SECURITIES & EXCHANGE BOARD OF INDIA versus BURREN ENERGY INDIA LTD. & ORS.

Citation: [2016] 8 S.C.R. 101 · Decided: 02-12-2016 · Supreme Court of India · Bench: RANJAN GOGOI · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2016] 8 S.C.R. I 0 I 
SECURITIES & EXCHANGE BOARD OF INDIA 
v. 
BURREN ENERGY INDIA LTD. & ORS. 
(Civil Appeal No. 36 I of2007) 
DECEMBER 02, 2016 
[RANJAN GOGOi AND N.V. RAMANA, JJ.] 
Securities and Exchange Board of India (Substantial 
Acquisition of Shares and Takeovers) Regulations, 1997 - Regns. 
22(7), 2(1)([) - Acquisition of 26.01% of the share capital in the 
target company on the date of Share Purchase Agreement by the 
acquirer - On the same date appointment of directors i11 the target 
company by the acquirer company and the company acting in 
concert - SEEi held that this amounted to violation of Regn. 22(7) 
since the appointment was made during the offer period-date of 
execution of share purchase agreement - Tribunal held them not 
liable for violating Regn. 22(7) - On appeal, held: Concluded 
agreement is not rnntemplated to be the starting point of th<' rJjfer 
period - But such a consequence must naturally follow once the 
offer period commences from the date of entering into a 
Memorandum of Understanding-agreement, falling short of a 
binding contract - If the offer period can be triggered of by an 
understanding that is yet to fructify into an agreement, the same 
can be said to have commenced/started ji·om the date of a concluded 
agreement-share purchase agreement - Order passed by the tribunal 
is set aside and that of the Adjudicating Officer is restored. 
Allowing the appeal, the Court 
HELD: 1.1 In the instant case, while respondent company 
was the acquirer, UBL was the person acting in concert. This is 
evident from the letter of offer (public announcement) dated 15'h 
February, 2005. The embargo under Regulation 22(7) of the 
Securities and Exchange Board of India (Substantial Acquisition 
of Shares and Takeovers) Regulations, 1997 is both on the 
acquirer and a person acting in concert. The expression 'person 
acting in concert' includes a corporate entity [Regulation 
2(l){e){2){i)] and also its directors and associates [Regulation 
JOI 
A 
B 
c 
D 
E 
F 
G 
H 
102 
SUPREME COURT REPORTS 
[2016] 8 S.C.R. 
A 2(1)(e)(2)(iii)). If this is what is contemplated under the 
Regulations, the argument of the respondents that Regulation 
22(7) can have no application to the instant case cannot be 
accepted. [Para 11)(106-D-E] 
1.2 It is correct that in the definition of 'offer period' 
B 
contained in Regulation 2(1)(1), relevant for the instant case, a 
concluded agreement is not contemplated to be the starting point 
of the offer period. But such a consequence must naturally follow 
once the offer period commences from the date of entering into a 
Memorandum of Understandin~ which, in most cases would 
C 
reflect an agreement in principle falling short of a binding contract. 
If the offer period can be triggered of by an understanding that is 
yet to fructify into an agreement, it cannot be seen how the the 
same can be said not to have commenced/started from the date 
of a concluded agreement-share purchase agreement. [Para 
12)(106-F-G] 
D 
1.3 The tribunal was incorrect in reaching its impugned 
conclusions and in reversing the order of the Adjudicating Officer. 
Consequently the order of the tribunal is set aside and that of the 
Adjudicating Officer is restored. [Parn 13)(107-A-BJ 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 361 of 
E 2007. 
F 
From the Judgment and Order dated 07.11.2006 of the Securities 
Appellate Tribunal, Mumbai in Appeal No. 132 of2006. 
Chander Uday Singh, Sr. Adv., Rishi Gautam, Bhargava V. Desai, 
Ms. Akriti Dewan, Siddhartha Chowdhury, Advs. for the Appellant. 
Shyam Divan, Sr. Adv., Tejas Karia, S. Shankar Das, Ms. Avlokita 
Rajvi, S.S. Shroff, Anil Kumar Tandale, Advs. for the Respondents. 
The Judgment of the Court was delivered by 
RANJAN GOGOi, J. I. The challenge in this appeal is to an 
G order of the learned Securities Appellate Tribunal, Mumbai (hereinafter 
referred to as "the Tribunal") reversing the order of the Adjudicating 
Officer dated 25'h August, 2006 holding the respondents guilty of 
contravening the provisions of Regulation 22(7) of the Securities and 
Exchange Board of India (Substantial Acquisition of Shares and 
H Takeovers) Regulations, 1997 (hereinafter referred to as "the 
SECURITIES & EXCHANGE BOARD OF INDIA v. BURREN 
103 
ENERGY INDIA LTD. [RANJAN GOGOi, J.] 
Regulations"). A penalty of Rs.25 lakhs has been imposed on each on 
A 
the respondents herein for the aforesaid violation. Aggrieved by the 
aforesaid reversal, Securitie

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