MS. SANGEETA SETHIA AND MR. PRABHAT SETHIA PROMOTER AND MANAGING DIRECTOR FILATEX FASHIONS LTD. Vs. SECURITIES AND EXCHANGE BOARD OF INDIA

JUDGEMENT

(1.) THIS appeal has been preferred against the impugned order dated April 4, 2013 passed by the learned Whole Time Member (WTM) of the Respondent directing the two appellants and one Mr. Swaminathan Rajendran to make public announcement to the shareholders of the Filatex Fashions Ltd. (hereinafter referred to as "target company"), within 90 days of the date of this order, in terms of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as "Takeover Regulations") and to pay interest at the rate of 12% per annum on the offer price from the date when the appellants acquired shares of the target company. Appellant No. 1 Ms. Sangeeta Sethia who claims to be a bonafide investor of the target company and the Appellant No. 2 happens to be the Promoter and Managing Director of the target company. Both the appellants are wife and husband respectively.

(2.) APPELLANT No. 1 along with said S. Rajendran acquired 6 lac shares increasing combined holding of the promoters from 28.88% as on quarter ending June 30, 2007 to 35.73% as on August 31, 2007 in breach of the provisions of Regulation 11 of Takeover Regulations. After conducting enquiry as envisaged under Sections 11, 11B and 11(4) of SEBI Act, 1992 read with Regulation 11 of the Takeover Regulations, learned WTM of the Respondent found the appellants guilty of violating Regulation 11(1) of the Takeover Regulations in as much as they failed to make public announcement to the shareholders of the company. Accordingly, the learned WTM passed impugned order dated April 4, 2013 directing the appellants as under: -

(3.) MR . Kumar Desai, learned counsel for the Respondent, on the other hand, has forcefully submitted that the shareholding of Sangeeta Sethia along with S. Rajendran exceeded 5% on August 31, 2007 as such they were required to make public announcement and also to make an open offer which they miserably failed to do. It is also submitted by Mr. Kumar Desai that Sangeeta Sethia and S. Rajendran, an employee of the target company, acted in concert with each other at the instance of Appellant No. 2, Prabhat Sethia, who happens to be promoter and Managing Director of the target company as well as husband of Appellant No. 1. Therefore, the appellants have not made out a case on merit as well as in equity.