A. R. DAHIYA versus SEBI

Citation: [2015] 12 S.C.R. 202 · Decided: 26-11-2015 · Supreme Court of India · Bench: VIKRAMAJIT SEN · Disposal: Dismissed

Judgment (excerpt)

A 
B 
[2015] 12 S.C.R. 202 
A. R. DAHIYA 
v. 
SEBI 
(Civil Appeal No. 2127 of 2006) 
NOVEMBER 26, 2015 
[VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ.] 
Securities and Exchange Board of India (Substantial 
c Acquisition of Shares and Takeovers) Regulations, 1997 -
Regs 3, 10, 11, 12, 16 and 20 - Takeover of company -
Transaction of buy-back of shares between promoter and 
State Financial Institution - Requirement of disclosure in the 
public announcement - On facts, takeover of company, 
D appellant-promoter acquiring in excess of 15% of the total 
shareholding of the Target Company - Appellant made a 
public announcement making an offer to the remaining 
shareholders of the target company to purchase shares of 
the company at an offer price of Rs 8. 75 per equity share 
E when their face value was Rs 101- and the appellant had 
acquired at the rate of Rs 23. 75 per share -Appellant neither 
in the public announcement nor in the letter disclosed that 
he had already bought back the shares of the Institution -
Appellant deposited amount with the Institution via post dated 
F cheques-Appellant's case that the said cheques was not in 
consideration for the buy-back of shares but by way of security 
for buy back obligation and since the cheques were later 
dishonoured, there was no acquisition - Held: Transaction 
G between the appellant and the State Financial Institution is 
subject to Regs 16 and 20, and the rate at which the appellant 
bought back the shares from the Institution had to be 
disclosed in the public announcement- Post-dated cheques 
were in consideration of the buy-back of the shares - Said 
H cheques amounted to a promise to pay and promise to pay 
202 
A. R. DAHIYA v. SEBI 
203 
amounted to sale of shares - Subsequent dishonouring of A 
the cheque would have no effect - Buy-back was in pursuance 
of an agreement, there was consensus ad idem -Appellant 
subsequently shirked his responsibility and tried to slither 
away from honouring the agreement, which he cannot be 
allowed to gain from - Acquisition takes place the moment B 
the acquirer decides or agrees to acquire, irrespective of the 
time when the transfer stands completed in all respects -
Actual transfer need not be contemporaneous with the 
intended transfer and can be in futuro - Thus, the order 
passed by SEBI directing the appellant to go in for a fresh C 
public announcement and offer to the shareholders of the. 
target company the price of Rs. 23. 75 per share upheld -
Securities and Exchange Board of India (Substantial 
Acquisition of Shares and Takeovers) Regulations, 2011. 
D 
Dismissing the appeal, the Court 
HELD: 1.1 It is evident from a reading of SEBI 
(Substantial Acquisition of Shares and Takeovers) 
Regulations, 1997 that the buy-back transaction E 
between the appellant and HSIDC was incapable of 
triggering Regulation 10, as the said transaction was 
protected by Regulation 3. However, the acquisition of 
the entire share capital of 'G' by the appellant attracted 
Regulation 10 as the acquisition was in excess of 15%. F 
Further, as this transaction was between two promoters, 
it did not have the protection of Regulation 3. As required 
under Regulation 10, the appellant did make a public 
announcement, but did not disclose its buy-back 
transaction with HSIDC. The appellant vainly and G 
incorrectly attempted to justify his act of non-disclosure 
by stating that the transaction with HSIDC was protected 
by Regulation 3, which placed it beyond the ambit of 
Regulation 10, 11 and 12. Regulation 3 only protects a 
transaction between a co-promoter and a State financial H 
204 
SUPREME COURT REPORTS 
[2015] 12 S.C.R. 
A institution to the extent that, as a consequence of such 
transaction a public announcement will not be required 
to be made.as provided under Regulations 10, 11 and 
12. However, it does not imply that the said transaction 
is to be protected from the rigours of other Regulations 
B provided for under the Act. Thus, the transaction 
between the appellant and HSIDC would have to be 
subject to Regulations 16 and 20, and the rate at which 
the appellant bought back the shares from HSIDC had 
to be disclosed in the public announcement. [Para 13] 
C [219-A-F] 
1.2 The submission that the post-dated cheques 
forwarded to HSIDC were given by way of a guarantee 
cannot be accepted, since the same was denied by 
D HSIDC in its letter to SEBI, wherein HSIDC stated that 
the post-dated cheques had been issued in 
considerati

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