LexNIRMA INDUSTRIES LTD. & ANR. versus SECURITIES & EXCHANGE BOARD OF INDIA
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A 8 c [20·t3] 3 S.C.R. 662 NIRMA INDUSTRIES LTD. & ANR. v. SECURITIES & EXCHANGE BOARD OF INDIA (Civil Appeal No. 6082 of 2008) MAY 9, 2013 [SURINDER SINGH NIJJAR AND ANIL R. DAVE, JJ.) SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997: Regulation 27 read with Regulation 10 - Order of SEBI rejecting request of appellant for withdrawal of offer to acquire equity shares - Challenged for denial of oral hearing - Held: Not being given an opportunity of oral hearing cannot always D be equated to a situation, where no opportunity is given to a party to submit an explanation at all - The entire material on which the appellants were relying was placed before SEBI and on its consideration the offer of the appellants was rejected - Therefore, it cannot be said that the appellants have been in E any manner prejudiced by the non-grant of the opportunity of personal hearing - Further, neither the appellants nor their Merchant Bankers requested for a personal hearing - Administrative law - Natural justice - Personal hearing. Regulation 27(1)(b)(c) and (d) - Rejection of request for F withdrawal of offer to acquire equity shares - Held: Rejection of request made by appellants for withdrawal from the public offer or exemption under Regulation 27(1)(d) cannot be said to be an order causing adverse civil consequences - Appellants had made an informed business decision - G Normally, the public offer once made can only be withdrawn in exceptional circumstances as indicated in Regulation 27(1) (b), (c) and (d) - These sub-clauses are exceptions to the general rule and, therefore, have to be construed very strictly -Clauses (b) and fc) are within the same genus of H 662 NIRMA INDUSTRIES LTD. v. SECURITIES & EXCHANGE 663 BOARD OF INDIA impossibility - Clause (d) also being an exception to the A general rule would have to be construed in terms of clauses (b) and (c) - Clause (d) would not permit SEBI to accept the offer of withdrawal when it has become uneconomical for the acquirer to perform the public offer - The meaning of terms "such circumstances" from the realm of impossibility cannot 8 be stretched to the realm of economic undesirability - Therefore, it cannot be said that the principle of ejusdem generis is not applicable for interpreting Regulation 27(1) (d) - SEBI as well as the SAT have correctly concluded that withdrawal of the open offer in the given set of circumstances C is neither in the interest of investors nor development of the securities market - Interpretation of statues - Ejusdem generis - Maxim 'noscitur a sociis'. Regulation 27(1) - Order of SEB/ rejecting request for withdrawal - Plea of delay in passing the order - Held: The D plea was not raised before SAT - It has been raised for the first time in the submissions made before Supreme Court - Since, it is a statutory appeal uls 15Z of the SEB/ Act, the plea cannot be permitted to be raised - Even on merits, there was no delay on the part of SEBI in approving the draft letter of E offer - Securities and Exchange Board of India Act, 1992 - s. 15Z - Delay/Laches. The appellants filed the instant appeal challenging order of the Security Appellate Tribunal (SAT) whereby the appeal against the order dated 30.4.2007 passed by SEBI rejecting the request for withdrawal of the offer of the appellants to acquire the equity shares of SRMTL under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, was rejected. It was contended for the appellants that the order passed by SEBI was passed without granting any opportunity of hearing to them. It was submitted that even if the regulations do not specifically provide for the grant F G of an opportunity of hearing, it ought to be read into the H 664 SUPREME COURT REPORTS [2013] 3 S.C.R. A Regulations in view of the drastic civil consequences, which the appellants would suffer under the impugned order passed by the SEBI and upheld by SAT. It was further contended that Regulation 27(1)(d) provides an exception for withdrawal of open offer not limited to the 8 narrow confines of Clauses (b) and (c) of Regulation 27(1). It was submitted that the exception under Regulation 27(1)(d) deals with a separate and distinct class of cases i.e. conferring a discretion on SEBI to allow withdrawal of open offers in "such circumstances", which C "in the opinion of the Board merit withdrawal" and, as such, Regulation
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