SHRI SUNIL KRISHNA KHAITAN, LATE SHRI SHREE KRISHNA KHAITAN, M/S. KHAITAN LEFIN LIMITED AND M/S. THE ORIENTAL MERCANTILE COMPANY LTD. Vs. SECURITIES AND EXCHANGE BOARD OF INDIA

JUDGEMENT

(1.) THE present appeal has been filed by four Appellants who are stated to be the promoters of M/s. Khaitan Electrical Ltd., hereinafter referred to as "Company". It was incorporated in 1975 and registered under the Companies Act, 1956. Its registered office is at Hyderabad and it is listed on two exchanges i.e., BSE and NSE. The Company is engaged in the business of manufacturing and marketing of electrical goods. All the four Appellants before this Tribunal are part of the promoter group of the Company and are aggrieved of the action of the Respondent in passing the Impugned Order dated December 31, 2012 hereinafter referred to as "Impugned Order", against them for the alleged failure to make a public announcement within the stipulated time as required under the provisions of regulations 10 and 11(1) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, hereinafter referred to as "SAST Regulations, 1997", in respect of the acquisition of shares in question by the Company. The promoter group of the Company, inter alia, includes all the four Appellants, their family members, relatives and associate persons/entities. M/s. Khaitan Lefin Ltd., hereinafter referred to as "KLL", and M/s. Oriental Mercantile Company Ltd., hereinafter referred to as "OMCL", became part of the promoter group on March 31, 1998 and March 31, 2000 respectively. The Company had an authorized share capital of INR 17,50,00,000 and a paid -up capital of INR 72,000,000 comprising of 7,200,000 shares with a face value of INR 10 each, at the end of the financial year on March 31, 2006.

(2.) BY the Impugned Order passed by the whole time member of the Respondent, hereinafter referred to as "WTM", the Appellants have been directed to make a combined public announcement to acquire shares of the Company in terms of regulations 10 and 11(1) of the SAST Regulations, 1997 within a period of 45 days from the date of the Impugned Order for the violation of said Regulations allegedly committed by the Appellants in the year 2006 -2007. The Appellants, alongwith consideration amount, have also been called upon to pay interest at the rate of 10% per annum, from June 16, 2007 to the date of payment of consideration to the shareholders who were holding shares in the Company on the date of the alleged violation and whose shares have been accepted in the open offer, after adjustment of dividend, if any, paid.

(3.) ACCORDINGLY , the Appellants were called upon to show cause as to why suitable directions under sections 11 and 11B of the SEBI Act read with regulations 44 and 45 of the SAST Regulations, 1997 and regulations 32 and 35 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, hereinafter referred to as "SAST Regulations, 2011", should not be issued against them for the above stated alleged violations. The Appellants filed their reply vide letter dated June 11, 2012, and during the personal hearing before the Respondent on August 21, 2012, Mr. Vyapak Desai, Advocate, appeared and made submissions on behalf of the Appellants. Subsequently, the Appellants also filed their written submissions on August 24, 2012.