SAT rejects plea for interest on open offer by Nirma Group cos

Upholding Sebi's ruling, SAT has rejected an individual Arun Goenka's plea seeking interest with regard to tendering of his shares held in Shree Rama Multi-Tech in an open offer made by Nirma Group entities earlier this year.
Goenka had sold shares of Shree Rama Multi-Tech to Nirma Industries Private Ltd and Nirma Chemical Works Private Ltd, as part of the open offer by these companies.
Later, Goenka had made a representation to the capital market regulator that the two Nirma Group firms had violated various norms with respect to the open offer.
The Securities and Exchange Board of India (Sebi) in an order dated May 26, 2014, while rejecting the representation made by Goenka had held that he was not entitled to interest on the amount received towards shares of Shree Rama Multi-Tech sold by him under the open offer.

Subsequently, Goenka had approached SAT challenging Sebi's ruling. The appeal was also filed against the two Nirma Group companies and Shree Rama Multi-Tech, among others.
Dismissing the appeal, SAT, in an order today said that the "liability to pay interest... Arises only when the acquirer fails to pay the consideration to the shareholders within 15 days from the date of the closure of the offer."

"In the present case, consideration was offered and paid to the appellant (Goenka) within the date specified under... takeover regulations 1997. Hence paying interest to the appellant does not arise at all," SAT said.
It also noted that payment of interest can only be made when the acquirer has failed to make a public offer or delayed the making of public offer within the stipulated time.

"Since appellant was not the shareholder on the trigger date i.E. July 22, 2005, appellant cannot be said to have suffered on account of delay and consequently question of paying interest to appellant does not arise at all," SAT said.
Sebi had received complaint from Goenka that alleged violation of various norms with respect to the open offer made by Nirma Industries and Nirma Chemical Works to the shareholders of Shree Rama Multi-Tech.
The Nirma Group entities had on July 25, 2005 made a public announcement to acquire shares of Shree Rama Multi-Tech. However, they had later sought withdrawal of the offer which was rejected by Sebi, SAT and the apex court.

Consequently, the companies made an offer that opened on January 16, 2014 and closed on February 4, 2014.