Adani Group’s open offer to acquire more shares of NDTV from the markets is likely to have been delayed, pending an appeal by market regulator SEBI in the Supreme Court (SC) against a recent judgment by the Securities and Appellate Tribunal (SAT).

The announcement that they were acquiring Vishwapradhan Commercial Pvt Ltd (VCPL) came after the SAT set aside SEBI’s order against the company and gave a clean chit to it in a 2009 deal with NDTV promoters — Pranoy and Radhika Roy. SEBI has challenged this SAT order. VCPL is holding NDTV shares and by virtue of its acquisition, the Adani Group is now the owner of 29 percent stake in NDTV, which further triggered an open offer.

Open offer

SEBI’s appeal to the SC is unlikely to have any bearing on the open offer by Adani Group to acquire additional shares of NDTV from the open market and also the buyout of VCPL that triggered the private loan agreement, a regulatory source told businessline. But SEBI will allow the open offer only after the SC gives its final verdict on the SAT order. There is a view that SEBI’s appeal against the SAT order and Adani’s open offer were two separate matters.

In 2009, VCPL and the Roys entered a loan agreement through which they borrowed ₹403 crore without interest for 10 years by pledging their 29 percent stake in NDTV. Since the Roys could not return the loan, Adani Group after its takeover of VCPL triggered the clauses of the loan agreement that gave them a huge chunk of NDTV shares. 


SEBI had arrived at a view that VPCL controlled NDTV through the loan agreement but SAT had termed it as a figment of SEBI’s imagination. Now, SEBI has said in its appeal to the SC that SAT has wrongfully read the takeover code, which lays down the rules in cases of merger and acquisitions.

In July, SAT called the SEBI’s conclusion that VPCL was controlling NDTV as imaginary and said the clauses in the agreement were merely to protect the lender.

In 2009, VPCL had given an interest-free loan of ₹403 crore to the Roys for 10 years that ended in 2019. Investigations found that the Roys did not return the money to VPCL and money was lent against convertible warrants that had NDTV shares as underlying. SEBI concluded that the loan agreement was a disguised control over NDTV and triggered the takeover code. Had SEBI’s case stood ground in SAT, VPCL would have had to make an open offer of NDTV shares, experts said. But SAT overturned SEBI arguments, after which VPCL was bought over by Adani Group, triggering the clauses of the loan agreement and hence an open offer.

Bad precedents

SEBI officials were concerned that the SAT verdict could set a precedent and promoters of listed companies may secure loan by issuing unlimited convertible instruments at pre-negotiated price, including non-compete clauses and yet not trigger the takeover code. Also, SAT had not considered the written submissions by SEBI on various aspects of the case, merely on technical grounds that they were not vetted by the arguing counsel.

SEBI is a quasi-judicial authority and its written submission has to be considered by the courts in the course of natural justice. The SC can take a strong view of the SAT’s attitude of throwing out written submissions of a regulator on frivolous technicalities, sources close to SEBI said. Also, SEBI officials were worried that if the SAT order was left unchallenged, it would lead to other media company promoters borrowing money from private lenders in lieu of unlimited convertible option at twice the market price with the right to appoint a director and still not trigger the takeover code, like what happened in the case of NDTV.

SEBI appeal