Pawan Kumar Saraf vs Sebi

1. The appellant has filed the present appeal praying for the

quashing of the order dated May 02, 2018 passed by Securities

and Exchange Board of India ("SEBI" for convenience) to the

extent that SEBI should direct the acquirer and other

Respondent Nos. 2 to 5 to revise the offer price from ` 55.22

per share to ` 79.58 per share along with interest.

2. The facts leading to the filing of the appeal is, that the

appellant is an investor and a shareholder in the target company

known as Xchanging Solutions Limited. Respondent No. 2 is

the acquirer and Respondent No. 5 is the merchant banker. A

Merger Agreement dated May 24, 2016 was executed between

Hewlett Packard Enterprise Company, Computer Sciences

Corporation and Respondent No. 4 i.e. DXC Technology 3

Company. Pursuant to this Merger Agreement, the acquirer,

Respondent No. 2 along with Respondent Nos. 3 & 4 were

required to make a public announcement under the Securities

and Exchange Board of India (Substantial Acquisition of Shares

and Takeovers), Regulations, 2011 ("Takeover Regulations,

2011" for convenience).

3. According to the appellant, the public announcement was

to be made within four working days from the date of the

Merger Agreement as per Regulation 13(2)(e) of the Takeover

Regulations. The acquirer failed to make an announcement

within the stipulated period and no action has been taken by

SEBI against the acquirer. It was stated that ultimately the

announcement was made on November 17, 2017 after 18

months.

4. The grievance of the appellant is, that the offer price is

required to be made as per the terms of Regulation 8(3)(e) of the

Takeover Regulations read with Regulation 2(1)(j) which

defines "frequently traded shares" which were existing prior to

amendment of the said Regulation on September 11, 2018. It

was contended that if the old definition of "frequently traded

shares" was considered which was existing prior to September

11, 2018, the price per share would be fixed at ` 79.58 and if the 4

frequently traded shares as per the amendment made on

September 11, 2018 is taken into consideration the price would

be ` 52.22 per share.

5. Thus, according to the appellant the offer price of

` 55.22 per equity share sought to be paid to the public

shareholders including the appellant by the acquirer-Respondent

No. 2 has been calculated erroneously and contrary to the

Takeover Regulations, 2011 and is detrimental to the interest of

the public shareholders.

6. Having heard the learned counsel for the parties, the

question whether the amended definition of Regulation 2(1)(j)

would be applicable or the old definition would be applicable

has to be considered and decided by some authority. In the

instant case, we do not find as to how the offer price of ` 55.22

was arrived at by the merchant banker as approved by SEBI.

Further, the question that the offer price should be considered as

on the date the public announcement of the offer was made i.e.

on November 17, 2017 or on the date when the Merger

Agreement on May 24, 2016 was made is also required to be

considered. Since, we find that the authority has not considered

these aspects it will not be appropriate for this Tribunal to

consider these propositions at this stage. 5

7. In this regard, we find that the appellant had written

several emails to SEBI intimating them that the offer price was

required to be calculated as per the unamended definition of

frequently traded shares. It seems that SEBI has not dealt with

the objections raised by the appellant while finalizing the offer

price of the acquirer.

8. For the reasons stated aforesaid, we dispose of this

appeal directing the appellant to file a consolidated

representation afresh annexing the earlier emails. Such

representation shall be filed within four weeks from today. The

representation filled by the appellant shall be decided by a

reasoned and speaking order by SEBI after hearing all parties

concerned within three months from the date when the

representation is filed along with the certified copy of this order.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C.K.G. Nair Member

Sd/-

Justice M. T. Joshi Judicial Member 19.09.2019 Prepared & Compared By: PK