BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO. JJ/AK/AO - 11-13/2014]
__________________________________________________
UNDER SECTION 15-I OF SECURITIES AND EXCHANGE BOARD OF INDIA
ACT, 1992 READ WITH RULE 5 OF SEBI (PROCEDURE FOR HOLDING
INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES,
1995
In respect of
Name

Permanent Account No.

Order Number

Mr. Vilas Valunji

Not Available

JJ/AK/AO/11/2014

Mr. Partha Debnath

Not Available

JJ/AK/AO/12/2014

Mr. Janardhan Shriniwas Purandare

Not Available

JJ/AK/AO/13/2014

In the Matter of M/s Vybra Automet Limited

FACTS OF THE CASE IN BRIEF
1. An open offer was made by Mr. Vilas Valunji (hereinafter referred to as
Vilas/"Acquirer"), along with Persons Acting in Concert (PACs) Mr. Partha
Debnath (hereinafter referred to as Partha) and Mr. Janardhan Shriniwas
Purandare (hereinafter referred to as Janardhan) (collectively referred to as
Noticees) to the shareholders of M/s Vybra Automet Limited (hereinafter
referred to as "VAL"/"Company"), Target Company listed at BSE Limited
(BSE) and Hyderabad Stock Exchange (HSE), through a public announcement
dated May 10, 2010 for acquisition of 14,25,800 fully paid up equity shares of
10 each, representing 20% of the voting share capital of VAL, at a price of
Adjudication order in respect of Vilas Valunji, Partha Debnath and Janardhan Shriniwas Purandare in the
matter of M/s Vybra Automet Limited
Page 1 of 10
January 20, 2014

22.65 per fully paid-up equity share inclusive of interest of an amount of

0.20

per share, payable in cash.

2. Securities and Exchange Board of India (hereinafter referred to as SEBI)
examined the letter of offer pertaining to the aforesaid open offer and alleged
that Vilas, Partha and Janardhan had violated the provisions of regulation 14(1)
of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997
(hereinafter referred to as SAST Regulations, 1997) read with regulation 35
of SEBI (Substantial Acquisition of Shares & Takeover) Regulations, 2011
(hereinafter referred to as SAST Regulations, 2011) and therefore, liable for
monetary penalty under section 15H(ii) of the Securities and Exchange Board of
India Act, 1992 (hereinafter referred to as the SEBI Act).
APPOINTMENT OF ADJUDICATING OFFICER
3. Shri Piyoosh Gupta was appointed as Adjudicating Officer vide order dated June
27, 2013 under section 15-I of SEBI Act read with regulations 44 & 45 of SAST
Regulations, 1997 and rule 3 of SEBI (Procedure for Holding Inquiry and
Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to
as Rules) to inquire into and adjudge under section 15H(ii) of SEBI Act for the
alleged violations of provisions of SAST Regulations. Consequent, upon transfer
of Shri. Piyoosh Gupta, the undersigned was appointed as the Adjudicating
Officer vide order dated November 08, 2013.
SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING
4. Show Cause Notices No. EAD/JJ/AK/29620/2013, EAD/JJ/AK/29622/2013 and
EAD/JJ/AK/29623/2013 all dated November 20, 2013 (hereinafter referred to as
SCNs) was issued to Vilas, Partha and Janardhan respectively, under rule
4(1) of the Rules to show cause as to why an inquiry should not be initiated and
penalty be not imposed under section 15H(ii) of SEBI Act for the alleged
Adjudication order in respect of Vilas Valunji, Partha Debnath and Janardhan Shriniwas Purandare in the
matter of M/s Vybra Automet Limited
Page 2 of 10
January 20, 2014

violation specified in the said SCNs. The said SCNs were duly delivered to the
Noticees by Speed Post (Acknowledgement / Proof of Delivery is present on
record). However, the Noticees did not submit any reply to the SCNs.
5. In the interest of natural justice and in order to conduct an inquiry in terms of
rule 4(3) of the Rules, the Noticees were granted an opportunity of personal
hearing on January 10, 2014 vide notice dated December 31, 2013. The said
Notice of Inquiry dated December 31, 2013 was also duly delivered to the
Noticees by Speed Post (Acknowledgement / Proof of Delivery is present on
record). However, the Noticees neither submitted any reply nor did it avail the
opportunity of personal hearing. This clearly shows the non-cooperative attitude
of the Noticees towards the adjudication proceedings. For the reasons
mentioned above, I observe that the Noticees was provided with enough
opportunity of being heard and hence, I am proceeding with the inquiry taking
into account the material available on record.

CONSIDERATION OF ISSUES AND FINDINGS

6. After perusal of the material available on record, I have the following issues for
consideration, viz.,
A. Whether the Noticees have violated the provisions of regulation 14(1) of
SAST Regulations, 1997?
B. Whether the Noticees are liable for monetary penalty under section
15H(ii) of the SEBI Act ?
C. What quantum of monetary penalty should be imposed on the Noticees
taking into consideration the factors mentioned in Section 15J of the SEBI
Act ?

Adjudication order in respect of Vilas Valunji, Partha Debnath and Janardhan Shriniwas Purandare in the
matter of M/s Vybra Automet Limited
Page 3 of 10
January 20, 2014

FINDINGS
7. On perusal of the material available on record and giving regard to the facts and
circumstances of the case, I record my findings hereunder.
ISSUE 1: Whether the Noticees have violated the provisions of regulation 14(1)
of SAST Regulations, 1997?
8. It was alleged in the SCNs that the Noticees had entered into a Share Purchase
Agreement (SPA) with the promoters of VAL i.e. Mr. V.N. Norhi and M/s Chaitu
Engineering Private Limited on April 02, 2010 to acquire in aggregate 9,97,000
equity shares constituting 13.89% of the total equity share capital of VAL. As per
regulation 14(1) of SAST Regulations, 1997 the acquirer along with the PACs
have to make the public announcement of offer within 4 working days from the
date of SPA. Therefore, it was alleged that the Noticees had made the public
announcement as per regulation 14(1) of SAST Regulations as against the due
date of compliance with a delay of 32 days, thereby it was alleged that the
Noticees had violated the provisions of regulation 14(1) of SAST Regulations,
1997.
9. The provisions of regulation 14(1) of SAST Regulations, 1997 are reproduced
hereunder:
Timing of the public announcement of offer
Regulation 14
(1) The public announcement referred to in regulation 10 or regulation 11
shall be made by the merchant banker not later than four working days
of entering into an agreement for acquisition of shares or voting rights
or deciding to acquire shares or voting rights exceeding the respective
percentage specified therein:
Provided that in case of disinvestment of a Public Sector Undertaking,
the public announcement shall be made by the merchant banker not later
than 4 working days of the acquirer executing the Share Purchase
Adjudication order in respect of Vilas Valunji, Partha Debnath and Janardhan Shriniwas Purandare in the
matter of M/s Vybra Automet Limited
Page 4 of 10
January 20, 2014

Agreement or Shareholders Agreement with the Central Government or

the State Government as the case may be, for the acquisition of shares
or voting rights exceeding the percentage of shareholding referred to in
regulation 10 or regulation 11 or the transfer of control over a target
Public Sector Undertaking.
(2) .
(3) .
(4) ..
10. The provisions of regulation 35 of SAST Regulations, 2011 are reproduced
hereunder:
Repeal and Savings.
35.(1) The Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997, stand repealed from the date on which these
regulations come into force.
(2) Notwithstanding such repeal,
(a) anything done or any action taken or purported to have been done or taken
including comments on any letter of offer, exemption granted by the Board, fees
collected, any adjudication, enquiry or investigation commenced or show-cause
notice issued under the repealed regulations, prior to such repeal, shall be
deemed to have been done or taken under the corresponding provisions of these
regulations;
(b) the previous operation of the repealed regulations or anything duly done or
suffered thereunder, any right, privilege, obligation or liability acquired,
accrued or incurred under the repealed regulations, any penalty, forfeiture or
punishment incurred in respect of any offence committed against the repealed
regulations, or any investigation, legal proceeding or remedy in respect of any
such right, privilege, obligation, liability, penalty, forfeiture or punishment as
aforesaid, shall remain unaffected as if the repealed regulations has never been
repealed;
(c) any open offer for which a public announcement has been made under the
repealed regulations shall be required to be continued and completed under the
repealed regulations.
(3) After the repeal of Securities and Exchange Board of India (Substantial Acquisition
of Shares and Takeovers) Regulations, 1997, any reference thereto in any other
regulations made, guidelines or circulars issued thereunder by the Board shall be
deemed to be a reference to the corresponding provisions of these regulations.

Adjudication order in respect of Vilas Valunji, Partha Debnath and Janardhan Shriniwas Purandare in the
matter of M/s Vybra Automet Limited
Page 5 of 10
January 20, 2014

11. As per regulation 14(1) of SAST Regulations, 1997 the public announcement
shall be made not later than four working days of entering into an agreement for
acquisition or deciding to acquire shares/voting rights exceeding the percentage
specified in regulation 10 or regulation 11 of SAST Regulations, 1997.
12. Upon perusal of the documents available on record I find that prior to SPA, the
Acquirer (Vilas) along with the PACs (Partha & Janardhan) held 10,33,227
equity shares representing 14.49% of total paid up/voting share capital of VAL.
Further, the Noticees had entered into SPA with the promoters of VAL i.e. Mr.
V.N. Norhi and M/s Chaitu Engineering Private Limited on April 02, 2010 to
acquire in aggregate 9,97,000 equity shares constituting 13.89% of the total
equity share capital of VAL. Thereafter, as per SAST Regulations, 1997 the
acquirer along with the PACs had to make the public announcement of offer
through their merchant banker within stipulated time of 4 working days from the
date of SPA i.e. by April 08, 2010. However, from the documents available on
record I find that the Noticees had made the public announcement of offer on
May 10, 2010 i.e. with a delay of 32 days. Hence, I note that Noticees through
their merchant banker had failed to make public announcement of offer in
accordance with the provisions of regulation 14 (1) of SAST Regulations, 1997.
13. Section 15H(ii) of the SEBI Act provides for imposition of monetary penalty, on
any person, who fails to make a public announcement to acquire shares at a
minimum price as required under the SEBI Act or any rules or regulations made
thereunder. The term failure includes failure to make the public announcement
within the stipulated time. The objective of the SAST Regulations is to provide
an orderly framework within which the process of substantial acquisition of
shares and takeovers could be conducted in a fair and transparent manner to
the advantage of all stakeholders. Justice Bhagwati Committee Report based on
which the SAST Regulations have been drafted, has clearly stated that, "while
on the one hand the regulations should not impose conditions which are too onerous to
fulfill and hence, make a substantial acquisition and takeover difficult, at the same time
Adjudication order in respect of Vilas Valunji, Partha Debnath and Janardhan Shriniwas Purandare in the
matter of M/s Vybra Automet Limited
Page 6 of 10
January 20, 2014

they should ensure that such process do not take place in a clandestine manner without
protecting the interest of shareholders". If the delay of the Noticees in making public
announcement of offer is taken lightly, then it would defeat the aforesaid
objective

of

the

SAST

Regulations

and

open

flood

gates

for

the

acquirers/Noticees to make the public announcement at their own whims and

fancies without any respect for the regulatory obligations. Further, I am of the
view that Noticees/acquirers should enter into SPA, only when they are assured
or have the assurance that public announcement of offer would follow within 4
working days from the date of SPA.
14. I note that despite duly receiving the SCNs and Notice of Inquiry (hearing
notice), the Noticees failed to submit any reply to the SCNs and has not refuted
the charges. The Honble Securities Appellate Tribunal (SAT) in Classic Credit
Ltd. vs. SEBI, Appeal No. 68/2003 has, inter-alia, held the appellants did not file
any reply to the second show-cause notice. This being so, it has to be presumed that the
charges alleged against them in the show-cause notice were admitted by them. The
Order passed by Honble SAT is relied upon in this case for guidance.
Therefore, I presume that the Noticees have admitted the charges alleged in the
SCNs.
15. Thus, in light of the above, the allegation of violations of provisions of regulation
14(1) of SAST Regulations, 1997 by the Noticees stands established.
ISSUE 2: Whether the Noticees are liable for monetary penalty under section
15H(ii) of the SEBI Act?
16. The provisions of section 15H(ii) of SEBI Act is reproduced hereunder:
Penalty for non-disclosure of acquisition of shares and takeovers.
15H. If any person, who is required under this Act or any rules or regulations made
thereunder, fails to,
Adjudication order in respect of Vilas Valunji, Partha Debnath and Janardhan Shriniwas Purandare in the
matter of M/s Vybra Automet Limited
Page 7 of 10
January 20, 2014

(i)
(ii)
(iii)
(iv)

..
make a public announcement to acquire shares at a minimum price; or

..
he shall be liable to a penalty of twenty-five crore rupees or three times the
amount of profits made out of such failure, whichever is higher.

17. In Appeal No. 66 of 2003 - Milan Mahendra Securities Pvt. Ltd. Vs SEBI Order
dated April 15, 2005 the Honble SAT has observed that, the purpose of these
disclosures is to bring about transparency in the transactions and assist the Regulator to
effectively monitor the transactions in the market.
18. Thus, as the violations of provisions of regulation 14(1) by the Noticees has
been established, I am convinced that it is a fit case to impose monetary penalty
under section 15H(ii) of SEBI Act.
ISSUE 2: What quantum of monetary penalty should be imposed on the
Noticees taking into consideration the factors mentioned in
Section 15J of the SEBI Act ?
19. While determining the quantum of monetary penalty under section 15H(ii) of
SEBI Act, it is important to consider the factors stipulated in section 15J of SEBI
Act, which reads as under:15J - Factors to be taken into account by the adjudicating officer
While adjudging quantum of penalty under section 15-I, the adjudicating
officer shall have due regard to the following factors, namely:(a)
(b)
(c)

the amount of disproportionate gain or unfair advantage, wherever

quantifiable, made as a result of the default;
the amount of loss caused to an investor or group of investors as a
result of the default;
the repetitive nature of the default.

Adjudication order in respect of Vilas Valunji, Partha Debnath and Janardhan Shriniwas Purandare in the
matter of M/s Vybra Automet Limited
Page 8 of 10
January 20, 2014

20. It is difficult, to quantify exactly the disproportionate gains or unfair advantage

enjoyed by the Noticees and the consequent losses suffered to the investors,
due to the delay in making public announcement of offer. However, it is a fact
the Noticees had failed to make the public announcement of offer within the
stipulated time specified under SAST Regulations, 1997. Further, there is no
material on record which dwells on the extent of specific gains made by the
Noticees. Also, there is no material on record to indicate that such default was
repetitive in nature.
21. Further, I find that Noticees had made the public announcement of offer with a
delay of 32 days and interest @10% had been calculated on price determined
as on the date of public announcement of offer i.e. offer price was
fully paid up equity share inclusive of interest of an amount of

22.65 per

0.20 per share.

I am of the view that, the Noticees have to be penalized even after having paid
an interest on offer price, because if not done so then it would mean that the
acquirers/Noticees will be at liberty to make the public announcement of offer at
their own wish and whim without any respect for the regulatory obligations.
22. In view of the abovementioned conclusion and after considering the factors
under Section 15J of the SEBI Act, I hereby impose a monetary penalty of
5,00,000/- (Rupees five lakhs only) under Section 15H(ii) of the SEBI Act for the
violation of regulation 14(1) of SAST Regulations, 1997 on the Noticees which is
appropriate in the facts and circumstances of the case.
ORDER
23. In exercise of the powers conferred under Section 15 I of the SEBI Act and Rule
5 of the Rules, I hereby impose a total penalty of

5,00,000/- (Rupees five lakhs

only) on the Noticees i.e. Mr. Vilas Valunji, Mr. Partha Debnath and Mr.
Janardhan Shriniwas Purandare in terms of the provisions of section 15H(ii) of
SEBI Act for the violations of provisions of regulation 14(1) of SAST
Adjudication order in respect of Vilas Valunji, Partha Debnath and Janardhan Shriniwas Purandare in the
matter of M/s Vybra Automet Limited
Page 9 of 10
January 20, 2014

Regulations, 1997. In the facts and circumstances of the case, I am of the view
that the said penalty is commensurate with the violations committed by the
Noticees. The Noticees shall be jointly and severally liable to pay the said
monetary penalty.
24. The Noticees shall pay the said amount of penalty by way of demand draft in
favour of SEBI - Penalties Remittable to Government of India, payable at
Mumbai, within 45 days of receipt of this order. The said demand draft should be
forwarded to Division Chief, Corporation Finance Department, Division of
Corporate Restructuring, SEBI, SEBI Bhavan, Plot No. C 4 A, G Block,
Bandra Kurla Complex, Bandra (E), Mumbai 400 051.
25. In terms of rule 6 of the Rules, copies of this order are sent to the Noticees and
also to the Securities and Exchange Board of India.

Date: January 20, 2014

Place: Mumbai

Jayanta Jash
Adjudicating Officer

Adjudication order in respect of Vilas Valunji, Partha Debnath and Janardhan Shriniwas Purandare in the
matter of M/s Vybra Automet Limited
Page 10 of 10
January 20, 2014