SAT directs Sebi to reconsider a complaint in open offer case

Barot had filed a complaint before Sebi that in the open offer made by India Star for buying additional shares of Global Offshore Services Ltd had failed to disclose information

The Securities Appellate Tribunal (SAT) today directed market regulator Sebi to reconsider a complaint by one Amit Bhagvatprasad Barot in a case related to suppression of information in the open offer.

Barot, in January 2012, had filed a complaint before Sebi that in the open offer made by India Star (Mauritius) Ltd during March, 2008 for buying additional shares of Global Offshore Services Ltd had failed to disclose information related to its background and past experience of its director.

In its order, the Tribunal has set aside the regulator's order and directed Sebi to reconsider complaint of appellant (Barot) made in January last year "afresh and pass appropriate orders as it deems fit."

Barot as a trader had held certain shares of Global Offshore Services (formerly called Garware Offshore Services).

In November 2007, India Star made a public announcement stating that it holds 12.02% stake in Global Offshore Services (target company)and due to conversion of optionally convertible debentures, became eligible to acquire additional 9.54% stake in the target company.

Thus, total holding of India Star in Global Offshore became 21.56% requiring it to make public announcement and acquire shares from public. Subsequently, India Star made an open offer in March 2008.

Barot, however, during the offer period, did not offer to sell shares of Global Offshore held by him to India Star.

In its complaint, Barot had said that India Star and HSBC Securities & Capital Market (India) Pvt Ltd, manager to the open offer, had failed to disclose material information with regard to the background of acquirer and past experience of its director Ravi Pratap Singh.

In 2011, Barot had filed an appeal before SAT, seeking order directing Sebi to order HSBC Securities and India Star to make fresh offer as material facts were 'suppressed' in open offer letter made in 2008.

He had said if those facts were disclosed as required under Sebi's regulations, he would have offered to sell shares of target company during the offer period.

In January 2012 the appeal was withdrawn with liberty to seek appropriate remedy before Sebi. Accordingly, in the same month, India Star filed a complaint before the regulator.

In its today's order, SAT noted that when a complaint is filed alleging violation of regulations framed by the regulator, it is obligatory on part of Sebi to consider the complaint and pass appropriate orders as it deems fit.

"In the present case complaint filed by appellant has been rejected without considering allegations set out in the complaint which has resulted in miscarriage of justice," the Tribunal added.