SARDA PLYWOOD INDUSTRIES LTD Vs. HEMANT KUMAR MOTIHAR

JUDGEMENT

(1.) This appeal under section 10F of the Companies Act, 1956 arises from an order dated January 7, 2011 on a petition under section 111A of the Act. A solitary point has been canvassed on behalf the appellant company. The appellant refers to a judgment reported at (Aska Investments Put. Ltd. vs. Grob Tea Company Ltd., 2005 1 CalHN 659) where the company Judge is said to have held that the violation of either Regulation 7 or Regulation 10 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997 would meet with the same consequence. The appellant suggests that in the light of such view expressed by this Court, the order impugned is liable to be set aside.

(2.) The company carried an application for rectification of its register of members under section 111A to the Company Law Board complaining that the acquisition of the subject shares was in derogation of the said Regulations of 1997 and, as a consequence, the transfer of the shares allowed by the company without being aware of the violation was liable to be undone and the register rectified. The appellant also levelled charges of the provisions of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 and the Foreign Exchange Management Act, 1999 being violated by the respondents in acquiring the subject shares. According to the appellant, the real transferee of the shares was a non-resident Indian and the acquisition of the shares was in breach of Regulation 13 of the 1992 Regulations.

(3.) The CLB framed three issues. The first was whether upon an acquirer of shares failing to discharge the obligation imposed by Regulation 7 of the Takeover Regulations, the acquisition itself was bad and the transfer of the relevant shares in the name of the transferee had to be undone. The second issue framed was as to whether there was any violation of Regulation 7 of the Takeover Regulations or Regulation 13 of the Insider Trading Regulations. The third issue was as to whether the petitioner before it, the appellant herein, was entitled to any relief.