Securities And Exchange Board of India Vs Sunil Krishna Khaitan And Others (Supreme Court of India)
Summary: The Supreme Court dismissed SEBI’s connected civil appeals arising from the Sunil Krishna Khaitan and Madhuri S. Pitti matters concerning the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The Court upheld the Securities Appellate Tribunal’s interpretation of Regulation 10 that the defined expression “acquirer” includes persons acting in concert and that the relevant threshold is determined by taking the combined shareholding/voting rights of the acquirer and persons acting in concert. Where that combined holding already exceeded 15% before the fresh acquisition, Regulation 10 was not attracted merely because an individual member’s holding crossed 15%. The Court stressed regulatory consistency, predictability and legal certainty, noting SEBI’s earlier interpretation of Regulation 10. On Regulation 44, the Court held that SEBI’s power to issue directions is wide but discretionary and must be exercised reasonably, keeping both the interest of the securities market and protection of investors in view.
In the circumstances, the belated directions requiring a public announcement/open offer were unsustainable. On the Securities Appellate Tribunal’s powers under Section 15T, the Court held that SAT has plenary appellate powers to confirm, modify or set aside the order under challenge, but cannot for the first time initiate penalty proceedings under Section 15H when such proceedings had not been initiated by the competent authority. Nevertheless, because the respondents had not filed a cross-appeal or cross-objection against the Rs.25 lakh penalty imposed by SAT for violation of Regulation 11(1), the Supreme Court did not interfere with that penalty and directed SEBI to give quietus to the matter without initiating fresh Chapter VI-A proceedings.
