SECURITIES AND EXCHANGE BOARD OF INDIAversusM/S. AKSHYA INFRASTRUCTURE PVT. LTD.

                        [2014] 13 S.C.R. 402


A       SECURITIES AND EXCHANGE BOARD OF INDIA
                                  V.

           M/S. AKSHYA INFRASTRUCTURE PVT.LTD.
B                 (Civil Appeal No. 6041of2013)
                          APRIL 25, 2014
       [SURINDER SINGH NIJJAR AND A. K. SIKRI, JJ.]
c         SEBI (Substantial Acquisition of Shares and
    Takeovers) Regulations, 1997-Regn. 27 and 11- Whether
    an open offer voluntarily made through a Public
    Announcement for purchase of shares of the target company
    can be permitted to be withdrawn at a time when the voluntary
D   open offer has become uneconomical to be performed -
    Held: Plain reading of Regn. 27(1) makes it clear that no
    public offer whether it is voluntary or triggered by Regn.11
    can be withdrawn, unless it satisfies the circumstances set
    out in Regn.27(1)(b), (c) and (d)- Under Regn. 27(1)(b)(c)
E   and (d), a Public Offer, once made, can only be permitted to
    be withdrawn in circumstances which make it virtually
    impossible to perform the Public Offer - Ejusdem generis
    principle is fully applicable for the interpretation of Regn.
    27(1)(b)(c) and (d) as there is a common genus of
F   impossibility - This impossibility would not include a
    contingency where voluntary open offer once made can be
    permitted to be withdrawn on the ground that it has now
    become economically unviable - Accepting such a
    submission, would give a field day to unscrupulous elements
G   in the securities market to make Public Announcement for
    acquiring shares in the Target Company, knowing perfectly
    well that they can pull out when the prices of the shares have
    been inflated, due to the public offer - Such speculative
H
                                 402
 · SEBI v. MIS. AKSHYA INFRASTRUCTURE PVT.LTD.                  403


practices are sought to be prevented by Regn. 27(1)(b)(c)       A
and (d), that is precisely the reason why Regn. 27(1 )(a) was
deleted.

     Allowing the appeal •. the Court
      HELD:1. The plain reading of Regulation 27(1) of 8
the SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997 makes it clear that no
public offer whether it is voluntary or triggered by
Regulation 11 can be withdrawn, unless it satisfies the
circumstances set out in Regulation 27(1 )(b), (c) and (d). C
There can be no distinction between a triggered public
offer and a voluntary public offer. Both have to be
considered on an equal footing. [Para 28][420-F-H;
421-A]                                                      D
      2. Under Regulation 27(1)(b)(c) and (d), a Public
Offer, once made, can only be permitted to be withdraY1n
in circumstances which make it virtually impossible to
perform the Public Offer. In fact, the very purpose for
deleting Regulation 27(1 )(a) was to remove any E
misapprehension that an offer once made can be
withdrawn if it becomes economically not viable. ·
[Para 31)(422-E-F]
      3. The ejusdem generis principle is fully applicable F
forthe interpretation of Regulation 27(1)(b)(c) and (d) as
there is a common genus of impossibility. This
impossibility envisioned under the aforesaid regulation
would not include a contingency where voluntary open
offer once made can be permitted to be withdrawn on G
the ground that it has now become economically
unviable. Accepting such a submission, would give a
field day to unscrupulous elements in the securities
market to make Public Announcement for acquiring
                                                                H
404        SUPREME COURT REPORTS                [2014] 13 S.C.R.


A shares in the Target Company, knowing perfectly well
  that they can pull out when the prices of the shares have
  been inflated, due to the public offer. Such speculative
  practices are sought to be prevented by Regulation
  27(1 )(b)(c) and (d), that is precisely the reason why
B Regulation 27(1 )(a) was deleted. [Para 36][424-G-H;
  425-A-B]

           Nirma Industries Ltd. & Anr. v. Securities and
           Exchange Board of India (2013) 8 SCC 20 : 2013
c          (3) SCR 662 - affirmed.
           Clariant International Ltd. & Anr. v. Securities &
           Exchange Board of India (2004) 8 SCC 524 : 2004
           (3) Suppl. SCR 843 and Natwar Singh v. Director
           of Enforcement & Anr. (2010) 13 SCC 255 : 2010
D
           (13) SCR 99 - referred to.
                          Case Law Reference:

           2013 (3) SCR 662             affirmed      Para 12
E          2004 (3) Suppl. SCR 843      referred to   Para 16

           2010 (13) SCR 99             referred to   Para 33
        CIVIL APPELLATE JURISDICTION: Civil Appeal No.
 F 6041 of2013.
            From the judgment and order dated 19.06.2013 of the
      Securities Appellate Tribunal, Mumbai ("SAT") in Appeal No.
      3 of 2013.
G         C. U. Singh, Sr. Adv., Pratap Venugopal, Ms. Surekha
      Raman (for M/s K. J. John & Co.), Advs. for the appellant.
           R. F. Nariman, Sr. Adv., Mayank Mishra, Ms. Ashlesha
      Srivastasva, Dheeraj Nair, Advs. for the respondent.
 H
   SEBI v. M/S.AKSHYAINFRASTRUCTURE PVT. LTD.                        405


      The Judgment of the Court was delivered by                     A ·

      SURINDER SINGH NIJJAR, J. 1. This appeal under
Section 15Z of the Securities and Exchange Board of India
Act, 1992 (the 'SEBI Act') is directed against the judgment
and final order of the Securities Appellate Tribunal, Mumbai         8
(SAT) dated 19th June, 2013 rendered in Appeal No.3 of 2013,
by which the appeal filed by M/s. Akshya Infrastructure Private
Limited - the respondent herein against the directions issued
by SEBI on 30 1hNovember, 2012 has been allowed.

     2. The fundamental issue which arises in this appealis C
whether an open offer voluntarily made through a Public
Announcement for purchase of shares of the target company
can be permitted to be withdrawn at a time when the voluntary
open offer has become uneconomical to be performed.
                                                              D
       3. In this case, the respondent herein, M/s Akshya
 Infrastructure Pvt. Ltd., is a part of the Promoter Group of MARG
·Limited ('the Target Company'). For the years 2006-07, 2007-
 08 and 2010-11, the gross acquisition by the Promoter Group
 of shares in the Target Company was as under:                       E

      "Financial Year       Percentage        Date triggered on

        2006-07                 14.34%           30.03.2007

        2007-08                  5.64%           12.10.2007          F
         2010-11                 7.11%           19.02.2011"

      As a consequence of the foregoing acquisitions, the
acquirers breached the 5% creeping acquisition limit and were        G
required to comply with the provisions of Regulation 11 of the
SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997 (~ereinafter referred to as the "Takeover
Regulations").
                                                                     H
406       SUPREME COURT REPORTS                 [2014] 13 S.C.R.


A       4. On 20th October, 2011, the respondent made a
  voluntary open offer through a Public Announcement in major
  National Newspapers, under Regulation 11 of the Takeover
  Regulations wherein the public shareholders of the Target
  Company were given an opportunity to exit at an offer price of
B Rs.91/- per equity share. This price represents a premium of
  10.3% over the average market closing price for the two weeks
  preceding the Public Announcement. The tendering period was
  scheduled to commence on 1st December, 2011 and conclude
  qn 201hDecember, 2011. The consideration for the tendered
c shares was to be paid on or before 4th January, 2012. As on
  the date of the open offer, the list of Promoters/Promoter Group
  Entities was as under:-

         SI. No. Name
D
           1.     Mr. G.RK. Reddy

           2.     Mr. G. Raghava Reddy

           3.     Ms. V.P. Rajini Reddy
E
           4.     Mr. G. Madhusudan Reddy

           5.     GRK Reddy & Cons (HUF)

           6.     M/s. Global lnfoserve Ltd.
F          7.     M/s. Marg Capital Markets Limited
           8.     M/s. ExemplarrWorldwide Limited
           9.     M/s. Marg Projects and Infrastructure Limited
G                 (formerly Marg Holdings and Financial Services
                  Limited)

           10.    M/s. Akshya Infrastructure Private Limited

H
    SEBI v. M/S. AKSHYA INFRASTRUCTURE PVT.LTD.                  407
               [SURINDER SINGH NIJJAR, J.]

         5. However, due to certain events, which have been A
  highlighted by both the parties, the respondent by letter dated
  29 1h March, 2012 through M/s. Motilal Oswal Investment
  Advisors (P) Ltd., the Managers to the Issue (hereinafter
  referred to as the "Merchant Banker"), addressed to SEBI,
  sought to contend that the open offer in question had become B
  outdated, thereby outliving its necessity and, therefore, the
  same ought to be permitted to be withdrawn. It was also
  contended that the amount of Rs.17.46 crores deposited by .
  the respondent in an escrow account towards the open offer
  ought to be allowed to be withdrawn. The letter emphasizes C
  that the public announcement was in nature of a voluntary open
  offer under Regulation 11 of .the Takeover Regulations. for
  consolidation of shareholding of the Promoter Group in the
  Target Company. The offer price of Rs.91/- per equity share
                                                                   0
  of the Target Company was aimed at presenting a
  commercially reasonable opportunity to the public
  shareholders to exit and at the same time it was meant to
  consolidate the shareholding of the promoter in the Target
  Company. It was further stated that due to the unjustified delay E
  by SEBI in taking a decision as to whether to approve the draft
  letter of offer has rendered the entire open offer exercise
  academic and meaningless. It was claimed that the transaction
  envisaged by the respondent is no longer justifiable on any
  ground, including the grounds of economic rationale and F
  commercial reasonableness. The respondent sought the
  withdrawal of open offer made under the public announcement
· in terms of Regulation 27 of the Takeover Regulations. The
  exact prayer made by the respondent was as follows:-
                                                                G
       "Consequently, we hereby seek withdrawal of the open
       offer made under the public announcement in terms of
       Regulation 27 of the Takeover Regulations (the benefit
       of which continue to accrue to us in terms of Regulation
       35(2) of the SEBI (Substantial Acquisition of Shares and H
408         SUPREME COURT REPORTS                    [2014] 13 S.C.R.


A          Takeovers) Regulations, 2011 "New Takeover
           Regulations"). Regulation 23(1 )(d) of the New Takeover
           Regulations equally empowers withdrawal of an open
           offer."

 8           6. The appellant by letter dated 301h November, 2012
      conveyed its comments in terms of the proviso to Regulation
      16(4) of the Takeover Regulations on the draft letter of offer.
      Certain information was sought in the aforesaid letter.     No
      reference was made in this letter with regard to the request
 c    made by the respondent for permission to withdraw the open
      offer. Rather it was stated as under :

            "Please note that failure to carry out the suggested
           .changes in the letter of offer as well as violation of
            provisions of the Regulations will attract appropriate
 D
            action. Please also ensure and confirm that apart from
            above, no other changes are carried out in the letter of
            offer submitted to us."
         The aforesaid comments of SEBI were challenged by
 E the respondent before SAT in Appeal No.3 of 2013.
          l. The respondent claimed that the impugned directions,
   ostensibly in the form of comments and observations on the
   draft letter of offer, reject the plea of the petitioner that the delay
 F caused by SEBI in clearance of the draft letter of offer, now
   renders the open offer unviable and academic. Further, the
   impugned directions purport to bind the appellant and thereby
   constitute an order by which the respondent was aggrieved;
   and m~cessitated the appeal before the SAT.
 G
           B. In the appeal before SAT, the respondent claimed that
      the directions contained in the impugned letter of SEBI dated
      3Qth November, 2012, incorrectly allege that prima facie
      requirement to make an open offer was triggered by the
 H
   SEBI v. M/S. AKSHYA INFRASTRUCTURE PVT.LTD.                     409
              [SURINDER SINGH NIJJAR, J.]

promoters and the promoter group entities of the Target A
Company (Promoter Group) under Regulation 11(1) of the
Takeover Regulations on three past occasions, viz. March 30,
2007, October 12, 2007 and February 19, 2011 (Alleged
Triggers). It was further claimed that the directions to revise
the offer price, on account of the requirement to make open B
offers pursuant to the alleged triggers was illegal and without
jurisdiction. It was also claimed that the directions contained
in the impugned letter has caused severe civil consequences
to the respondent. It was also claimed that the submissions on
the issues presented by the respondent before the appellant C
have neither been considered nor appreciated.

      9. The appeal was,contested by the appellant by filing a
detailed affidavit on 12 111 April, 2013. As noticed above, the
aforesaid appeal has been allowed by SAT in terms of prayer D
clause (a), (b) and (c) of Para 7 of the appeal filed by the
respondent, which are as under:-
     "(a) That this Hon'ble Tribunal be pleased to set aside
        the Impugned Direction;                                    E
     (b) That this Hon'ble. Tribunal be pleased to order and
        direct the respondent to allow the appellant to withdraw
        the open offer without any adverse orders or directions
        against the appellants or the Promoter Group;
                                                                   F
     (c) That this Hon'ble Tribunal be pleased to order and
        direct the respondent to allow the appellant to withdraw
        the amount of Rs.17.46 crores deposited in escrow
        in lieu of the Open Offer."
                                                                   G
      10. It was, however, made clear that SAT has not made
any observation on the merits of the issue regarding the three
alleged triggers and the contentions of the parties in this regard
were kept open. Aggrieved by the aforesaid impugned
judgment, SEBI has filed the present Civil Appeal.                 H
410            SUPREME COURT REPORTS                [2014] 13 S.C.R.


A           11. We have heard the learned counsel for the parties at
      lennth.

        12. Mr. C.U. Singh, learned senior counsel appearing
  for the appellant, has submitted that the issues raised by the
B appellant herein are squarely covered against the respondent
  by an earlier judgment of this Court in Nirma Industries Ltd.
  & Anr. Vs. Securities and Exchange Board of lndia1!

             13. At this stage, Mr. RF. Nariman, learned senior counsel
      appearing for the respondent, has raised certain preliminary
C     objections with regard to the maintainability of the appeal. He
      submits that the directions issued by the SEBI are based on a
      misconception of the law applicable to the peculiar facts of
      this case. He submits that firstly: this is a case where the
D     respondent had made voluntary open offer. It was not a case
      of an open offer made because of a triggered mechanism
      under the Takeover Regulations; secondly. since the open offer
      was a pure and simple voluntary offer, no prejudice has been
      caused to any shareholder; thirdly: the present case does not
E     fall within the ambit of Regulation 27 of Takeover Regulations.
      According to Mr. Nariman, Regulation 27 ought to be read in a
      manner that it would only govern mandatory open offers and
      not voluntary open offers; fourthly: SEBI has without any
      justification intermingled acquisition of shares by the
F     respondent on the three earlier occasions in 2006-07, 2008-
      09 and 2009-1 O; fifthly: SEBI unjustifiably and arbitrarily took
      13 months to offer comment( s) on the draft letter of offer. Even
      then the clarification sought by the appellant pertained to the
      past alleged triggers which had no connection with the
G     voluntary open offer. It is submitted that even if the case of the
      respondent falls within the ambit of Regulation 27, the
      withdrawal is permissible in such circumstances which in the
      opinion of SEBI (the Board) merit withdrawal; sixthly: the
H     1
          (2013)   s sec 20
   SEBI v. M/S. AKSHYA INFRASTRUCTURE PVT.LTD.                   411
              (SURINDER SINGH NIJJAR, J.]

judgment in Nirma Industries (supra) is distinguishable; A
lastly: the judgment in Nirma Industries (supra) is incorrect
and needs reconsideration.

      14. Mr. C.U. Singh, learned senior counsel appearing
for the appellant, has submitted that the correspondence 8
exchanged between the parties would show that the delay in
consideration of the letter of offer was caused by the •
respondent by not giving the necessary information. He relies
on the voluminous correspondence between the parties in
support of his submission which, if necessary, shall be          c
considered later. His second submission is that the request
for withdrawal of open offer is to be considered strictly under
the provision of Regulation 27 of the Takeover Regulations.

      15. The respondent had made a Public Announcement
                                                                 0
on 20 1h October, 2011 which clearly informed the public
shareholders of the Target Company that they were being given
an opportunity to exit at an offer price of Rs.91/- per equity
share, which represetited a premium of 10.3% over the
average market closing price for the two weeks preceding the     E
Public Announcement. This Public Announcement and the
Public Offer was sought to be withdrawn on 291h March, 2012.
He points out that in the aforesaid letter; the request for
withdrawal is specifically made under Regulation 27 of the
Takeover Regulations. Therefore, Mr. Nariman cannot be           F
permitted to, now, submit that Regulation 27 is not applicable
to the open offer in the present case.

      16. Mr. C.U. Singh then submits that the respondents
have consciously proceeded with an open offer and they have G ·
rightly not been permitted to withdraw the same by the
appellant. The next submission of Mr. C.U. Singh is that
Regulation 27 deals with only withdrawal of 'Public Offer' and
not withdrawal of 'Public Announcement'. In any event,
                                                                 H
412            SUPREME COURT REPORTS             [2014] 13 S.C.R.


A according to learned senior counsel, submission with regard
  to withdrawal of Public Announcement has been made, only,
  at the time of arguments before this Court. It was neither
  pleaded nor raised before the SE Bl/SAT, nor even in the counter
  affidavit before this Court. He next submitted that under the
B provisions of Regulation 27, public offer is a rule and withdrawal
  is an exception. Relying on the interpretation of Regulation 27
  in Nirma Industries Ltd.(supra), he submits that an offer can
  be permitted to be withdrawn only if it becomes virtually
  impermissible to carry out. Permitting public offers once made
C to be withdrawn on the ground that it has become uneconomical
  would compromise the integrity of the Securities Market. This
  would be contrary to the scheme of the Takeover Code.
  Mr. C.U. Singh then submits that there is no distinction under
  Regulation 27 between the voluntary open offer and
0
  mandatory open offer which is the result of a triggered
  acquisition. Relying on Regulations 11to14 oftheTakeover
  Regulations, he submits that all the different types of open
  offers are set out therein. Each one of the open offers has the
E same effect on shareholders and the market. Therefore, the
  provisions contained in Regulation 27 have to be strictly
  adhered to in considering the request for withdrawal of the
  open offer. It is further submitted that the appellant had fixed
  the offer price under the relevant regulations and in accordance
F with the law laid down by this Court in Clariant International
  Ltd. &Anr. Vs. Securities & Exchange Board of lndial~
        17. According to Mr. C.U. Singh, in normal circumstances,
  withdrawal can only be made under Regulation 27(1 )(b), (c)
G and (d). He submits that in the letter dated 29 1h March, 2012,
  the respondent claims that the offer has become "outdated
  due to the sheer efflux of time". The second reason given is
  the delay in clearance of open offer from SEBI. The letter also
  indicates that the respondent does not agree with the views of
H     2
          (2004)   s sec 524
   SEBI v. M/S. AKSHYA INFRASTRUCTURE PVT.LTD.                  413
              [SURINDER SINGH NIJJAR, J.]

the .SEBI on the fact situation~ Another reason given is that A
"even if the SEBI were to approve the draft letter of offer today,
the open offer exercise would be entirely academic and
meaningless." Another reason given is .that "the transaction
then envisaged by us is no longer justifiable on any ground
including grounds of economic rationale and commercial B
reasonableness." All these factors, according to Mr. C.U. Singh,
will not be covered by any of the clauses in Regulation
27(1 )(b )(c)(d). He then submitted that even if there is a delay
by SEBI, the ordinary investor in shares of the Target Company
should not be made to suffer. According to Mr. C.U. Singh, the C
controversy raised in the appeal is squarely covered against
the respondent by judgment of this Court in Nirma Industries
Ltd. (supra).

      18. Mr. Nariman has rebutted the aforesaid submissions D
of Mr. C.U. Singh. He submits that the single most important
distinction between Nirma and this case is that it pertains to a
voluntary public offer. This Court had no occasion to deal with
a voluntary public offer in Nirma Industries Ltd. (supra). In
reply to the other submissions made by Mr. C.U. Singh, Mr. E
Nariman has also relied on some correspondence. He has
also relied upon a table to substantiate the submission that
the law laid down in Nirma Industries would not be applicable
in the facts and circumstances of this case. Dealing with the
issue of delay, it is submitted by Mr. Nariman that there vyas an F
unjustifiable and inexplicable delay by SEBI in issuing its
comments on the draft letter of offer. In support of this
submission, he has relied on some correspondence.

     19. He relies on letter dated October 20, 2011, whereby G
the respondent made a voluntary open offer by Public
Announcement under Regulation 11 of the Takeover
Regulations. He points out that Clause 11.4 of the Public
Announcement clearly states that voluntary open offer can be
                                                             H
414       SUPREME COURT REPORTS                   [2014] 13 S.C.R.


A withdrawn by the respondent at any time. He then points out
  that on 251h October, 2011, SEBI called upon the respondent
  to provide information on the changes in shareholding and
  capital build up of the Target Company, along with compliance
  of the SEBI Regulations. He submits that although the
B information sought pertains to the earlier acquisition it was
  duly provided on November4, 2011 and November 8, 2011.
  Mr. Nari man submits that under Regulation 18( 1) of the
  Takeover Regulations, the draft letter of offer is required to be
  filed with SEBI well within 14 days from the date of the Public
C Announcement. Once the letter of offer is filed, SEBI was
  required to dispatch the same to the shareholders immediately
  after 21 days. During 21 days, SEBI is permitted to stipulate
  the changes required to be made in the letter of offer which
D the Merchant Banker and the Acquirer shall incorporate 1n the
  letter of offer, before it is dispatched to the shareholders. In
  case, SEBI receives a complaint or it initiates an enquiry or
  investigation in respect of public offer, it can call for a revised
  letter of offer. In this case, he submits that the draft letter of
E offer was given on October 28, 2011 well within 14 days period
  stipulated under Regulation 18(1 ). But SEBI did not issue its
  comments on the draft letter of offer within 21 days, as required.
  Not only there was a non-compliance of Regulation 18(1) but
  there was no occasion to invoke proviso to Regulation 18(2).
F SEBI did not inform or advise the respondent to revise the
  draft l13tter of offer on account of any inadequacy in the
  disclosure made by the respondent in the draft letter of offer in
  respect of the voluntary offer. All the queries were related to
  the past alleged triggers. These alleged triggers were wholly
G unrelated to the voluntary open offer for which the draft letter of
  offer was filed with the appellant. He then pointed out that by
  letter dated 171h November, 2011, the appellant again sought
  the same clarification on the alleged triggers, as stated in its
  letter dated November 11, 2011. He submitted that the
H
   SEBI v. M/S.AKSHYAINFRASTRUCTURE PVT. LTD.                       415
              [SURINDER SINGH NIJJAR, J.)

Merchant Banker and the respondent provided all explanation         A
regarding these acquisitions on November 28, 2011. The letter
dated November 24, 2011 of the respondent was forwarded
to the appellant by the Merchant Banker on November 28,
2011. This letter gave date wise explanation on all the issues
raised as to why no open offer was made pertaining to the           B
alleged triggers, as there was no violation of Regulation 11 (1)
and 11 (2) of the Takeover Regulations. This explanation was
reiterated on December 14, 2011 by the respondent/Promoters
but there was no response from the appellant to any of the
aforesaid letters. This led the respondent to a reasonable belief   C
that the explanation had been accepted. Subsequently, there
was a telephonic request by the appellant to provide the same
information on the alleged triggers in various formats. The
respondent duly re-arranged the same information in the
                                                                    0
desired format and provided the same to the appellant on
January 13, 2012, January 16, 2012 and February 3, 2012.
lnspite of all this, still there were no comments from the SEBI.
Mr. Nari man emphasized that the unjustifiable, inexplicable and
inordinate, delay on the part of the appellant in issuing           E
comments on the draft letter of offer created a situation wherein
it was impossible for the respondent to implement the
 voluntary open offer. By that time, the underlying decision to
consolidate shareholding had become infructuous by sheer
efflux of time. It was under these circumstances that the           F
respondent intimated its decision to withdraw its voluntary
open offer and sought withdrawal of the same in terms of the
 Regulation 27 of the Takeover Regulations.

      20. It was pointed out by Mr. Nari man that the respondent G
specifically and expressly sought opportunity of a personal
hearing on the aforesaid request for withdrawal, the appellant
did not revert on the request. The respondent once again
furnished the same information on the alleged triggers in
differef)t formats as required by the appellant through H
416        SUPREME COURT REPORTS                 [2014] 13 S.C.R.


A communications dated April 12, 2012; April 20, 2012;
  May 10, 2012; May21, 2012; June 6, 2012 and July 5, 2012.
  After a period of more than 13 months, from the date of filing
  of the draft letter of offer and after more than 8 months from the
  date of request for withdrawal, the appellant issued the
B impugned letter dated November30, 2012. Mr. Nariman points
  out that the directions issued in the impugned letter are wholly
  unjustified. He points out to the following two directions:-
          (a) Go ahead with the voluntary open offer on account of
 c        some alleged triggers (for creeping acquisitions under
          Regulation 11 of the Takeover Code, 1997) in the past
          i.e. 2006-07; 2007-08 and 2010-11.
          (b) make an open offer with upward revision in price per
          share. The share prices offered by the respondent in
 D
          2009 were RS.91.00 per equity share and as on date
          the prices is RS.315.90 per equity share.

           21. Mr. Nariman submitted that SAT without going into
   the merits and demerits of the alleged earlier acquisitions, has
 E left it open for SEBI to take appropriate action in accordance
   with law with regard to the aforesaid three acquisitions.
   Therefore, clearly the aforesaid three acquisitions have no
   connection whatsoever with the voluntary offer under
 F consideration in these proceedings.
          22. The next submission of Mr. Nariman is the foundation
   of all his other submissions. According to Mr. Nariman, there
   is a fundamental difference between a mandatory public offer
   and a voluntary open offer. It cannot be placed on the same
 G pedestal. According to learned senior counsel, in a mandatory
   public offer there exists an underlying transaction which triggers
   the Takeover Code under which the shareholders obtain a right
   to exit from the company. However, in a voluntary open offer,
   no such right accrues to the shareholders to exit the company,
 H
   SEBI v. M/S. AKSHYA INFRASTRUCTURE PVT.LTD.                     417
              [SURINDER SINGH NIJJAR, J.]

 since the offer is not the result of a triggered acquisition. In the A
 present case, the action of SEBI, according to Mr. Nariman, is
 contrary to Regulation 1.·8. The letter of offer was not ~ispatched
 to the shareholders as per Regulation 18(1 ). Regulation 15(4)
 deems that the offer is made on the date on which the Public
 Announcement has appeared in any newspaper. But according B
 to Mr. Nariman, this deeming fiction is for the purpose of price
 fixation for the offer. It has nothing to do with Regulation 18
 which is to dispatch the actual offer to the .shareholders.
 Therefore, according to Mr. Nariman, reliance placed by Mr.
  C.U. Singh on the expression "offer once made" in Regulation C
  27 is misconceived. This expression has to be understood in
  terms of Regulation 18. Since Regulation 18 had not been
  complied with and there was nb dispatch of the letter of offer
'to the shareholders, there was no question ofany prejudice
  being caused to the interest of the shareholders. Mr. Nariman D
  then submits that because bfthe inaction on the part of SEBI,
  the respondent would be squarely covered under Regulation
  27(1 )(b ). The approval of the letter of offer by the appellant is
  statutory in nature. Since it had not been granted within the E
  stipulated ·period of time, the respondent was entitled to
  assume that it had been refused. According' to Mr. Nariman, it
   has been erroneously submitted by Mr. C.U:Singh that the
   claim of the respondent is not covered' under Regulation
   27(1 )(b). Mr. Nariman theh submits that the judgment in Nirma F
   Industries is not applicable in the facts and circumstances of
  this case. Finally, he has submitted that the judgment in Nirm'a
   Industries (supra) requires.reconsideration. In support of this
   submission, he submits that Regulation 27 has to be
   interpreted by.keeping in mind the earlier Regulation 27(1 )(a). G
   In Nirma Industries, this Court has held that Regulation 27
   (b),(c) and (d)are all in the nature of impossibility. Mr. Nariman
   made a mention about Regulation 27(1)(a) which was omitted             .~



    by the SEBI (Substantial Acquisition of Shares and Takeovers)
                                                                     H
418         SUPREME COURT REPORTS                [2014] 13 S.C.R.


A (Second Amendment) Regulations, 2002 with effect from
 · September 9, 2002. Prior to deletion, it read as under:
           "-(a) the withdrawal is consequent upon any competitive
           bid"
              '
B       Based on this, he submits that economic viability of public
  offer was the genus of Regulation 27. The facts of this case
  would clearly place the request of the respondent for withdrawal
  of the public offer in the realm of impossibility. Mr. Nariman
C has submitted that for the interpretation of Regulation 27, the
  ejusdem generis principle would not apply as there is no
  common genus between Clauses 27(1 )(b)(c) and (d).

         23. Mr. C.U. Singh in rejoinder has submitted that in view
  of the law laid down in Nirma Industries, the public offer made
D by the respondent cannot be permitted to be withdrawn. Earlier
   incidence of the alleged triggers can be relied upon. According
  to him, the price has to be fixed on the basis of the public
  announcementloffer. He submits that Regulation 18(1) talks of
   14 days of the Public Announcement. Furthermore, public offer
E cannot be said to be made only on dispatch of the letter of
  offer to the individual shareholders. The impact on the
  securities market would follow the public announcement. He
  reiterates that even the withdrawal letter seeks permission to
  withdraw the Public Offer under Regulation 27. Finaily, he
F submits that the interpretation of Regulation 27 rendered in
  Nirma Industries Ltd. (supra) is correct. It fully applies to
  the facts of the present case. It is neither distinguishable nor
  does it require reconsideration.
G          24. We have considered the submission made by the
      learned counsel for the parties.
        25. Factually, it cannot be denied that in the years 2006-
  07, 2007-08 and 2010-11, the respondent had acquired shares
H in excess of 5% which breached the 5% creeping acquisition
   SEBI v. M/S. AKSHYA INFRASTRUCTURE PVT.LTD.                    419
              [SURINDERSINGH NIJJAR, J.]

limit. In our opinion, the respondent wasrequired to comply A
with Regulation 11 and make a Public Announcement to
acquire shares in accordance with law. The respondent
admittedly not having complied with Regulation 11, In our
opinion, the appellant was perfectly justified in taking the non-
compliance into consideration whilst considering the feasibility B
of the public offer made on 2Q 1h October, 2011.

        26. With regard to delay, we do not find much substance
 in the submission of Mr. C.U. Singh. Mr. Singh has sought to
 explain the delay on the ground that information sought by the   c
 appellant was not given bythe respondent. In our opinion, this
 was no ground for the appellant to delay the issuance of
 comments on the letter of offer, especially not for a period of
 13 months. In the event the information was not forthcoming,
·the appellant had the power to refuse the approval of the public D
 offer. It is true that under Regulation 18(2), SEBI was required
 to dispatch the necessary letters to the shareholders within a
 reasonable period. It is a matter of record that the comments
 were not offered for 13 months. Such kind of delay is wholly
 inexcusable and needs to be avoided. It can lead to avoidable E
 controversy with regard to whether such belated action is bona
 fide exercise of statutory power by SEBI. By adopting such a
 lackadaisical, if not callous attitude, the very object for which
 the regulations have been framed is diluted, if not frustrated. It
 must be remembered that SEBI is the watchdog of the F
 Securities Market. It is the guardian of the interest of the
 shareholders. It is the protective shield against unscrupulous
 practices in the Securities Market. Therefore, SEBI like any
 other body, which is established as a watchdog, ought not to G
 act in a lackadaisical manner in the performance of its duties.
 The time frame stipulated by the Act and the Takeover
 Regulations for performing certain functions is required to be
 maintained to establish the transparency in the functioning of
  SEBI.
                                                                    H
420        SUPREME COURT REPORTS                   [2014] 13 S.C.R.


A        27. Having said this, we are afraid such delay is of no
  assistance to the respondent. It will not result in nullifying the
  action taken by SEBI, even though belated. Ultimately, SEBI
  is charged with the duty of ensuring that every public offer made
  is bona fide for the benefit of the shareholders as well as
B acquirers. In the present case, SEBI has found that permitting
  the respondent to withdraw the public offer would be
  detrimental to the overall interest of the shareholders. The only
  reason put forward by the respondent for withdrawal of the offer
  is that it is no longer economically viable to continue with the
C offer. Mr. Nariman has referred to a tabular statement and data
  to show that there is no substantial variation in the share prices
  that ensued making of the public offer. Having seen the table,
  we find substance in the submission of Mr. Nariman that there
  is hardly any variation in the shares of the Target Company
0
  from 20 1hOctober, 2011 till 30th November, 2011 . The variation
  seems to have been between Rs. 78.10 (on 24.11.2011) and
  Rs. 87.60 (on 20.10.2011 ). Such a variation cannot be said to
  be the result of the public offer. But this will not detract from the
E well known phenomena that PublicAnnouncement of the public
  offering affects the securities market and the shares of the
  Target Company. The impact is immediate.

         28. We are unable to agree with the submission of
   Mr. Nariman that Regulation 27 would not be applicable to a
 F voluntary public offer. A perusal of Regulation 27(1) makes it
   patently clear that Regulation 27 (1) reads "no public offer, once .
   made, shall not be withdrawn except under the following
   circumstances." Accepting Mr. Nariman's submission would
 G be to reconstruct the aforesaid provision. This Court, or any
   other court, whilst construing the statutory provision cannot
   reconstruct the same, The plain reading of the aforesaid
   regulation makes it clear that no public offer whether it is
   voluntary or triggered by Regulation 11 can be withdrawn,
 H unless it satisfies the circumstances set out in Regulation
   SEBI v. M/S. AKSHYA INFRASTRUCTURE PVT.LTD.                   421
              [SURINDER SINGH NIJJAR, J.]

27(1 )(b), (c) and (d). There can be no distinction between a    A
triggered public offer and a voluntary public offer. Both have
to be considered on an equal footing. We find substance in
the submission made by Mr. C.U. Singh that Regul~tion 18{2)
has no relev~:mce to the case projected by the respondents
having singularly failed to give the necessary information to    B
SEBI with regard 'to the earlier three acquisiti~ns.

      29. We also do not agree with Mr. Nariman that
Regulation 27.has to be read in the context.ofthe Regulation
as it existed when it was first enacted. As noticed earlier,     c
Regµlation 27(1 )(a) before its deletion on September 9, 2002
permitted the public offer to be withdrawn, consequent upon
any competitive bid. We see no reason to differ from the view
taken in Nirma Industries Ltd. (supra) wherein we have
observed as follows:                                             D

      "62. A bare perusal of the aforesaid Regulations·
                                                -    .      .
                                                          shows
      that Regulation 27(1) states the general rule in nega_tive
      terms. It provides that no public offer, once made, shall
      be withdrawn. Since clause (a) has been omitted, we E
      are required to interpret only the scope and ambit of
      clauses (b), (c) and (d). The three sub-clauses are
     -exceptions to the general rule and, therefore, have to be
      construed very strictly. The exceptions cannot be
      construed. in such a manner that would destroy the F
      general rule that no public offer shall be permitted to be
      withdrawn after the public announcement has been made.
      Clause (b) would permit a public offer to be withdrawn,. in
      case of legal impossibility when the statutory approval
      required has been refused. Clause (c) again provides G
      for impossibility when th~ sole acquirer, being a natural
      person, has died. Clause (b) deals with a legal
      impossibility whereas clause (c) deals with a natural
      disaster. Clearly clauses (b) and (c) are within the same
                                                                  H
422         SUPREME COURT REPORTS                   [2014] 13 S.C.R.


A           genus of impossibility. Clause (d) also being an exception
            to the general rule would have to be naturally construed
            in terms of clauses (b) and (c). Mr Divan has placed a
            ~ireat deal of emphasis on the expression "such
            circumstances" and "in the opinion" to indicate that the
B           Board would have a wide discretion to permit withdrawal
            of an offer even though it is not impossible to perform.
            We are unable to accept such an interpretation."

           30. The submission with regard to the non-applicability
c     of ejusdem generis for interpretation of the Takeover
      Regulations has been considered and rejected in Nirma
      Industries Ltd. (supra) (Paragraphs 63 to 71 ).

            31. We are also not impressed by the submission of
D     Mr. Nariman that it has now become economically impossible
      to give effect to the public offer. This very submission has been
      rejected in Nirma Industries Ltd. (supra). We reiterate our
      opinion in Nirma Industries Ltd. (supra) that under
      Clause 27(1 )(b)(c) and (d), a Public Offer, once made, can
E     only be permitted to be withdrawn in circumstances which
      make it virtually impossible to perform the Public Offer. In fact,
      the very purpose for deleting Regulation 27 (1)(a) was to remove
      any misapprehension that an offer once made can be
      withdrawn if it becomes economically not viable. We are of
 F    the considered opinion that the distinction sought to be made
      by Mr. Nariman between a voluntary public offer and a
      triggered public offer is wholly misconceived. Accepting such
      a submission would defeat the very purpose for which the
      Takeover Code has been enacted.
G
        3:2. We also do not find any merit in the submission of
   Mr. Nariman that the delay of 13 months by SEBI in issuing the
   impugned directions would permit the respondent to withdraw
   the Public Offer under Regulation 27(1 )(b ). The consideration
 H by SEBI is as to whether a Public Offer is in conformity with
     SEBI v. M/S. AKSHYA INFRASTRUCTURE PVT. LTD.                 423
                [SURINDER SINGH NIJJAR, J.]

the provisions of the SEBI Act and the Takeover Regulations. A
Delay in performance of its duties by SEBI can not be equated
to refusal of the statutory approval requires from other
independent bodies, such as under the RBI, Taxation Laws
and other regulatory statutes including Foreign Exchange
Regulations. Delay by SEBI in taking a final decision in making B
its comments on the letter of offer would not fall under
Regulation 27 (1)(b ).

       33. This now brings us to the submission of Mr. Nariman.
that there was a breach of Rules of Natural Justice. It is matter c
of record that the respondent had asked for an opportunity of
hearing but none was granted. But the question that arises is
as to whether this is sufficientto nullify the decision of SEBI. In
our opinion, the respondent has failed to place on the record
either before SAT or t:>efore this Court the prejudice that has D
been caused by not observing Rules of Natural Justice. It is by
now settled proposition of law that mere breach of Rules of
Natural Justice is not sufficient. Such breach of Rules of Natural
Justice must also entail avoidable prejudice to the respondent.
This reasoning of ours is supported by a number of cases. E
We may, however, refe,r to the law laid down in Natwar Singh
Vs. Director of Enforcement & Anr.. 3 wherein it was held
that "there must also have been caused some real prejudice
to the complainant; there is no such thing as a merely technical
infringement of natural justice."                                   F
      34. All the information sought by SEBI related to the three
earlier acquisitions when the creeping limit for acquisition has
been breached for triggering the mandatory Takeover
Regulations. In appeal, SAT has left the question with regard G
to the earlier three acquisitions open arid to be decided in
accordance with law. Therefore, clearly no prejudice has been
caused to the respondent.
3
    (2010)13 sec 255
                                                                   H
424         SUPREME COURT REPORTS                  [2014] 13 S.C.R.


A            35. Finally, we are unable to accept the submission of
      Mr. Nariman that the ratio of law as declared in Nirma
      Industries Ltd. (supra) would not be applicable to the facts
      and circumstances of this case. As pointed out earlier, we do
      not accept the distinction sought to be made by Mr. Nariman
 B    with regard to voluntary open offerand mandatory open offer
      which is the result of a triggered acquisition. The
      consequences of both kinds of offers to acquire shares in the
      Target Company, at a particular price, are the same. As soon
      as the offer price is made public, the securities market would
 C    take the same into account in all transactions. Therefore, the
      withdrawal of the open offer will have to be considered by the
      Board in terms of Regulation 27(1 )(b)(c) and (d). Further, the
      deletion of Regulation 27(1 )(a) does not, in any manner,
      advance the case of the respondent. It rather reinforces the
 D    conclusion that an open offer once made can only be withdrawn
      in circumstances stipulated under Regulation 27(1 )(b )(c) and
      (d). We also do not agree with Mr. Nariman that voluntary open
      offer made by the respondent ought to be permitted to be
 E    withdrawn under Regulation 27( 1)(b) for the reasons already
      stated. We have already come to the conclusion that the delay
      in offering comments by the Board on the letter containing
      voluntary open offer, though undesirable, is not fatal to the
      decision ultimately taken by the Board. We, therefore, reiterate
 F    our conclusion in Nirma Industries (supra).
         36. We also do not find substance in the submission of
   Mr. Nariman that the judgment in Nirma Industries (supra)
   needs reconsideration. In our opinion, the ejusdem generis
 G principle is fully applicable for the interpretation of Regulation
   27(1 )(b)(c) and (d) as there is a common genus of
   impossibility. This impossibility envisioned under the
   aforesaid regulation would not include a contingency where
   voluntary open offer once made can be permitted to be
 H withdrawn on the ground that it has now become economically
   SEBI v. M/S. AKSHYA INFRASTRUCTURE PVT.LTD.                     425
              [SURINDER SINGH NIJJAR, J.]

 unviable. Accepting such a submission, would give a field day A
 to unscrupulous elements in the securities market to make
 Public Announcement for acquiring shares in the Target
 Company., knowing perfectly well that they can pull out when
 the prices of the shares have been inflated, due to the public
 offer. Such speculative practices are sought to be prevented B
 by Regulation 27(1 )(b)(c) and (d), that is precisely the reason
 why Regulation 27(1 )(a) was deleted. Merely because there
 has not been any substantial change in the price of shares in
.this particular case, would not, in any manner, invalidate the
 conclusion reached in Nirma Industries (supra).                  C

     37. Last but not least, we are not able t9 approve the
approach adopted by SAT in adopting the Issue of Capital
and Disclosure Requirements Regulations, 2009 (ICDR)
Regulation for interpreting the provisions contained in            D
Regulation 27 of the Takeover R~gulations. The regulations in
Takeover Code have to be interpreted by correlating these
regulations to the provisions of the SEBI Act.

      38. In view of the above, the appeal is allowed. The         E
impugned order passed by the SAT dated 19th June, 2013 in
Appeal No.3 of 2013 is set aside and the directions issued by
the appellant in the letter dated 3Qth November, 2012 are
restored.
                                                                   F

Bibhuti Bhushan Bose                             Appeal allowed.