SAT Mumbai Dismisses Appeal Against SEBI Refusal To Relax Competing Offer Timeline

The Mumbai Securities Appellate Tribunal (SAT) on 19 August ruled that a competing acquirer must make a public announcement within 15 working days of the Detailed Public Statement issued by the first acquirer, and cannot seek relaxation of the timeline at a later stage.

A Bench comprising Presiding Officer Justice P.S. Dinesh Kumar with Technical Members Meera Swarup and Dr. Dheeraj Bhatnagar dismissed businessman Digvijay Laxhamsinh Gaekwad's appeal against the Securities and Exchange Board of India's (SEBI) refusal to exempt him from the timelines under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 for making a competing offer to acquire shares of Religare Enterprises Limited (REL). They held:

“A plain reading of Regulation 20(1) shows that once a 'public announcement' of open offer is made, a competing acquirer shall be entitled to make his 'public announcement' of an 'open offer' within 15 working days of 'Detailed Public Statement' made by the acquirer who makes 'first public announcement'.”

REL, a listed non-banking financial company, received an open offer from the Burman Group, which held 21.54 per cent in the company and proposed to acquire an additional 5.27 per cent, thereby crossing the 25 per cent threshold. The Burman Group made its public announcement on 25 September 2023, followed by a Detailed Public Statement on 4 October 2023.

In January 2025, Gaekwad sought to make a competing offer to acquire 55 per cent of REL at Rs. 275 per share. He subsequently sought exemption from the timelines prescribed under Regulations 20(1) and 20(5) of the SEBI (SAST) Regulations.

Gaekwad argued that the 15 working day period for making a competing offer should be counted from 18 January 2025, when the Burman Group issued its Letter of Offer, rather than from the Detailed Public Statement issued in October 2023.

Meanwhile, the Supreme Court directed Gaekwad to deposit Rs. 600 crore in connection with his proposed competing offer. The deadline was subsequently extended to 13 February 2025, but Gaekwad did not deposit the amount. SEBI rejected Gaekwad's request, prompting him to approach the Tribunal.

SEBI opposed the appeal, submitting that Regulation 20(1) expressly requires a competing acquirer to make a public announcement within 15 working days of the Detailed Public Statement issued by the first acquirer.

The Tribunal noted that the Burman Group issued its Detailed Public Statement on 4 October 2023 and that Gaekwad did not make any competing public announcement within the prescribed period. It rejected Gaekwad's argument that 18 January 2025, when the Letter of Offer was issued, should be treated as the relevant date. It observed that permitting Gaekwad to enter the process at such a later stage would amount to gross discrimination against the first acquirer, which had already deposited funds in escrow and obtained regulatory approvals.

The Bench also rejected the argument that Regulation 11 could be used to relax the timeline for making a competing offer. It observed:

“We note that the provisions under Regulation 11 are not general exemption provisions (such as Section 462 of the Companies Act, 2013) but limited to allowing an acquirer to dispense with the open offer requirement and do not provide for relaxation from other requirements including timelines in case of an ongoing open offer.”

Further, the Tribunal noted that Gaekwad had failed to comply with the Supreme Court's direction to deposit Rs. 600 crore and that the Burman Group's open offer ultimately concluded on 13 February 2025.

Accordingly, the SAT dismissed the appeal. It, however, clarified that Gaekwad's option to acquire REL was not closed and that he could initiate a fresh takeover bid by complying with the SEBI (SAST) Regulations.

For Appellant: Senior Advocate CA Sundaram, Advocates Rohini Musa, Rahul Punjabi and Ishan Shroff

For Respondents: Senior Advocates Pradeep Sancheti, Pranav Badheka and Advocates Mihir Mody, Vijay Chockalingam, Aavish Shetty, Ravichandra Hegde, Major Nirvikar Singh, Rohan Batra, Abhiraj Arora, Mitravinda Chunduru, Dhruv Sethi, Richa Seth and Rhea Kapoor