w w w . L a w y e r S e r v i c e s . i n



IFB Agro Industries Ltd. & Others v/s SICGIL India Ltd. & Others


Company & Directors' Information:- IFB INDUSTRIES LTD [Active] CIN = L51109WB1974PLC029637

Company & Directors' Information:- SICGIL INDIA LIMITED [Active] CIN = U24111TN1947PLC002534

Company & Directors' Information:- IFB AGRO INDUSTRIES LTD. [Active] CIN = L01409WB1982PLC034590

Company & Directors' Information:- R K B AGRO INDUSTRIES LIMITED [Active] CIN = L17100KA1979PLC003492

Company & Directors' Information:- J R AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15342UP1982PTC005792

Company & Directors' Information:- B M AGRO INDUSTRIES LIMITED [Active] CIN = U74899DL1992PLC049988

Company & Directors' Information:- R S AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15319DL1998PTC097025

Company & Directors' Information:- S N T AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U01122DL1997PTC086925

Company & Directors' Information:- D D AGRO INDUSTRIES LIMITED [Active] CIN = U24219PB1999PLC022487

Company & Directors' Information:- S S D AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15100MH1998PTC113744

Company & Directors' Information:- S. A. B. INDIA AGRO INDUSTRIES LIMITED [Active] CIN = U01403UP2009PLC038365

Company & Directors' Information:- U K AGRO INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U15114UP2003PTC028107

Company & Directors' Information:- R. K. AGRO INDUSTRIES PRIVATE LIMITED [Under Process of Striking Off] CIN = U15410WB2012PTC180269

Company & Directors' Information:- R J AGRO INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U15311KA2005PTC035485

Company & Directors' Information:- S O I AGRO INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U15310GJ2010PTC059966

Company & Directors' Information:- THE INDIA COMPANY PRIVATE LIMITED [Active] CIN = U74999TN1919PTC000911

Company & Directors' Information:- S I P AGRO INDUSTRIES LIMITED [Strike Off] CIN = U01403WB2012PLC188362

Company & Directors' Information:- S. S. AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15490PN2013PTC146574

Company & Directors' Information:- J J AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15130MH1980PTC023302

Company & Directors' Information:- A R AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U74899DL1992PTC050526

Company & Directors' Information:- G S AGRO INDUSTRIES PVT LTD [Active] CIN = U01132WB1990PTC049960

Company & Directors' Information:- D V AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U74899DL1993PTC051892

Company & Directors' Information:- P AND G AGRO INDUSTRIES P LTD [Strike Off] CIN = U99999UP1985PTC007509

Company & Directors' Information:- R. K. G. S. AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15100UP2017PTC097391

Company & Directors' Information:- INDIA CORPORATION PRIVATE LIMITED [Active] CIN = U65990MH1941PTC003461

Company & Directors' Information:- V G AGRO INDUSTRIES LIMITED [Strike Off] CIN = U01400DL1993PLC051666

Company & Directors' Information:- T S AGRO INDUSTRIES PVT LTD [Strike Off] CIN = U15209UP1987PTC008974

Company & Directors' Information:- B AND P AGRO INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U01110MH1972PTC015574

Company & Directors' Information:- P V R K AGRO INDUSTRIES PVT LTD [Strike Off] CIN = U01119AP1988PTC008395

Company & Directors' Information:- K R P AGRO INDUSTRIES PVT LTD [Active] CIN = U01110MH1991PTC062304

    Company Petition No. 550 of 2004

    Decided On, 05 July 2017

    At, National Company Law Tribunal, Kolkata

    By, THE HONOURABLE MR. VIJAI PRATAP SINGH
    By, JUDICIAL MEMBER

    For the Petitioners: Ratnanko Banerji, Senior Advocate with Anirudh Roy, Sarathi Das-gupta, Jayanta Sengupta, Rook Ray, Nikita Jhunjhunwala, Advocates. For the Respondents: Jishnu Saha, Senior Advocate with Bodhisatta Biswas, Prapa Ganguly, Advocates.



Judgment Text

1. The present company petition being C. P. No. 550 of 2004 was filed by the petitioner on July 19, 2004 before the then Company Law Board, by invoking the provision contained in Section 111A of the Companies Act, 1956, seeking some main and interim reliefs as prayed in point No. VII and VIII in the main company petition on the main ground that the alleged illegal acquisition of the shares of the petitioner-company, in violation of the regulation 13 of the SEBI (Prohibition of Insider Trading) Regulations, 1992. The brief facts leading to filing of this petition are as follows.

2. IFB Agro Industries Ltd., the petitioner herein, was incorporated on February 19, 1982 under the provisions of the Companies Act, 1956. The registered office of the petitioner-company is situated at Plot No. IND-5, Sector I, East Calcutta Township, Kolkata-700 107, within the jurisdiction of this hon'ble Bench. The authorised capital of the petitioner-company is Rs. 12 crores. The issued subscribed and paid-up capital of the petitioner-company is Rs. 7,70,71,110 made up of 77,07,111 equity shares of Rs. 10 each fully paid-up. The present business of the petitioner-company is the manufacture and sale of rectified spirit, country liquor, IMFL, marine products, carbon dioxide gas.

3. The petitioner-company is a listed company and its shares being quoted on the Mumbai, Kolkata, Delhi and National Stock Exchanges. Respondent No. 1, SICGIL India Ltd., a company incorporated under the provisions of the Companies Act, 1956 and having its registered office at, Dhun Building, 84 (Old No. 827), Annasalai, Chennai-600 002. Respondent No. 2 is the managing director of respondent No. 1 and is the principal person in control of the management and affairs of respondent No. 1-company. Respondents Nos. 3 to 6 are relatives of respondent No. 2 within the meaning of Section 6 of the Companies Act, 1956. Respondent No. 3 is the wife of respondent No. 2 and respondents Nos. 4 to 6 are inter-related to respondents Nos. 2 and 3. Respondent No. 1-company is a manufacturing company engaged in the manufacturing of carbon dioxide and dry ice. The respondents whether jointly or individually have now purported to acquire, in all, a total number of 6,33,682 shares of the petitioner-company being approximately 8.22 per cent, of the paid-up capital of the petitioner-company as at July 9, 2004.

4. The Learned counsel for the petitioner submitted that the managing director or respondent No. 1-company being respondent No. 2 visited the office of the petitioner-company in the first week of August, 2003 with a business proposal for marketing the carbon dioxide being manufactured by the petitioner-company and for being associated in the dry ice business carried on by Nurpur Gases P. Ltd., with which the petitioner-company had close business relationship. The proposal was discussed, where after it was decided by the petitioner-company not to have any business tie up with respondent No. 1-company.

5. The Learned counsel for the petitioner submitted that ever since August, 2003 the respondents have been systematically acquiring shares of the petitioner-company in the open market in a bid to pressurise the petitioner-company into accepting the business proposal of respondent No. 1-company for marketing carbon dioxide and for giving an alliance in the dry ice business of Nurpur Gases P. Ltd. It is also submitted that the respondents are all undesirable persons as shareholders in the petitioner-company, and they have a personal business interest directly against the interest of the petitioner-company.

6. It is further submitted that the acts and conduct of the respondents in purporting to acquire such shares without making mandatory disclosures under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 are in breach of the said Regulations (as amended) and, as such, the respondents are not entitled to exercise any rights in respect of the shares acquired by the respondents which are in violation of the said Regulations of 1992.

7. On January 22, 2004 the petitioner received a letter from respondent No. 1-company allegedly being intimation under regulation 7(1) of the SEBI (Substantial Acquisition Of Shares and Takeovers) Regulations, 1997, notifying that it had acquired 600 shares taking the total shareholding of the respondents beyond 5 per cent, of equity share capital of the petitioner-company and as a result the respondents became entitled to a further 0.008 per cent, of the voting rights in the petitioner-company and the combined shareholding strength and/or voting rights of respondent No.-l company, as at the date of issuance of the said letter stood at 5.003 per cent. Following the receipt of the said letter of January 16, 2004 the petitioner-company cause enquiries to be made and discovered that the shareholding strength and/or voting rights of the respondents in the petitioner-company as on January 16, 2004 was 4.988 per cent. It is further submitted that the respondents were acting in concert and/or as a combined entity, the petitioner-company, in the usual course, cause the quantum of shareholding jointly held by the respondents to be monitored on a regular basis thereafter and come to learn that the shareholding of respondent No. 1 and/or the respondents in the petitioner-company has been gradually increasing after January 20, 2004. It was only on or about June 4, 2004 that the petitioner-company came to learn that respondent No. 1 himself had purported to increase its own shareholding and/or voting strength in the petitioner-company from 3.131 per cent, of the paid-up capital as at January 16, 2004 to over 5 per cent, of the paid-up capital of the petitioner-company. The petitioner submitted that the no mandatory disclosure in compliance with the provisions of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, as amended by the Amendment Regulations, 2002 for the said increase, had been made by respondent No. 1 who was obviously functioning as a combined unit in the matter of acquiring shares of and in the petitioner-company.

8. It is further submitted by the petitioner that the said Prohibition of Insider Trading Regulations require a specific notice under the said Regulations to be issued by any person upon such person's shareholding in a listed company exceeding 5 per cent.

9. On May 21, 2004 the list of beneficiaries/beneficial owners (hereinafter referred to as "BENPOS") reported by depositories to the petitioner-company indicated that the respondents had acquired further 2 per cent, equity shares of the petitioner-company which was in violation of regulation 13(1) and (3) and under Chapter IV of the SEBI (Prohibition of Insider Trading) Regulations, 1992 (hereinafter referred to as the said "Insider Regulations").

10. The petitioner further submitted that the respondents were required to make the continual disclosure under Chapter IV of the Prohibition of Insider Trading Regulations which the respondents have failed neglected and omitted to do. It is also submitted that the respondents were required to issue intimation to the petitioner-company within four days of the respondents crossing the stipulated threshold. Notwithstanding passage of more than four days from the time the respondents combined shareholding and voting strength in the petitioner-company stood increased by more than 2 per cent, over the existing 5 per cent, and notwithstanding the provisions of regulation 13(1) of the Prohibition of Insider Trading Regulations having become operative in respect of the respondents increased shareholding strength and voting rights in the company, the respondents have failed, refused and neglected to comply with the mandatory provisions of the said Prohibition of Insider Trading Regulations.

11. Learned counsel for the petitioner alleged that the motive of the respondents is to pressurize the petitioner-company and its promoters into entering into a marketing and distribution agreement to the detriment of the petitioner-company and its shareholders and to thwart competition in the carbon dioxide market.

12. Thereafter, on June 4, 2004 the BENPOS further indicated that respondent No. 1-company had individually acquired holding more than 5 per cent, of the equity shares in the petitioner-company. This was also in violation of both the Takeover Regulations and Insider Trading Regulations. On July 9, 2004, the respondents held approximately 8.22 per cent, equity shares of the petitioner-company.

13. In view of the above, on July 19, 2004 the petitioner-company filed the company petition under Section 111A of the Companies Act, 1956, before the then Company Law Board, Kolkata Bench praying, inter alia, for the following reliefs :

(a) Declaration that such acquisition of shares by respondents Nos. 1 to 6 as illegal, null and void and of no effect;

(b) Necessary direction be given for rectification of the register of records by deleting the names of respondents Nos. 1 to 6;

(c) Permanent injunction restraining the respondents from exercising any rights or receiving any benefits in respect of shares held by the respondents in the petitioner-company in any manner whatsoever.

14. As per the BENPOS dated August 13, 2004 respondent No. 1 was holding 6.38 per cent, equity shares of the petitioner-company. Upon intimation to the respondents about the petition filed by the petitioner-company, respondent No. 1-company brought down its shareholding in the petitioner-company to 4.91 per cent. Such purported reduction in holding was engineered by transfer of shares to other respondents who are the family members of respondent No. 2 therefore, the said transaction was a sham transaction and done solely for the purposes of circumventing the laws.

15. On August 23, 2004 the petitioner received a letter from respondent No. 1-company allegedly being intimation under regulation 7(1) of the Takeover Regulations notifying that they had acquired 16,484 shares after which the total shareholding of the respondent exceeded 10 per cent, of equity share capital of the petitioner-company. However, the declaration was incomplete and not in accordance with regulation 7(1) of the Takeover Regulations.

16. After hearing both the parties, on August 27, 2004 the then Company Law Board, Kolkata Bench was pleased, inter alia, to pass an interim order, freezing the voting rights of respondent No. 1-company in respect of the shares which were in excess of 5 per cent, (on the basis of statement of holding as on July 9, 2004, i.e., 0.933 per cent.).

17. The Learned counsel for the petitioner further submitted that as the petitioner-company brought on record the repeated violations which were made by respondent No. 1-company from time to time and leave was granted by the then Company Law Board to file supplementary affidavits to bring on record the subsequent acts of violation to which the respondents duly replied.

18. On June 19, 2006 the petitioner filed the supplementary affidavit stating inter alia, therein the respondents as "persons acting in concert" continued to acquire further shares from the market to take their holding to 10 per cent., 11 per cent, and 13 per cent, in September, 2004, March, 2005 and January, 2006 respectively in the petitioner-company without making any or adequate declarations or furnish any or adequate intimation or particulars of acquisition to the petition. By supplementary affidavit dated February 28, 2013 the petitioner bring on record the mala fide intentions of respondent No. 1 acquiring further shares of the petitioner-company and its repetitive violations under the Takeover Regulations, 1997 and 2011 and the Insider Trading Regulations, 1992.

19. Again on April 9, 2015 the petitioner filed the supplementary affidavit submitting therein the continued violations of regulation 13(1), (3) and (6) of the Insider Trading Regulations as well as regulation 7 of the Takeover Regulations, 1997 and 2011. The petitioner also brought the following facts on record that:

(a) The respondents had taken advantage of the pending matter and without paying heed to the order continued to acquire shares of the petitioner-company and taking their holding to 15.020 per cent.

(b) The disclosures does not specify the individual shareholding and neither states the facts that 0.933 per cent, of the shareholding stood frozen vide the order of the learned Company Law Board dated August 27, 2004.

(c) The respondents had completely suppressed the fact that Pure Industrial Gases P. Ltd. (PIGPL) which is the family company of respondents Nos. 2 to 6 was holding 16,200 equity shares constituting 0.20 per cent, of the shareholding in the petitioner-company which is evident from the shareholding pattern of PIGPL as on November 1, 2014. The combined holding of the respondents along with PIGPL had triggered the open offer on July 17, 2009 which was also in violation Of regulation 10 of the Takeover Regulations.

(d) The petitioner did not intimate to the petitioner-company about acquisition of shares in the petitioner-company as required under relevant laws.

(e) None of the disclosures of shareholding by the respondents record the frozen shares as was directed by the learned Company Law Board.

20. In reply, learned counsel for the first respondent submitted that there is no cause of action whatsoever as against respondents Nos. 2 to 6 as there has been no violation whatsoever of the provisions of the Insider Trading Regulations. In so far as respondent No. 1 is concerned, respondent No. 1 exceeded 5 per cent, of the paid-up capital of the petitioner-company on June 2, 2004. However, the respondents submit that at no point of time there was any intention on the part of the respondents to violate any provisions of the law. In fact, respondent No. 1 had made the necessary disclosure of regulation 7 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (Takeover Code) within the statutory time period at the time the combined shareholding of the respondents exceeded 5 per cent, and 10 per cent, vide their letters dated January 20, 2004 and August 20, 2004 respectively, copy of which are annexed to the reply of the company petition as annexures R3 and R4. However, respondent No. 1 inadvertently failed to note that upon its individual shareholding exceeding 5 per cent, of the total paid-up share capital of the petitioner-company, regulation 13 of the Insider Trading Regulations contemplates disclosure of interest by respondent No. 1 within four working days of the acquisition of the shares. The alleged non-compliance of the above provision is inadvertent and a bona fide mistake and respondent No. 1 had no intention on whatsoever to violate the provisions of any law much less the Insider Trading Regulations. Respondent No. 1 subsequently ascertained that their shareholding exceeded the limit of 5 per cent, and that the disclosure required under regulation 13(1) of the SEBI (Prohibition of Insider Trading) Regulations, 1992, has not been made within the time prescribed by the Regulations. Immediately thereafter, respondent No. 1 has taken immediate steps to remedy such non-compliance by making the necessary disclosure to the petitioner-company and a copy whereof has been forwarded to the SEBI by means of letter dated August 24, 2004.

21. It is further submitted that respondent No. 1-company immediately made the necessary disclosures vide letter dated August 16, 2004 and the said letter is annexed hereto and marked as annexure R5. In addition to the above respondent No. 1 also reduced its shareholding to below 5 per cent, and its current shareholding in the petitioner-company as on date is 4.906 per cent. Furthermore, respondent No. 1 has also forwarded a copy of the disclosure made to the petitioner-company under regulation 13(1) to the SEBI vide its letter dated August 24, 2004 and attached to the reply and marked as annexure as R6.

22. It is further submitted that the petitioner-company cannot seek to prevent the respondents from exercising any rights or receiving any benefit in respect of shares held by the respondents in the petitioner-company in any manner. Respondent No. 1 further stated that the mala fide intentions of the present management of the petitioner-company is further borne out by the fact that they have deliberately been attempting to deny the respondents of their legitimate rights as shareholder to participate in the meetings of the company and vote on resolutions there.

23. The Learned counsel denied that the present petition has been filed within the period of limitation. The present petition has been filed beyond a period of two months as prescribed under section 111A(3) under the Companies Act, 1956. Respondent No. 1-company's shareholding exceeded 5 per cent, of the total paid-up capital of the petitioner-company on June 2, 2004 and the present petition has been filed beyond a period of two months from the said date and it is, therefore, clearly barred by limitation.

24. The respondents also filed the counter to the supplementary affidavits denying and disputing the facts save and except which are matters of record and more or less strict to the following two points :

(i) Whether the expression person in regulation 13 of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 can be given the more expansive meaning "persons acting in concert" which the petitioner is seeking to give it.

(ii) The petition in the present case has been filed after the two months limitation period provided in Section 111A of the Companies Act, 1956.

25. In the written submissions, the respondents contended that in this context, it is relevant to note that the expression "persons acting in concert" used in regulation 7 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, finds no mention in the Insider Trading Regulations. As the use of the different expression "person" and "persons acting in concert" in the Insider Trading Regulations and the Takeover Regulations must be taken to be conscious, the question is whether there is really any scope for interpreting "person" under the Insider Trading Regulations as "persons acting in concert". The respondents submit that no such mandatory disclosures under the Insider Trading Regulations are required to be made for any collective holding since there is no such provision under the Insider Trading Regulations. The disclosure to be made under regulation 13 of Insider Trading Regulations contemplates "person", which would mean a single entity.

26. The respondents further submitted that the concept of "persons acting in concert" finds mention in the Takeover Regulations. Under such regulations, disclosures have been made by the respondents of their collective shareholding in the petitioner-company, as mandated under the said Takeover Regulations. The disclosures have been duly made in full compliance with the Regulations by the respondents. The same have been annexed to the pleadings filed by the respondents at all points of time.

27. It is further submitted that respondents Nos. 2 to 6 have never exceeded the limit of shareholding under the Insider Trading Regulations and therefore, no mandatory disclosures were required to be made by them. In support of the submission learned counsel for the respondents relied on the two judgments of the hon'ble Supreme Court cases Union of India v. Shiv Dayal Soin and Sons P. Ltd.. AIR 2003 SC 1877 and Anand Nivas P. Ltd. v. Anandji Kalyanji's Pedhi, AIR 1965 SC 414.

28. In view of the above facts, learned counsel for the respondents prayed that the company petition be dismissed.

29. On the basis of the pleadings of the parties following question arises for the decision of the case :

(1) Whether the acquisition of shares by the respondents without complying with the statutory provisions of disclosure norms under the SEBI Regulations is valid ?

30. According to the petitioner's contention, EFB Agro Ltd., had received intimation under regulation 7(1) of the SAST Regulations from SICGIL along with F. L. Dadabhoy and relatives, about acquiring of 600 shares on January 19, 2004 leading to holding of more than 5 per cent, equity share capital of the petitioner-company. Although the petitioner went on to contend that the declaration so made by the respondents was not as per the prescribed format and was incomplete under regulation 7(1), the petitioner additionally also pointed out that there were no disclosures made under regulation 7(2) of the SAST Regulations, 1997 either. Additionally, the petitioner contended that the respondents failed to make any declarations under regulation 13(1) of the Insider Trading Regulations. The aforementioned contentions of the petitioner have not been denied by the respondents either. The respondents contended that respondent No. 1 had made the necessary disclosure under regulation 7 of the SEBI (SAST) Regulations, 1997, within the statutory time period at the time the combined shareholding of the respondents exceeded 5 per cent, and 10 per cent., vide their letters dated January 20, 2004 and August 20, 2004. The respondents have also contended that respondent No. 1 had inadvertently failed to note that upon its individual shareholding exceeding 5 per cent, of the total paid-up share capital of the company, regulation 13 of the Insider Trading Regulations contemplates disclosure of interest by the first respondents within four working days of the acquisition of the shares. Therefore, according to the respondent's contention respondent No. 1 had taken immediate steps to remedy such non-compliance by making the necessary disclosures to the company and had forwarded a copy to the SEBI by means of a letter dated August 24, 2004. The respondents further contended that respondents Nos. 2 to 6 had at no point of time reached 5 per cent, of the shareholding of respondent No. 1 and were not in default of non-compliance with the provisions of the Insider Trading Regulations. Moreover, the respondents have contended that respondent No. 1 has since brought down its shareholding to less than 5 per cent, and therefore the cause of action of the petitioner for in the nature of declaration and for rectification of register did not arise any further, which therefore leads to the conclusion that the question of granting an injunction restraining the respondents from exercising any benefits in respect of such of those shares acquired in violation of the Insider Trading Regulations has become infructuous as respondent No. 1 does not hold any share in violation of the Insider Trading Regulations.

31. The respondents have further contended that the promoters of the petitioner-company did not wish any other person other than them to hold any substantial shareholding in the company and were therefore seeking to prevent the respondents from making investments in the company. The respondents further contended that a delay in making a disclosure by respondent No. 1 under regulation 13(1) cannot vitiate the acquisition of shares by the respondents. The respondents have also contended that since the petitioner-company came to know that respondent No. 1 had exceeded 5 per cent, of the paid-up capital of the company as early as June 4, 2004 the petitioner had failed to file the present petition within two months from the date of such acquisition and therefore the present petition is barred by time under Section 111A(3) of the Companies Act, 1956.

32. Even though respondents Nos. 2 to 6 qualified as relatives as has been indicated in the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 and the Companies Act, 1956; they cannot be brought under the purview of the term "person" as has been contemplated in regulation 13 of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992.

33. Regulation 2(i) of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 states :

"(i) 'relative' means a person, as defined in Section 6 of the Companies Act, 1956 (1 of 1956);"

34. Regulation 13 of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, lays down :

"13. Disclosure of interest or holding by directors and officers and substantial shareholders in listed companies Initial disclosure

(1) Any person who holds more than 5 per cent, shares or voting rights in any listed company shall disclose to the company in Form A, the number of shares or voting rights held by such person, on becoming such holder, within 4 working days of :

(a) the receipt of intimation of allotment of shares ; or

(b) the acquisition of shares or voting rights, as the case may be.

(2) Any person who is a director or officer of a listed company shall disclose to the company in Form B the number of shares or voting rights held and positions taken in derivatives by such person and his dependents (as defined by the company), within four working days of becoming a director or officer of the company.

Continual disclosure

(3) Any person who holds more than 5 per cent, shares for voting rights in any listed company shall disclose to the company in Form C the number of shares or voting rights held and change in shareholding or voting rights, even if such change results in shareholding falling below 5 per cent., if there has been change in such holdings from the last disclosure made under sub-regulation (1) or under this sub regulation ; and such change exceeds 2 per cent, of total shareholding or voting rights in the company . . .

(5) The disclosure mentioned in sub-regulations (3) and (4) shall be made within four working days of :

(a) the receipts of intimation of allotment of shares, or

(b) the acquisition or sale of shares or voting rights, as the case may be."

35. Section 3 of the General Clauses Act, 1897, lays down definitions. It states :

"In this Act, and in all Central Acts and Regulations made after the commencement of this Act, unless there is anything repugnant in the subject or context,-. . .

(42) 'person' shall include any company or association or body of individuals, whether incorporated or not;"

36. Therefore, the term "person" in regulation 13 of the SEBI (Prohibition of Insider Trading) Regulations, 1992 shall be construed to include a company as well and not only an individual.

37. Respondent No. 1 being a company, to have acquired more than 5 per cent, shareholding in the petitioner-company, is therefore liable to serve the declarations under the SEBI (SAST) Regulations, 1997 and the SEBI (Prohibition of Insider Trading) Regulations, 1992., as well. However, respondent No. 1 had failed to serve the declaration under the latter regulation which it had rectified after the petitioner had filed the present company petition on July 19, 2.004. The declaration so filed at a later point of time on August 24, 2004 is in violation of the SEBI (Prohibition of Insider Trading Regulations), 1992 and is not valid for the reason that the said declaration had to be filed within four working days of the receipt of intimation of allotment of shares or the acquisition of shares or voting rights, as the case may be, as per the SEBI (Prohibition of Insider Trading) Regulations, 1992.

38. Additionally, the term person in the SEBI (Prohibition of Insider Trading) Regulations, 1992 under regulation 13 can be construed to mean and include all other respondents besides respondent No. 1 as "persons acting in concert". The reason for this is the exercise of control in the management of the petitioner-company which would be done jointly by all the respondents. If the aforementioned concept of control in the management of the petitioner-company is to be viewed, all the respondents could be made jointly liable to serve a declaration under regulation 13 along with respondent No. 1.

39. In conclusion, it clearly indicates that respondent No. 1 was in default for not having served the declaration under the SEBI (Prohibition of Insider Trading) Regulations, 1992, when its shareholding in the company exceeded 5 per cent.

40. The present petition has been filed for relief under Section 111A of the Companies Act, 1956, wherein the petitioner has prayed for declaring the acquisition of shares of and in the company by respondents Nos. 1 to 6 as illegal, null and void and of no effect, for rectifying the records by deleting the names of the respondents as owners of all shares of and in the company so acquired by the respondents, and permanent injunction restraining the respondents from exercising any rights or receiving any benefits in respect of the shares held by the respondents in the company in any manner.

41. In the case of B and A Packaging (India) Ltd. v. Amrex Marketing P. Ltd. [2017] 203 Comp Cas 454 (NCLT), which was decided on January 17, 2017 by the National Company Law Tribunal, Kolkata Bench, it was observed that (page 456): "... no disclosures have been made by respondent No. 1 under the SEBI (Prohibition of Insider Trading) Regulations, 1992 and in particular regulation 13 thereof which requires mandatory disclosures to be made where the acquirer has acquired over 5 per cent, shares in the company . . . The company has been advised that issuance of the intimation and/or notice under the Takeover Regulations by respondent No. 1 cannot be deemed to be a notice or intimation within the meaning of the SEBI (Prohibition of Insider Trading) Regulations".

42. In the present petition, the petitioner has filed the present petition under Section 111A of the Companies Act, 1956. In case of violation of the SEBI Regulations, section 111A(3) empowers the company to apply for rectification and in such a case, the Company Law Board is entitled to properly direct the parties so that the mischief is undone.

43. Section 111A of the Companies Act, 1956, contemplates :

"111A. Rectification of register on transfer.- (1) In this section, unless the context otherwise requires, 'company means a company other than a company referred to in sub-section (14) of section 111 of this Act.

(2) Subject to the provisions of this section, the shares or debentures and any interest therein of a company shall be freely transferable :

Provided that if a company without sufficient cause refuses to register transfer of shares within two months from the date on which the instrument of transfer or the intimation of transfer, as the case may be, is delivered to the company, the transferee may appeal to the Company Law Board and it shall direct such company to register the transfer of shares.

(3) The Company Law Board may, on an application made by a depository, company, participant or investor or the Securities and Exchange Board of India, if the transfer of shares or debentures is in contravention of any of the provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992), or regulations made thereunder or the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986), or any other law for the time being in force, within two months from the date of transfer of any shares or debentures held by a depository or from the date on which the instrument of transfer or the intimation of transmission was delivered to the company, as the case may be, after such inquiry as it thinks fit, direct any depository or company to rectify its register or records.

(4) The Company Law Board while acting under sub-section (3)

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, may at its discretion make such interim order as to suspend the voting rights before making or completing such enquiry. (5) The provisions of this section shall not restrict the right of a holder of shares or debentures, to transfer such shares or debentures and any person acquiring such shares or debentures shall be entitled to voting rights unless the voting rights have been suspended by an order of the Company Law Board. (6) Notwithstanding anything contained in this section, any further transfer, during the pendency of the application with the Company Law Board, of shares or debentures shall entitle the transferee to voting rights unless the voting rights in respect of such transferee have also been suspended. (7) The provisions of sub-sections (5), (7), (9), (10) and (12) of section 111 shall, so far it may be, apply to the proceedings before the Company Law Board under this section as they apply to the proceedings under that section." 44. In such a situation, the SEBI has the power to impose penalty for the violation of the SEBI Regulations but section 111A(3) empowers the Tribunal to direct the parties so that the mischief is undone. In the present case, the acquisition of shares in excess of 5 per cent, of the shareholding was in violation of the SEBI Insider Trading Regulations and the SEBI (SAST) Regulations for the lack of proper format of the declaration. Therefore, in the interest of justice, the shares so acquired in excess of 5 per cent, in violation of the SEBI Regulations, should be offered for buy-back to the company at the market value of the share which was on the date of the presentation of the petition under section 111A(3). Therefore, the petition deserves to be allowed. 45. Additionally, the present petition is also not barred by limitation as had been contended by the respondents as the petitioner had come to know of the violation of the provisions of the said Regulations by respondent No. 1 where it had exceeded the 5 per cent, shareholding mark in the petitioner-company only on or about June 4, 2004 and the petition was filed on July 19, 2004 which was well within the two months period from June 4, 2004. ORDER 46. The present company petition is allowed. The respondents having furnished the declaration at a later point of time are hereby barred from exercising their rights as to the shares acquired by them in the petitioner-company in excess of 5 per cent. The company is hereby authorised to buyback the shares that the respondents hold in excess of 5 per cent, of the shareholding in the company at the rate which was prevailing on the date of presentation of the petition or market value, whichever is higher. The respondents are directed to hand over the share certificates and share transfer forms within 30 days of the order to the company and in response to that the petitioner will be liable to pay the buy-back price which shall be the value of shares which was prevailing on the date of presentation of the petition or market value whichever is higher. 47. It is clear that the power exercised by the Company Law Board and the powers exercised by the SEBI fall in different and distinct jurisdictional fields. Therefore, the present order shall not preclude the jurisdiction of the SEBI as an adjudicating authority for deciding on the violation of the SEBI Regulations as have been laid down in the present petition. 48. No order as to costs. 49. Company Petition No. 550 of 2004 is hereby disposed of.
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