. v Union of India, (1989) 2 SCC 458, 16.
Russel v Scott, 1948 2 AII ER 1 (HL).
68
OXFORD DICTIONARY OF ENGLISH (3d ed., 2010).
69
2A NORMAN J. SINGER & J.D. SHAMBLE SINGER, STATUTES AND STATUTORY CONSTRUCTION (5th ed., 2008),
cited in Maharashtra University of Health Sciences v Satchikitsa Prasarak Mandal, (2010) 3 SCC 876, 33.
70
Maharashtra University of Health Sciences v Satchikitsa Prasarak Mandal, (2010) 3 SCC 876, 34.
71
Nathi Devi v Radha Devi Gupta, (2005) 2 SCC 271, 14.
67

28

Hence, in any case, the words such circumstances as in the opinion of the Board merit
withdrawal appearing in Regulation 27(1)(D) of the 1997 Takeover Regulations should not
be read ejusdem generis with the preceding clauses of Regulation 27(1).

29

PRAYER
Wherefore in light of the facts stated, issues raised, arguments advanced and authorities cited,
it is most humbly and respectfully prayed before this Honourable Court that it may be pleased
to:

Hold that the provisions of Regulation 23 of the 2011 Takeover Regulations can be
applied to an open offer made under the 1997 Takeover Regulations.

Hold that the Appellant has exercised due diligence.

Hold that the Respondent has violated the principles of natural justice by passing its
order without hearing the Appellant.

Hold that Regulation 27(1)(d) of the 1997 Takeover Regulations should be read
ejusdem generis with Regulations 27(1)(b) and 27(1)(c) of the 1997 Takeover
Regulations.

Quash and set aside the order of the SAT.

Grant any other order which the Honourable Court may deem fit in the eyes of equity,
justice and good conscience.

Date: September 11, 2016

Place: New Delhi

30

Counsel for the Appellant

121A