AB & ANR Vs.
Securities & Exchange Board, India & ANR  INSC 491 (25 August 2004)
N. Santosh Hegde,S.B. Sinha & A.K. Mathur S.B. SINHA, J: BACKGROUND FACTS:
Wimco Limited (Wimco) is a target company. Its shares are listed on the
stock exchanges at Mumbai, Delhi, Calcutta, Kanpur as also on the National
Stock Exchange. It is engaged in the business of manufacture and sale of a
broad range of safety matches.
The Appellant No. 1 herein (Swedish Match) is incorporated in Sweden. It is
a holding company of the Appellant No. 2 (S.M.S) holding its entire paid up
capital. It is also a holding company of Haravon Investments Private Limited
(Haravon) and Seed Trading Private Limited (Seed). These four companies
hereinafter would be called and referred to as the Swedish Match Group. It had
acquired in the target company 52.11% shares, i.e., 46.18% by Haravon and 5.93%
by Seed. AVP Trading Private Limited (AVP) and Plash Floods P. Ltd. (Plash)
were Indian promoters of the target company. They belong to one Jatia Group of
companies holding 24.11% of the share capital of the target company, i.e., AVP
holding 6.03% and Plash holding 18.08%.
The Swedish Match entered into an agreement with the Jatia Group to acquire
majority shoreholding in Haravon and Seed and to make a public announcement of
offer to acquire 20% shares in Wimco. The obligation to make a public
announcement of offer arose in view of indirect acquisition of more than 10%
shares in Wimco (in view of the law as prevailing thence) attracting the
provisions of Regulation 10 of the SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997 (hereinafter called and referred to for the sake
of brevity as "the Regulations").
On or about 17th December, 1997, the public announcement of offer was made
by S.M.S. together with the Jatia Group of Companies, viz., Plash and AVP as
"acquirers" and "persons acting in concert". In the letter
of offer, it was specified that both Swedish Match Group and Jatia Group intend
to exercise joint control over the affairs of Wimco. For the purpose of the
public announcement of offer, 'Haravon' and 'Seed' being subsidiaries of
Swedish Match Singapore were deemed to be "persons acting in concert"
in terms of Regulation 2(e)(2)(i) of the 'Regulations'.
Upon completion of the process of public offer, the share holding in Wimco
was as under : Haravon 28.28%, Seed 10.33%, AVP 5% and Plash 15%. The aggregate
of total share holding of both the groups, thus, came to 58.61%.
It is not in dispute that subsequent to April, 1998 the said Groups were
exercising joint control over the affairs of Wimco. By a Special Resolution
adopted in this behalf, the target company allotted shares on a preferential
allotment basis to 'Haravon', 'AVP' and 'Plash' purported to be in terms of
Section 81(1)(A) of the Companies Act, 1956
whereupon the share holding in Wimco came to as under:
Haravon 46.18%, AVP 6.03%, Plash 18.08%.
As no preferential shares were allotted to Seed, its shareholding was
diluted to 5.93%.
Swedish Match Group, thus, held 52.11% and Jatia Group held 24.11% of the
total shares in Wimco. The aggregate shareholding of both the Groups came to
76.22%. The Government of India by an order dated 5th July, 1999 permitted increase in foreign equity participation in the target company from 38.61% to 52.11%.
S.M.S. thereafter acquired from Jatia Group (as the latter was desirous of
exiting from the joint control over Wimco) the following extent of share:
AVP 5.47%, Plash 16.42%, at a price well above the market price.
Pursuant to or in furtherance of the letter of the Government of India dated
19th May, 2000 increasing foreign collaboration to the extent of 74.00438%;
the Swedish Match Group acquired 74% shareholding and Jatia Group was left with
2.22% in Wimco.
It is also not in dispute that although the market value of each acquired
share of the target company was only Rs. 9.55; the consideration paid to Jatia
Group by the Swedish Match Group was Rs. 35/- per equity share. Pursuant to or
in furtherance of the said arrangement, the Directors belonging to Jatia Group
resigned as a result whereof, their joint control with Swedish Match Group
ceased leading to sole control of the latter.
Allegedly, the cessation of joint control was approved in a general meeting
of the shareholders of Wimco held on 27th September, 2000. S.M.S.
thereupon by a letter dated 27th September, 2000 in terms of Regulation 7 of
the Regulations disclosed to WIMCO its holding of more than 5% of the equity
share capital. The said transaction was also brought to the notice of the SEBI
(the Board) by a letter dated 28th September, 2000. It also agreed to adhere to
the 'lock-in' restrictions applicable to the locked in shares forming part of
21.89% shares purchased from AVP and Plash (Jatia Group of Companies). Upon
receipt of the said information, SEBI by a letter dated 17th October, 2000 made
a query as to whether the said transaction took place in accordance with
Regulation 20 (pricing guidelines), Regulation 7 (mandatory disclosures) and
Regulation 12 (change in control) of the Regulations, in response whereto,
Swedish Match by a letter dated 1st November, 2000 submitted its replies
thereto. An additional query by SEBI was made as regard calculation of market
price and compliance of the provisions of the Regulations by a letter dated 30th November, 2000; to which a reply was given on 8th January, 2001.
PROCEEDINGS BEFORE SEBI :
A show-cause notice was served upon the Appellants by SEBI asking them to
show cause as to why no public announcement of offer had been made in terms of
Regulations 10 and 11(1) of the Regulations stating:
"4. As you have acquired the shares of WL in the manner as stated above
without making a public announcement as required by the provisions of the
captioned regulations, you have, prima-facie, violated the provisions of
Regulation 10 individually and Regulation 11(1) collectively of the captioned
Regulations and, therefore, you are liable for penal action under the
Regulations and SEBI Act, 1992.
5. In view of the above, you are called upon to show cause as to why one or
more or all action (s) under Regulation 44 and Regulation 45(6) of the
Regulations and Section 11B of the SEBI Act 1992, should not be initiated
against you for violation specified above." The Appellants herein filed a
show cause before the Board.
ORDER OF SEBI :
The Chairman, SEBI upon hearing the Appellants by an order dated 4th June, 2002 observed that Regulation 12 has no application.
It was, however, held:
"In view of the above, the submission of the Acquirers that Regulation
11(1) should exclude a transaction involving a transfer of shares as part of
cessation of participation in joint control, particularly where such persons in
joint control acquired shares as persons acting in concert is not tenable.
Therefore, if an Acquirer triggers either of the Regulations, i.e.,
Regulations 10, 11 or 12, he has to make a public announcement unless the
acquisition is specifically exempt in terms of the Regulations. Therefore, each
of the Regulations 10, 11 & 12 has to be complied with independently by the
Acquirers. The acquisition falling under proviso to Regulation 12 is not
automatically exempt from the applicability of Regulations 10 & 11."
Consequent upon the said findings, the following directions were issued :
"In view of the above the exercise of the powers conferred upon me
under sub-section (3) of Section 4 read with Section 11B SEBI Act 1992
(hereinafter referred to as the Act) read with Regulation 44 & 45 of the
Regulations, I hereby direct the Acquirers to make public announcement in terms
of Chapter III of the Regulations in terms of sub-Regulation (1) of Regulation
11 taking 27/9/2000 as the reference date for calculation of offer price within
45 days of passing of this order." THE TRIBUNAL :
Aggrieved by and dissatisfied with the said order, an appeal was filed by
the Appellants herein before the Securities Appellate Tribunal (Tribunal).
The Tribunal took notice of the Appellant's letter dated 28.9.2000
contending "We wish to inform you that we have through our wholly owned
subsidiary Swedish Match Singapore Pte. Ltd. and pursuant to the requisite
approvals acquired an additional 11382800 equity shares from the aforesaid Indian
companies such that we are not in sole control of WIMCO Ltd." and held:
"Sequence has been mentioned correctly thus that they acquired
additional shares and thereby acquired sole control of WIMCO Ltd. As the
control is relatable to the shareholding in the instant case and to nothing
else and cessation of control was due to divesting of the said ownership of
shares in the absence of any other evidence to the contrary it can be safely
concluded that the Acquirers acquired shares from the Jatia Group and
consequently Jatia Group ceased to be in joint control of the target company.
Assuming that if the Jatia Group had been in joint control due to some other
factors, then section 11 would not have attracted. In the instant case, it is a
clear case of acquisition of shares and cessation of control consequential to
divestment of shares held by the person in control." (Emphasis supplied)
Holding that the provisions of Regulations 11(1) and 12 are not in conflict
with each other in any manner and further holding that the Regulation is a
beneficial legislation, the Tribunal held:
"The legislative intent behind the Regulations is clear. The objective
is to protect the interests in securities. It is with the said objective that
regulations 10, 11 and 12 have been framed providing an opportunity to the
existing shareholders of a company under acquisition and that exit opportunity
cannot be denied by resorting to a narrow and technical interpretation of the
regulations. As already stated in this order regulations 10, 11 and 12 are put
in position to meet different situations. Which one of these regulations is
attracted to an acquisition, would depend on the specific facts. In my opinion
in the light of the facts, as the Respondent has held, the acquisition in question
attracts the provisions of regulation 11(1)." This appeal has been filed
by the Appellants herein before this Court in terms of Section 15-Z of the
Securities and Exchange Board of India Act, 1992 (for short "the
Act") SUBMISSIONS :
Mr. F.S. Nariman, learned senior counsel appearing on behalf of the
Appellants would contend that although each one of the Regulation 10, 11 and 12
of the Regulations require making of public announcement, but the same are
mutually exclusive and independent of one another as they address different
types of acquisitions (as found by SEBI) and should necessarily, thus, be
limited to the context of the situation with which it deals and should not be
projected into the other.
The learned counsel would point out that Regulation 10 applies to initial
acquisition of shares or voting rights by an acquirer whereas Regulation 11
having been captioned as "Consolidation of Holdings" deals with
consolidation of existing shareholder (s) by way of acquisition of additional
shares, i.e., such acquisition must be by way of combined shareholding of
acquirer and persons who previously acted in concert with him resulting in
increase of more than 5% and in case of Regulation 11(1), by acquisition of any
Regulation 11, Mr. Nariman would submit, does not cover purchase of shares
by the acquirer from the persons who have previously acquired shares in concert
with him as in such a case there is no acquisition of additional shares as the
aggregate shareholding of the parties does not increase at all and far less by
5%. Elaborating his submission, Mr. Nariman would argue that as both Swedish
Match Group and Jatia Group had 76.22% which was reduced to 74%, there had been
no acquisition of additional shares and in that view of the matter the
purported admission by the Appellants in its letter dated 28.9.2000 should be
ignored. Proviso appended to Regulation 12, according to Mr. Nariman, is
squarely attracted in the instant case, in view of the fact that the
shareholders in a general meeting had approved the change in control in favour
of the Swedish Match Group from the joint control of Swedish Match Group and
Jatia Group and in that view of the matter, no public announcement therefor was
required. In the alternative it was submitted that Regulation 11 does not
envisage inter se transfer between one group to the another. The Scheme of the
statute is such, it was urged, that the requirement of public announcement is
not attracted in all cases which would be evident from Regulation 3 of the Regulations
and in that view of the matter it cannot be said that the proviso appended to
Regulation 12 will have no application in the instant case. In this connection
our attention has also been drawn to the subsequent amendments made to the
regulations. The learned counsel would argue that also in a situation like
death or bankruptcy of a person in joint control may lead to sole control of
the target company in which event also the rigours of Regulation 12 will have
no application. Pointing out the difference between Regulations 11 and 12, it
was urged that whereas in terms of Proviso to Regulation 12 the change in
control is exempted from the applicability thereof (which otherwise requires
the making of a public announcement) by a resolution passed by the shareholders
in the General Meeting, but the necessity of making a public offer under
Regulation 11 cannot be condoned by the shareholders because a right to have
the shares offered under the public offer is conferred upon the remaining
shareholders as even a majority of them cannot barter away the right of a
minority. The position, however, would be different in a case where change in
control of the target company is approved by the majority of the shareholders
in a general meeting, as therein the question as regard protection of the
interest of the shareholders would fall for cosnideration.
Regulations 10, 11 and 12 having been intended for the benefit of the
shareholders of the target company, the learned counsel would argue, only a
letter of offer is required to be sent to all the shareholders of the target
company in terms of Regulation 22(3) for the purpose of allowing and enabling
the existing shareholders to avail of the opportunity to offer their shares for
purchase to the acquirers at a price specified in the public announcement and
the letter of offer. Requirement of change from joint control to sole control
would be fulfilled if all the existing shareholders approved the change from
joint control to sole control, urged Mr. Nariman, as by reason of such a
resolution, the transfer from joint control to the sole control would be
offered which would amount to an election not to exit from the company and to
remain therein under the management of the sole controller.
It was urged that Explanations (i) and (ii) are explanations to the proviso
appended to Regulation 12 and not to the main part thereof, which had been
inserted only for the purpose of clarifying the phrase "change in
control" occurring therein.
The learned senior counsel would submit that where there is a mere cessor of
control by one out of two persons already in control or where any person or
persons are given joint control and the combined degree of control is not
greater than being presently exercised, a resolution in a general meeting is
not necessary; since there is no change in control and, thus, the question of
any acquisition of control within the meaning of the main part of Regulation 12
would not arise. Proviso to Explanation (i) i.e. cessor of control by one or
more persons already in control, according to Mr.
Nariman, imposes a further restriction if the transfer of joint to sole
control is through sale of shares at less than the market value of the shares,
in which an event only a special Resolution is required to be passed at a
specially called meeting of the shareholders of the target company.
Without prejudice to the submissions as referred to hereinbefore, Mr.
Nariman would argue that once a direction has been issued by the Board, the
penalties specified in Regulation 44 including (a) criminal prosecution under
Section 24 of the Act; (b) monetary penalty under Section 15H of the Act and
(c) directions under the provisions of Section 11B of the Act may ensue but in
the facts and circumstances of the case penal provisions should not have been
directed to be resorted to having regard to the fact that the Regulations
contained no clear and unambiguous words to indicate the true legal position.
The penal provisions, it was contended, are required to be strictly construed.
Reliance in this connection has been made on Francis Hartford Shankhouse and
District Workingmen's Social Club and Institute, Sharma and Another[(1973) 2
SCC 257 at 261].
Mr. Kirit N. Raval, learned senior counsel appearing on behalf of the
Respondent, on the other hand, would contend that the language in Regulations
10, 11 and 12 of the Regulations being clear and unambiguous, this Court should
apply the principles of literal interpretation. He would urge that having
regard to Explanation I appended to Regulation 12, the question of application
of Regulation 12 would not arise inasmuch as by reason thereof a transfer of
control from joint owners (Swedish Match A.B.
and Jatia Group) to a single sole owner (Swedish Match Group) stands
excluded from the concept of "Change in Control".
Mr. Raval would submit that although the Board has accepted the position
that there was no violation of Regulation 12, relying on or on the basis of
proviso appended thereto, the Tribunal has clearly held that there has been no
change in control in terms of the Regulations and in that view of the matter
the opinion of the Tribunal shall prevail over that of the Board.
State of T.N. [(2002) 8 SCC 361].
The learned counsel would strenuously urge that the application of
Regulation 11 cannot be excluded by bringing the transaction in question as
having been made under Regulation 12 in terms whereof an additional liability
was required to be incurred by the Appellants. It was pointed out that no
disclosure has ever been made by the Appellants that in fact they had intended
to purchase the shares belonging to the Jatia Group at a price of Rs. 35 as
against the then prevailing market price of Rs. 9.55 per equity share. In fact
the stand of the Appellants had all along been that they would not sell the
shares below the market price and, thus, indicating that the shares would be
sold at the prevailing market price.
Mr. Raval would urge that the Appellants withheld a very valuable
information from the shareholders i.e. the actual price of share being paid to
Jatia Group which would have otherwise become known to them if a public
announcement of offer was made. If it is to be held that even in a case of this
nature no public announcement is to be made, the intent and purport of the
legislature in bringing Regulations 10, 11 and 12 to the statute book with a
view to protect the interest of the investors shall be frustrated.
The learned counsel would further submit that the regulations were amended
only for the purpose of plugging the loopholes which existed in the 1994
Regulations in terms of the recommendations of a Committee consisting of
experts in the fields of law, securities market, accounts, finance, management
etc. and, thus, if the interpretation of regulations as suggested by Mr.
Nariman, is accepted, the same would frustrate the object of bringing the said
regulations. Reliance in this behalf has been placed on and Anr. [(1990) 4 SCC
The learned counsel would urge that Regulations 14, 15 and 16 clearly make a
distinction in the timing of offer to be made between Regulations 10 and 11 on
the one hand and Regulation 12, on the other, having regard to the fact that
process of action initiating the operation of Regulations 10, 11 and 12 would
In a given case, Mr. Raval would submit, a transaction may trigger both
Regulations 11 and 12, in which event, an appropriate combined notice of public
announcement of offer may be issued.
Drawing our attention to Regulation 44, the learned counsel would contend
that in terms thereof the Board is not obliged to issue any direction only in
terms of Clauses (a) to (d) thereof as the words "give such directions as
it deems fit including" must be held to be of wide amplitude. Clauses (a)
to (d) are only illustrative and not exhaustive and in that view of the matter,
the Board was within its jurisdiction to issue the impugned directions.
It was contended that the penal provisions contained in Section 15H are not
the subject matter of the present proceedings. Further, an order which may be
passed under Section 15H of the Act would be separate and distinct.
ISSUE FOR DETERMINATION :
The core issue which falls for our determination is the interpretation of
Regulations 10, 11 and 12.
STATUTORY PROVISIONS :
and Exchange Board of India Act, 1992 was enacted to provide for the
establishment of a Board to protect the interests of investors in securities
and to promote the development of, and to regulate, the securities market and
for matters connected therewith or incidental thereto.
Section 11 of the Act provides for functions of the Board which would
include registering and regulating the working of persons specified in Clauses
(b) and (ba). Section 11A provides for the matters which are to be disclosed by
the companies. Section 11B empowers the Board to issue directions as specified
Chapter VIA of the Act deals with penalties and adjudication whereas Section
15A provides for penalty for failure to furnish information, return etc.,
Section 15H provides for penalty for non-disclosure of acquisition of shares
and takeovers which include a case where public announcement to acquire shares
at a minimum price is not made as required under the Act or the rules or the
regulations. Section 15H of the Act provides for a penalty of twenty-five
crores or three times the amount of profits made out of such failure, which is
higher. Section 15I confers power upon the Board to adjudicate in the event a
penalty proceeding is directed to be initiated.
Section 15T deals with appeal to the Securities Appellate Tribunal. Section
15Z, which has been brought in the statute book by Act 59 of 2002, provides for
an appeal to this Court from any decision or order of the Tribunal on any
question of law arising thereunder.
Regulation 2(e) of the Regulations defines "person acting in
Regulation 3 inter alia contains an exclusionary clause stating that the
matters specified therein shall not apply to Regulations 10, 11 and 12.
Regulations 10, 11(i) and 12 of the Regulations read as under:
"10. Acquisition of [15%] or more of the shares or voting rights of any
company. No acquirer shall acquire shares or voting rights which (taken
together with shares or voting rights, if any, held by him or by persons acting
in concert with him), entitle such acquirer to exercise fifteen percent or more
of the voting rights in a company, unless such acquirer makes a public
announcement to acquire shares of such company in accordance with the
11. Consolidation of holdings (1) No acquirer who, together with persons
acting in concert with him, has acquired, in accordance with the provisions of
law, 15 per cent or more but less than 75 per cent of the shares or voting
rights in a company, shall acquire, either by himself or through or with
persons acting in concert with him, additional shares or voting rights
entitling him to exercise more than 5% of the voting rights, in any period of
12 months, unless such acquirer makes a public announcement to acquire shares
in accordance with the Regulations.
12. Acquisition of control over a company - Irrespective of whether or not
there has been any acquisition of shares or voting rights in a company, no
acquirer shall acquire control over the target company, unless such person
makes a public announcement to acquire shares and acquires such shares in
accordance with the Regulations.
Provided that nothing contained herein shall apply to any change in control
which takes place in pursuance to a resolution passed by the shareholders in a
Explanation : (i) For the purposes of this Regulation where there are two or
more persons in control over the target company, the cessor of any one such
person from such control shall not be deemed to be a change in control of
management nor shall any change in the nature and quantum of control amongst
them constitute change in control of management.
Provided however that if the transfer of joint control to sole control is
through sale at less than the market value of the shares, a shareholders
meeting of the target company shall be convened to determine mode of disposal
of the shares of the outgoing shareholder, by a letter of offer or by
block-transfer to the existing shareholders in control in accordance with the
decision passed by a special resolution. Market value in such cases shall be
determined in accordance with Regulation 20.
(ii) where any person or persons are given joint control, such control shall
not be deemed to be a change in control so long as the control given is equal
to or less than the control exercised by person(s) presently having control
over the company." Regulation 14 provides for the timing of public
announcement of offer to the effect that the same shall be made not later than
four working days of entering into an agreement for acquisition of shares or
voting rights or deciding to acquire shares or voting rights exceeding the
respective percentages specified therein. Clause (3) of Regulation 14 provides
for public announcement referred to in Regulation 12 to be made not later than
four working days after any such change or changes are decided to be made as
would result in the acquisition of control over the target company by the
Regulation 14 provides for the mode and manner of the public announcement to
be made under Regulations 10, 11 or 12 whereas Regulation 16 specifies the
Regulation 44 of the Regulations reads as under:
"44. Directions by the Board - The Board may, in the interests of the
securities market, without prejudice to its right to initiate action including
criminal prosecution under section 24 of the Act give such directions as it
deems fit including :
(a) *** (b) *** (c) directing the person concerned to sell the shares acquired
in violation of the provisions of these Regulations;" Regulation 44, as
amended in the year 2002, provides for several directions. Clauses (f) and (i)
thereof are in the following terms:
"44. Directions by the Board. Without prejudice to its right to
initiate action under Chapter VIA and section 24 of the Act, the Board may, in
the interest of securities market or for protection of interest of investors,
issue such directions as it deems fit including: - (f) directing the person
concerned to make public offer to the shareholders of the target company to
acquire such number of shares at such offer price as determined by the Board;
(i) directing the person concerned, who has failed to make a public offer or
delayed the making of a public offer in terms of these Regulations, to pay to
the shareholders, whose shares have been accepted in the public offer made
after the delay, the consideration amount along with interest at the rate not
less than the applicable rate of interest payable by banks on fixed deposits."
Establishment of independent regulatory agencies and need for expert
regulations were long felt primarily as a response to the growing complexity in
human affairs and trade and business in particular. It was felt that a
regulator who was aware of the realities of that field should be ready to
regulate that field. Demand for regulators who were not mere Government
officials but people who are experts in the field came up. Regulations framed
by an expert body like SEBI was felt to be an effective substitute for
government regulation. The evolution in respect whereof can be traced back to
the Great Depression of 1930s. As a part of the new deal, several expert bodies
were established like the Federal Communications Commission and Securities
Exchange Commission. In the Indian context, this rationale was invoked for the
establishment of an expert body to regulate the securities market after the
Securities Scam in 1992.
The statement of Objects and Reasons of the Act are as under :
"Securities and Exchange Board of India (SEBI) was established in 1988
through a Government resolution to promote orderly and healthy growth of the
securities market and for investors' protection. SEBI has been monitoring the
activities of stock exchanges, mutual funds, merchant banks, etc., to achieve
The capital market has witnessed tremendous growth in recent times,
characterized particularly by the increasing participation of the public.
Investors' confidence in the capital market can be sustained largely by
ensuring investors' protection.
With this end in view, Government decided to vest SEBI immediately with
statutory powers required to deal effectively with all matters relating to
capital market. As Parliament was not in session, and there was an urgent need
to instill a sense of confidence in public in the growth and stability of the
market, the President promulgated the Securities and Exchange Board of India
Ordinance, 1992 (Ord. 5 of 1992) on 30th January, 1992. The Bill seeks to
replace the aforesaid Ordinance".
Section 30 of the 1992 Act empowers the Board (the expert body) to make
regulations consistent with the Act and the rules made thereunder to carry out
the purposes of the Act inter alia providing for :
"(c) the matters relating to issue of capital, transfer of securities
and other matters incidental thereto and the manner in which such matters shall
be disclosed by the companies under section 11A;" SEBI made Regulations in
the year 1994. The said regulations were said to have many loopholes and, thus,
the Bhagwati Committee consisting of experts in different fields was set up to
suggest amendments therein.
Regulations 1997 indisputably were made pursuant to or in furtherance of the
recommendations made by the said Committee. It is also not in dispute that
whereas most of the recommendations made by the Bhagwati Committee were
accepted, some were not.
In the aforementioned backdrop, this Court has been called upon to interpret
the scope and ambit of Regulations 10, 11 and 12.
Before we advert to the said question, we must bear in mind that the said
Regulations seek to protect the interests of the shareholders. Public
announcement of offer is one of the modes of protecting the interests of the
Interpretation Principles of :
It is a well-settled principle of law that where wordings of a statute are
absolutely clear and unambiguous recourse to different principles of
interpretations may not be resorted to but where the words of a statute are not
so clear and unambiguous, the other principles of interpretation should be
SEBI was an expert body. It made regulations which were meant to sub-serve
the interests of investors as also promote and regulate the securities market.
Regulations 10, 11 and 12 ex-facie operate in three different fields.
They seek to control creeping acquisition which may lead to substantial
acquisition and ultimately total control of the company. There may, however, be
a case where control of the company is sought to be taken over by transfer of
share only i.e. by a single transaction, in which event Regulations 11 and 12
both may apply.
We would at the outset proceed to consider the admitted fact of the matter
that both Swedish Match Group and Jatia Group were acquirers "in concert
with each other". They were in joint control of Wimco. Jatia Group
intended to transfer the control of the target company by transferring their
shares in favour of Swedish Group.
APPLICABILITY OF REGUALTIONS 11 AND 12:
With a view to arrive at an answer to the question, we may begin with
Regulation 12. The said Regulation like Regulations 10 and 11 also speaks of
public announcement. Such public announcement is required to be made
irrespective of whether or not there has been any acquisition of shares or voting
rights in a company. In either of the case, the acquirer is statutorily
required to make public announcement of acquisition of shares and control of
the target company in accordance with the regulations. The proviso appended to
Regulation 12 curves out an exception as regard necessity of making public
announcement. Explanation appended to Regulation 12, however, states that it
would have no application where a change in control takes place pursuant to a
resolution passed by the shareholders in a general meeting. As would be noticed
shortly hereinafter, the proviso to Regulation 12 cannot be said to have any
application in the instant case as by reason of the Explanation appended
thereto, Regulation 12 would have no application.. Result in change in control
over the target company in terms of Regulation 12 would come into being in two
situations; viz. (i) by acquisition of share, or voting rights; or (ii) where
there has been none.
A control over the target company may be achieved by amending the memorandum
of association or by any other mode which necessitates a resolution to be
passed by the shareholders in a general meeting. The expressions "in
pursuance to a resolution passed by the shareholders in a general meeting"
are crucial as the proviso will apply only when the change of control over the
target company takes place otherwise than by acquisition of shares or voting
The primal question would be as to whether Explanation (i) appended to
Regulation 12 would bring the matter out of the purview of the regulation? In
the fact of the present case, it does. Explanation appended to Regulation 12
postulates that where there are two or more persons in control over the target
company (here Swedish Match Group and Jatia Group), the cessor of any one such
person (Jatia Group) from such control shall not be deemed to be a change in
control of management nor shall any change in the nature and quantum of control
amongst them constitute change in control of management. By reason of the said
Explanation, a legal fiction has been created pursuant whereto or in
furtherance whereof applicability of Regulation 12 is excluded. Change of
control contemplated under Regulation 12 calls for a public announcement when
the same is sought to be achieved by acquiring shares or voting rights. A
change of control in terms of Regulation 12 may also take place pursuant to a
resolution passed by the shareholders in a general meeting. Only in the latter
case the proviso which carves out an exception would be attracted. The effect and
purport of the first proviso may also be construed having regard to the second
proviso appended thereto. The second proviso appended to Regulation 12 takes
within its fold a case where the joint control to sole control is through sale
at less than the market value of the share. It, therefore, speaks of a
different situation, namely, control by transfer of joint control to sole
control through sale was at less than the market value of the shares. In a case
where the second proviso is attracted, the Explanation (1) will have no role to
Situation, however, would be different when the transfer of joint control to
sole control takes place through sale at a price which is higher than the
market value of the shares leading to change in control over the target
company, which cannot be done pursuant to a resolution passed by the
shareholders in a general meeting in terms of the first proviso. In other
words, in the event, the change in control is sought to be achieved by sale of
shares at a price higher than the market value of the share, Regulation 12 will
clearly be attracted making public announcement imperative. Such public
announcement evidently is required to be made having regard to the fact that
the interest of investors is required to be protected; pursuant whereto and in
furtherance whereof the shareholder would be informed of the value of the share
at which the transfer of control would take place so as to enable him to
exercise his option to sell his shares at the price offered by the acquirer or
continue to keep the same.
A general meeting of the shareholders of the target company had taken place
but the same does not sub-serve the requirements of law inasmuch as, it would
bear repetition to state, when transfer of control over the target company takes
place by reason of acquisition of shares at a price higher than the market
price the acquirer has a statutory obligation to make the public announcement.
Such a statutory requirement is not capable of being waived by the majority
shareholders. In this case, the records reveal that the shareholders were not
informed that although the market value of the share was about Rs. 9.55, Jatia
Group was offered the price of Rs. 35/- per equity share. It was merely
disclosed that such acquisition would not be at a price lower than the market
price. If such transfer was to take place at a price less than the market
price, the second proviso appended to Regulation 12 would have been attracted.
It was, therefore, obligatory on the part of the acquirer to furnish correct
information as regard the price which was being offered to Jatia Group.
There may be cases where to some extent Regulations 11 and 12 may overlap.
But Regulations 14, 15 and 16 clearly postulate that public announcement is
required to be made in relation to transfer of shares attracting Regulations 10
or 11 not later than four working days of entering into an agreement for
acquisition of shares or voting rights or deciding to acquire shares or voting
rights exceeding the respective percentage specified therein and in case of
acquisition of control in terms of Regulation 12; not later than four working
days after any such change or changes are decided to be made as would result in
the acquisition of control over the target company by the acquirer.
In a given situation, a public announcement can be made upon compliance of
both Regulations 11 and 12.
It is also not a case where Regulation 3 will have any application.
Admittedly, the Appellants did not claim any exemption in terms of
Regulation 3 nor were they eligible therefor. It is also not a case where
change in control had taken place by reason of inheritance or succession but by
reason of conscious act of transfer of shares by one acquirer from another.
In a case of this nature, thus, Regulation 12 would not apply, the logical
corollary whereof would be that Regulation 11 will apply.
Let us now consider the legal principles as regard 'Proviso and
a 3-Judge Bench of this Court held that proviso may serve four different
"(1) qualifying or excepting certain provisions from the main
(2) it may entirely change the very concept of the intendment of the
enactment by insisting on certain mandatory conditions to be fulfilled in order
to make the enactment workable;
(3) it may be so embedded in the Act itself as to become an integral part of
the enactment and thus acquire the tenor and colour of the substantive
enactment itself; and (4) it may be used merely to act as an optional addenda
to the enactment with the sole object of explaining the real intendment of the
statutory provision." Proviso to Regulation 12 exempts only a part of the
It does not take within its umbrage both the situations contemplated under
As regard functions of an Explanation, it was opined:
"52(a) to explain the meaning and intendment of the Act itself, (b)
where there is any obscurity or vagueness in the main enactment, to clarify the
same so as to make it consistent with the dominant object which it seems to
subserve, (c) to provide an additional support to the dominant object of the
Act in order to make it meaningful and purposeful, (d) an Explanation cannot in
any way interfere with or change the enactment or any part thereof but where
some gap is left which is relevant for the purpose of the Explanation, in order
to suppress the mischief and advance the object of the Act it can help or
assist the Court in interpreting the true purport and intendment of the
enactment, and (e) it cannot, however, take away a statutory right with which
any person under a statute has been clothed or set at naught the working of an
Act by becoming an hindrance in the interpretation of the same." The
Explanation was inserted evidently with a view to clear the obscurity occurring
in Regulation 12 as regard a class of cases of cessation of joint control to
Others [(2003) 5 SCC 413] this Court held that the proviso acted as an
exception to the main provision but such an exception must be strictly
construed and confined to the intent of the legislature.
[See also Ali M.K. and Others vs. State of Kerala and Others (2003) 11 SCC
632 and Union of India vs. Sanjay Kumar Jain JT 2004 (6) SC 318].
66] it was held that in a case where a legal fiction created in the Explanation
was construed to be validly made as thereby main provision was made absolutely
clear and explicit, the legal fiction so created must also be given its full
It is true that Regulation 12 could have been better worded but the
application of Regulations 11 and 12 in a case of this nature is free from
doubt. This is not a case where having regard to the explanations in the
provisos and reading the provision in the manner we have done, it stands
obscure. The Explanations (i) and (ii) are not Explanations to the provisos but
the main part thereof.
It would, therefore, be not correct to contend that where there is a mere
cessor of control by one out of two persons already in control or where any
person or persons are given joint control and the combined degree of control is
not greater than being presently exercised, a Resolution in general meeting
would sub-serve the purpose, is devoid of any merit as change in control has
taken place by reason of acquisition of shares from another person in control.
Having regard to the fact that the price offered to Jatia Group was higher than
the market price, a public announcement was imperative so as to enable the
shareholders to elect as to whether to sell their shares held by them or not.
No exemption from public announcement has been carved out by reason of the
proviso appended to Regulation 12 as in terms of the Explanation, Regulation 12
would have no application.
The purported resolution dated 27.9.2000 reads as under:
"Resolved that the cession of their participation in the joint control
of the company by the Jatia Group as of the date hereof such that Swedish Match
AB and its subsidiary are in sole control of the company be and is hereby
approved." The said resolution is of no avail in the fact of the matter as
neither the proviso nor the second explanation appended to Regulation 12 is
Furthermore, only because Regulation 12 also speaks of public announcement,
the same by itself would not exempt the acquirer from making a public
announcement in terms of clause (1) of Regulation 11.
WAS THERE ANY REQUIREMENT TO COMPLY WITH
REGULATION 11? With a view to advert to the question, the admitted facts may be
Swedish Match Singapore agreed to acquire majority shareholding in Haravon
and Seed subsequent to 17th December, 1997 wherefor the public offer was made.
S.M.S. comprising of Haravon and Seed had 28.28% and 10.33% whereas Jatia Group
comprising of AVP and Plash had 5% and 15% respectively whereas public/others
had 41.39% shares. In concert with each other the two Groups acquired shares
from public. On or about 25th August, 1999 by acquiring preferential shares the
Swedish Match Group obtained 52.11% and Jatia Group obtained 24.11% as a result
whereof in Wimco the shares held by public/others came down to 23.78%. Both
Swedish Group and Jatia Group were exercising the joint control. By reason of
Jatia Group opting out of the joint control by transfer of shares in favour of
Swedish Match Singapore, a subsidiary of Swedish Match AB (a part of Swedish
Match Group) obtained 74% of shares whereas shares i.e. Haravon 46.18%, Seed 5.93%
and SMS 21.89%. Thus, the extent of shares of Jatia Group came down to 2.22%.
Jatia Group sold their shares to public as a result whereof shares of public
became 23.78%. S.M.S. is a subsidiary of the Singapore Match Group. The Swedish
Match is the holding company being the owner of the 100% shares of SMS. It
stands categorically admitted by the Appellants herein that acquisition of
shares from Jatia Group in favour of SMS was done by the Swedish company as a
group and not as an individual company. Factually, therefore, it is not correct
to contend, although in its notice dated 28.1.2002, SEBI had given indication
thereof, that SMS had acquired 21.89% shares of its own. Even if SMS had done
so, Regulation 10 would apply as no public announcement was made therefor.
S.M.S. was a part of the Swedish Match Group and they acquired 21.89% shares
from Jatia Group. On or about 25th August, 1999, indisputably, Swedish Group
and Jatia Group acted in concert with each other. By reason of acquisition made
in September, 2000, Swedish Group, as acquirer, together with Jatia Group, had
acquired more than 15% but less than 75% of shares. Any of those acquirers
whether Swedish Match Group or Jatia Group, therefore, was prohibited from
acquiring by itself any additional share entitling it to exercise more than 5%
of the voting rights.
Regulation 11 does not brook any other interpretation. If additional shares
are acquired entitling an acquirer to exercise more than 5% of the voting
rights, the statutory embargo to the effect that the acquirer (in this case
Swedish Match Group) must make a public announcement to acquire shares in
accordance with the Regulation comes into operation.
The words "additional shares" are not terms of art. It speaks of
acquisition of shares in addition to what it had got. Such acquisition of
additional shares may be either from public or from a person with whom at one
point of time the acquirer had acted in concert. If such a meaning is not
assigned, the disjunctive clauses contained in the expressions "either by
himself or through or with person acting in concert with him" may not
carry a true and effective meaning.
The pre-conditions attracting Regulation 11 are: (i) that an acquirer had
acquired shares in concert with another; (ii) such acquisition was more than
15% but less than 50% of the shares or voting rights in a company; (iii) in the
event, the acquirer intends to acquire such additional shares or voting rights
which would allow him to exercise more than 5% of the voting rights within a
period of 12 months, public announcement is required to be made therefor. (iv)
such acquisition of additional shares contemplates three different situations,
i.e., the acquisition may be by acquirer himself or through or with the person
acting in concert with the person with whom they had acquired shares earlier in
concert with each other.
Regulation 11, therefore, contemplates both situations, namely, where
substantial acquisition of shares may result in change of control and where it
does not. Only because in a case where acquisition of additional shares may
result in change of control, the same by itself would not exempt the acquirer
from complying with the statutory requirement of Regulation 11. Primarily,
Regulations 10, 11 and 12 operate in different fields which is manifested from
a plain reading of Regulations 14, 15 and 16. We may, however, hasten to add
that there may be a situation where Regulations 11 and 12 may overlap with each
other, in which event, it would be open to the acquirer to issue a combined
notice fulfilling the requirement of both Regulations 11 and 12.
Indisputably, the purport and object of which a regulation is made must be
duly fulfilled. Public announcement is at the base of Regulations 10, 11 and
12. Except in a situation which would bring the case within one or the other
'exception clause', the requirement of complying with the mandatory
requirements to make public announcement cannot be dispensed with.
Admittedly in this case no public announcement has been made.
It may be true that the Board in its impugned order dated 4th June, 2002
proceeded on a wrong premise that having regard to the proviso appended to
Regulation 12, Regulation 12 would be attracted. But the SAT, in our opinion,
rightly construed the provisions of Regulations 11 and 12 in arriving at a
finding that Regulation 11 would be attracted and Regulation 12 would not be.
The tribunal was entitled to take a different view of the matter from that of
the Board with a view to sustain the ultimate result in the appeal in exercise
of its appellate power. Such a power in the appellate court/ tribunal is akin
to or analogous to the principles contained in Order 41 Rule 33 of Code of
Civil Procedure. Even otherwise before us the judgment of the Tribunal is in
question, this Court is required to consider the correctness or otherwise of
the Tribunal. In any event, the reasonings of the tribunal shall prevail over
the Board. (See S. Shanmugavel Nadar (supra), para 17) Although we do not find
any difficulty in construing the provisions of Regulations 11 and 12 but
assuming Regulations 11 and 12 are not clear, the rule of purposive
construction should be taken recourse to.
It is now trite that when an expression is capable of more than one meaning,
the Court would attempt to resolve that ambiguity in a manner consistent with
the purpose of the provisions and with regard to the consequences of the
alternative constructions. (See Clark & Tokeley Ltd.
540], this Court held:
"8It is a cardinal principle of construction of a statute that effort
should be made in construing its provisions by avoiding a conflict and adopting
a harmonious construction. The statute or rules made thereunder should be read
as a whole and one provision should be construed with reference to the other
provision to make the provision consistent with the object sought to be
achieved." Settlement  Ch. 382, it is stated:
"Two methods of statutory interpretation have at times been adopted by
the court. One, sometimes called literalist, is to make a meticulous
examination of the precise words used. The other sometimes called purposive, is
to consider the object of the relevant provision in the light of the other provisions
of the Act the general intendment of the provisions. They are not mutually
exclusive and both have their part to play even in the interpretation of a
taxing statute." It was also observed:
"Where there is an exemption provision in a fiscal statute the onus is
on a taxpayer to show that the exemption applies: Barron v. Littman  A.C.
96 and Imperial Chemical Industries Ltd. v. Caro  1 W.L.R. 529."
Others [(2003) 7 SCC 589] this Court referred to various decisions including
Peerless General Finance (supra) whereupon the Appellate Tribunal as also Mr.
Raval placed strong reliance expounding the theories of purposive JT 2004
(Suppl.1) SC 274) Regulations 10, 11 and 12 were amended in the year, 1997
having regard to the fact that the 1994 Regulations contained many loopholes,
and, thus, the mischief rule should be resorted to so as to suppress the
mischief which would have surfaced had the literal rule been allowed to cover
the IS STRICT CONSTRUCTION OF THE REGULATION CALLED FOR? A penal statute
indisputably is required to be strictly construed. But a different situation
may arise if the penalty is sought to be levied as a result of failure on the
part of the person statutorily obliged to comply with the statutory provisions
which are imperative in nature.
There may not be any doubt or dispute as regard the proposition that when
words employed in a penal statute employs are not clear, the principle 'against
doubtful penalisation' would be applied.
In Francis Bennion's Statutory Interpretation, Fourth Edition, at page 704,
Section 271 it is stated that principle against penalization under a doubtful
statute is a legal policy which would apply in a given situation but the
learned Author himself states that different consequences of enactments are
possible depending upon the text and context of the statute. In the same
treatise at page 367, it is stated:
"(2) A construction put forward may rely entirely on the literal
meaning, or may elaborate (but still correspond to) the literal meaning, or may
depart from the literal meaning in favour of a strained meaning. The court,
where it considers (or prefers to say) that the literal meaning is unambiguous,
will tend to decide in favour of what it regards as the unglossed literal
meaning and reject other versions." Referring to Trustees of Sir John
Aird's Settlement (supra), the learned Author at pages 368 & 369 states:
"Subsection (2) Where the enactment is grammatically ambiguous, the
opposing constructions put forward are likely to be alternative meanings each
of which is grammatically possible. Where on the other hand the enactment is
grammatically capable of one meaning only, the opposing constructions are
likely to contrast an emphasized version of the literal meaning with a strained
construction. In the latter case the court will tend to prefer the literal
meaning, wishing to reject the idea that there is any doubt.
Example 149.2 In a tax avoidance case concerning capital transfer tax, the
Court of Appeal were called on to construe the Finance Act 1975 Sch 5 para 6(7)
as originally enacted. Counsel for the Inland Revenue put forward several
alternative arguments on construction, but the court preferred the one based on
the unglossed literal meaning. It may be conjectured however that the other
arguments helped to convince the court that the Inland Revenue's case was to be
preferred." Failure to comply with a statute may attract penalty. But only
because a statute attracts penalty for failure to comply with the statutory
provisions, the same in all situations would not call for a strict
construction. A statute ordinarily must be literally construed. Such a literal
construction would not be denied only because the consequence to comply the
same may lead to a penalty. This aspect of the matter has been considered by
this Court in Indian Handicrafts Emporium (supra). Proceeding on the basis that
there existed a dichotomy, the Court ultimately held that the resolution will
have to be reached by reading the entire statute as a whole. [See also Reema
Aggarwal (supra)] 628] this Court held:
"The Courts will therefore reject that construction which will defeat
the plain intention of the Legislature even though there may be some
inexactitude in the language used. [See Salmon vs.
Duncombe [(1886) 11 AC 627 at 634]. Reducing the legislation futility shall
be avoided and in a case where the intention of the Legislature cannot be given
effect to, the Courts would accept the bolder construction for the purpose of
bringing about an effective result. The Courts, when rule of purposive
construction is gaining momentum, should be very reluctant to hold that the
Parliament has achieved nothing by the language it used when it is tolerably
plain what it seeks to achieve. (See (1990) 2 All ER 118 at 122-3)"
Referring to its earlier decisions, this Court :
"36. These decisions are authorities for the proposition that the rule
of strict construction of a regulatory/penal statute may not be adhered to, if
thereby the plain intention of the Parliament to combat crimes of special nature
would be defeated." Let us now consider the decisions relied upon by Mr.
In Avais (supra), the House of Lords was concerned with the construction of
the meaning applied in Gaming machine. In that case itself, it was held:
"The task of the courts is to ascertain in any particular case whether
the conditions have been (or, as in this case, would be) complied with or not.
There is no evident reason for interpreting the conditions otherwise than
according to their natural meaning. Indeed, there is this point to be borne in
mind in favour of a literal construction. If the conditions are not complied
with, the club officials who allow the club premises to be used for the gaming
are guilty of criminal offences. The Act would be setting a trap for them, if
by some artificial construction of the provisions an apparently innocent
financial agreement (such as accepting from the owner of the machines a
guarantee of the club's takings) were held to involve or lead to a breach of
the conditions." The said decision, thus, runs counter to the submissions
Nariman. In this case also conditions are imposed in the matter of
acquisition of shares. If the conditions have not been complied with, the Act
having set up a trap for them, the logical consequences would ensue.
In The Seksaria Cotton Mills Ltd. (supra), the Court was dealing with the
activities of a welfare agent vis-`-vis the meaning of 'possession' in the
relevant Act. The Court found:
"The facts are truly and accurately given according to the popular and
natural meaning of the words used; nothing was hidden. The goods did reach the
quota-holder in the end, or rather his proper agent, and we cannot see what
anyone could stand to gain in an unauthorised way over the very natural mistake
which occurred owing to what seems to have been a time-lag in the consequences
of a change of agency. So, even if there was a technical breach of the law, it
was not one which called for the severe strictures which are to be found in the
trial court's judgment and certainly not for the savage sentences which the
learned Magistrate imposed. In the High Court also we feel a nominal fine would
have met the ends of justice even on the view the learned Judges took of the
law." In the aforementioned backdrop only, it was held:
"In a penal statute of this kind it is our duty to interpret words of
ambiguous meaning in a broad and liberal sense so that they will not become
traps for honest, unlearned (in the law) and unwary men.
If there is honest and substantial compliance with an array of puzzling
directions, that should be enough even if on some hypercritical view of the law
other ingenious meanings can be devised." This is a case of non-compliance
of mandatory statutory provisions and not of substantial compliance. It is also
not a case involving unlearned or unwary men.
In Bhagirath Sharma (supra), the question which fell for consideration was
whether 'tube' is included within the expression 'tyre'. Keeping in view the
provisions of the Essential Commodities Prices and Stocks (Display and
Control) Order, 1967, this Court applied the rule of strict construction.
Regulations being regulatory in nature, the intent and object sought to be
achieved thereby must be firmly applied with. In this view of the matter, we
are of the opinion that Regulations do not deserve strict constructions so as
to hold that even a public offer was not necessary.
ANOTHER FACET OF THE CASE:
Having held so, would it be proper for this Court to direct the Board not to
take any penal action against the Appellants? The Board is an expert body. As a
legislature, it makes the regulations, as an executive, it implements the
legislation and in case of a breach it takes upon a quasi-judicial function.
While functioning in its judicial capacity, it has wide discretion. It can
initiate criminal proceedings in terms of Section 24 of the Act, issue
directions in terms of Section 11-B and Regulation 44 as also take recourse to
penal provisions as contained in Section 24 and Chapter VI-A of the Act. Its
decision is final subject to the decision of the Tribunal. But the sequences of
events, as noticed hereinbefore, clearly go to show that even the Board was not
sure of the legal position.
It in no uncertain terms held:
"As the said change from joint to sole control took place in pursuance
to a resolution passed by the shareholders in general meeting, the same would
not trigger Regulation 12, same being covered under proviso to Regulation
12." The Board even did not think it fit to apply the Explanation appended
to Regulation 12 in its proper perspective.
It is only the Tribunal at a later stage came to a clear finding that
proviso appended to Regulation 12 will have no application and Explanation
Before us also the Counsel read the regulations in question over and over
again. Focus on certain words was placed differently at different times.
It is only after considering the matter from different angles, we have been
able to arrive at a definite conclusion.
In Trustees of Sir John Aird's Settlement (supra) upon taking into
consideration several alternative arguments on construction of the Finance Act
1975 Schedule 5 para 6(7) as originally enacted, the Court preferred the one
based on the unglossed literal meaning.
The adversarial system prevailing in India allows a counsel to put forward
construction of the enactment in question relying on several alternative
arguments and the Court may ultimately base its judgment on unglossed literal
meaning. (See Example 149.5 of Francis Bennion's Statutory Interpretation,
Fourth Edition, page 371).
In the aforementioned backdrop, this Court thought it fit to consider as to
whether in exercise of its jurisdiction under Article 142 of the Constitution
of India a direction should be issued directing the Board to forbear from
proceeding under Section 15H of the Act against the Appellant.
It is accepted that once a public offer is made the investors would be
entitled to elect to transfer their shares at a higher price which may be
offered by the acquirer with a view to acquire control over the target company.
The investors would also be entitled to interest at such rate as the Board may
determine. The provisions of Section 15H of the Act mandates that a penalty of
rupees twenty-five crore may be imposed. The Board does not have any discretion
in the matter and, thus, the adjudication proceeding is a mere formality.
Imposition of penalty upon the Appellant would, thus, be a forgone conclusion.
Only in the criminal proceedings initiated against the Appellants, existence of
mens rea on the part of the Appellants will come up for consideration.
We, therefore, are of the opinion that it is a fit case where this Court
should exercise its jurisdiction under Article 142 of the Constitution to
direct the Board to forbear from proceedings with the adjudication proceeding
against the Appellants. This may not, however, be treated to be a precedent.
These appeals are allowed in part and to the extent mentioned hereinbefore.
In the facts and circumstances of this case, there shall be no order as to