A single shareholder is a person aggrieved and he can therefore intercede if the takeover code is flouted but he cannot intercede when disciplinary proceedings are being conducted or dropped against the companies involved in the takeover exercise.

This was a view expressed by the Securities Appellate Tribunal in Radhyshyam Aggarwal vs. Bank of Rajasthan Ltd (now part of ICICI Bank Ltd).

SEBI had carried out investigations against the erstwhile Bank of Rajasthan Ltd. regarding dealings in the scrip of the bank.

It was noted that the promoter group of Bank of Rajasthan Ltd. had, by way of their continuous disclosures, announced that their stakes in the bank were coming down from 44.18 per cent during the quarter ending June 2007 to 28.61 per cent during the quarter ending December 2009 though the truth of the matter was they had steadily been hiking their stake without disclosures.

Pending investigations, the SEBI passed an ex-parte ad-interim order dated March 8, 2010, restraining 100 entities from accessing the securities market and further prohibiting them from buying, selling or dealing in securities in any manner till further directions.

On completion of the investigations, the Board came to a prima facie conclusion that out of the 100 entities, 92 were involved in violation of regulatory framework and no material could be found against the remaining eight entities.

Therefore, by its order dated March 26, 2012, the Board recommended initiation of the adjudication proceedings against the 92 entities.

However, it revoked the ex-parte ad-interim order passed on March 8, 2010 against all the entities observing that all these entities have been debarred for the last two years and that there is no need to continue the directions any further.

The grievance of the appellant was that the prohibitory order issued on March 8, 2010 against these entities should have been continued as the proceedings are still continuing and charges against entities are of violation of the takeover code.

The SAT held that he was not a person aggrieved and did not have locus standi in the matter while making it clear that the question of locus standi is always situational.

Hence the same shareholder would have had locus standi had the issue been not of disciplining erring companies but violation of the takeover code itself.

(This article was published on November 20, 2012)
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