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Arun Goenka v. SEBI and Ors.

Arun Goenka v. SEBI and Ors.

Facts: The offer price of Rs. 944.19 was originally offered by Aurora UK Bidco Limited, respondent no. 2 to the shareholders of the target company which according to them was as per Regulation 8(4) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“SAST Regulations, 2011” for convenience). 

However, SEBI appointed an Independent Valuer to determine the value of the shares under Regulation 8(16). This direction of SEBI 4 was challenged in Appeal No 149 of 2020. which was dismissed by this Tribunal by an order dated 17.07.2020.

Thereafter the Independent Valuer has determined and recommended the Fair Price which has been accepted by SEBI and communicated to the parties. Such communication has now been challenged by the shareholders of the target company, namely, Arun Goenka and VLS Finance Ltd. in Appeal No. 338 of 2020 and 354 of 2020 respectively. 

Issue: Whether the interest is required to be paid upto the date of actual payment?

Judgement: It was held that while compensating a person, the court should see that he is not unjustly enriched. Interest is directed to be paid on the default of the acquirer occasioning loss suffered by an investor of his money. The question of paying interest by way of compensation to persons who had not suffered any loss, thus, would not arise.

Further, frequently traded shares Sub Regulation 20(4) is applicable and if an open offer has been made under Takeover Regulations 1997 that process has to be completed under the same Regulations as is explicitly stated in Sub Regulation 35(2)(c) of the new Takeover Regulations 2011.

The Bench held that a reasoned order on this aspect is required to be given by SEBI as it involves the interest of the shareholders. Therefore it dispose of the appeals, directing the appellants to move an appropriate representation with regard to the payment of interest on delayed payments within a week.

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