WTM/RKA/EFD-DRA-III/ 43 /2016

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

ORDER
Under sections 11 and 11B of the Securities and Exchange Board of India Act, 1992 read
with regulations 44 and 45 of the Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 1997 and regulations 32 and 35 of the
Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011 in respect of: 1) Mr. Anil Vedmehta
2) Ms. Bhavana V Gandi
3) Ms. Mamta Parekh
4)
5)
6)
7)
8)
9)

Mr. Paresh Parekh

Mr. Chetan Gosalia
Mr. Babulal Mehta
Ms. Priyanka Mehta
Mr. Rajkumar Jain
Mr. Pulkit Vimal Mehta

In the matter of acquisition of shares of Mobile Telecommunications Ltd.

1. Mobile Telecommunications Ltd. (hereinafter referred to as "target company) is a company
having its registered office at 46, Empire Tower, Near Associated Petrol Pump, C. G.Road,
Ahmedabad 380009, Gujarat and its shares are listed on Bombay Stock Exchange Ltd.
(BSE).
2. As per the shareholding pattern of the target company for the quarter ended March 31, 2010,
its promoter group comprised Mr. Anil Vedmehta, Ms. Bhavana V Gandi, Ms. Mamta Parekh,
Mr. Paresh Parekh, Mr. Chetan Gosalia, Mr. Babulal Mehta, Ms. Priyanka Mehta and Mr.
Rajkumar Jain (hereinafter collectively referred to as the promoter group-I or individually by
their respective names).
3. Further, as per the shareholding pattern of the target company for the quarter ended March
31, 2013, its promoter group comprised Mr. Anil Vedmehta, Ms. Bhavana V Gandi, Ms.
Mamta Parekh, Mr. Paresh Parekh, Mr. Chetan Gosalia, Mr. Rajkumar Jain and Mr. Pulkit
Vimal Mehta (hereinafter collectively referred to as the promoter group-II or individually by
their respective names).

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4. As per the shareholding pattern of the target company filed with BSE, the shareholding of
promoter group-I in the target company for the period from September 2009 to December 2010
was as follows:
Quarter
ending

%
Promoter No. of shares Total equity capital of
shareholding
held
the target company

Sep-09
Dec-09

52.72
52.73

6,27,36,545
6,27,54,295

11,90,00,000
11,90,00,000

Mar-10
Jun-10

55.63
54.19

6,62,05,550
6,44,83,088

11,90,00,000
11,90,00,000

Sep-10

54.41

6,47,45,390

11,90,00,000

Dec-10

54.41

6,47,45,390

11,90,00,000

5. It was noted that the promoter group-I of the target company held 55.63% of its share capital as
on March 31, 2010. On April 16, 2010, Mr. Anil Vedmehta (hereinafter referred to as the
acquirer) acquired 13,15,053 shares constituting 1.11% shares of the target company, through
a bulk deal thereby triggering the requirement to make a public announcement for an open
offer under regulation 11(2) of SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997 (Takeover Regulations, 1997). Thus, the acquirer, along with persons
acting in concert (PACs) i.e. other entities belonging to promoter group-I, was required to make
a public announcement in accordance with the provisions of regulation 11(2) read with
regulation 14 of the Takeover Regulations, 1997 within 4 working days from the date of the
aforesaid acquisition, but he failed to do so.
6. In addition to the above, it was also noted that during the financial year 2012-2013 Mr. Anil
Vedmehta carried out certain acquisitions. The summary of the trading of Mr. Anil Vedmehta
during the period starting from March 31, 2012 to March 28, 2013, is as under:
Particulars
Total paid up share capital
Shareholding as on March 31, 2012 (as
per filings made at BSE)

No. of shares

% of shares

11,90,00,000
6,09,96,824

100.00
51.26

Total on-market Purchases (a)

31,59,086

2.65

Total off-market Purchases (b)

34,63,000

2.91

Total Gross purchases (a+b)

66,22,086

5.56

7. As on March 31, 2012, the shareholding of promoter group-II was 51.26%. On March 20, 2013,
Mr. Anil Vedmehta acquired 3,400 shares through open market and 32,10,000 shares through

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off market thereby increasing the shareholding of promoter group-II by 5.56% during the financial
year 2012-13, These acquisitions by Mr. Anil Vedmehta triggered the requirement on part of
the promoter group-II to make an open offer under regulation 3(2) of the SEBI (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Regulations, 2011).
Thus, the acquirer, along with PACs i.e. other entities belonging to promoter group-II, who were
deemed as PACs by virtue of regulation 2(1)(q)(2)(iv) of Takeover Regulations, 2011 was
required to make a public announcement in accordance with the provisions of regulation 3(2)
read with regulation 13 of Takeover Regulations, 2011, but he failed to do so.
8. In view of the above, SEBI issued a show cause notice dated December 23, 2014 (hereinafter
referred to as "the SCN") to the promoter group-I and the promoter group-II of the target company
(alternatively also referred to as the Noticees) calling upon them to show cause as to why
suitable directions under sections 11 and 11B of the Securities and Exchange Board of India
Act, 1992 ("SEBI Act"), regulation 44 and 45 of Takeover Regulations, 1997 and regulations
32 and 35 of the Takeover Regulations, 2011 should not be issued against them.
9. Mr. Anil Vedmehta on behalf of all the entities belonging to the promoter group-I and the promoter
group-II filed the replies to the SCN vide letters dated January 20, 2015, March 31, 2015 and
May 13, 2015. An opportunity of personal hearing was also provided to the Noticees on May
13, 2015 and February 17, 2016 when Mr. Anil Vedmehta appeared and made submissions on
behalf of all the Noticees. Thereafter, Mr. Anil Vedmehta also filed written submissions in the
matter vide email dated March 11, 2016.
10. Vide the replies/written submissions, inter alia, the following submissions were made by Mr.
Anil Vedmehta on behalf of all the Noticees:
i.
The acquirer had not intentionally hidden or misrepresented anything but due to his
personal problems in the year 2010-2011, he could not gather the details of shareholding
within the stipulated time.
ii.
The target company was prompt in compliances for last 15 years and the promoters of
the company consolidated their shareholding not in view of making any undue profit but
to provide an exit opportunity to needy investors in the bad phase of market and the same
was within the stipulated framework of the laws and guidelines of SEBI. Moreover, these
transactions were intimated to the other authorities also.
iii.
As regards the acquisition dated April 16, 2010, the acquirer submitted that there was a
clerical error of calculation with respect to the shareholding pattern filed for the period
ended March 31, 2010. In this regard, the acquirer collected the shareholding details from
the Registrar and Transfer Agent (RTA) which according to him show that the
promoter groups holding on March 31, 2010 was 52.94% and was erroneously reported

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iv.

v.

vi.

vii.

viii.

as 55.63% as on March 31, 2010.

During the said period (Financial Year 2009-2010), Mr. Anil Vedmehta was going through
a personal problem with his ex-wife and since her wife was not staying with him during
the course of undergoing divorce, it was beyond his understanding whether to treat his
wifes shareholding in the promoter group or not.
On April 16, 2010, he purchased 13,15,053 equity shares and reported the same to BSE.
While calculating the shareholding for the quarter ending March 31, 2010, the secretarial
department inadvertently treated the same purchase transaction as sale transaction and
drew the shareholding pattern which resulted into a net error of 2.2 % in total
shareholding. Subsequently, the promoter group submitted the revised Shareholding
pattern for the period ended March 31, 2010 reflecting the true shareholding as on March
31, 2010 which was taken on record by BSE.
With respect to the 32,10,000 equity shares transferred to his account through an offmarket transaction on March 20, 2013, Mr. Anil Vedmehta submitted that the said shares
were lying in his ex-wifes name as per the divorce consent terms and thereafter, on
compliance of the divorce consent terms the said shares were transferred back to him as
an iinter se transfer.
During the financial year 2012-2013, the promoter group did not purchase 66,22,086
shares as alleged in the SCN. On perusal of the record, it has been observed that SEBI
included 28,76,269 shares which were sold by the acquirers broker on March 25, 2013,
March 26, 2013 and March 28, 2013, These 28,76,269 shares were purchased by Mr. Anil
Vedmehta during 2006-2010 and kept with his broker. Hence, these shares should not be
part of total purchase during 2012-2013.
If these shares are excluded from the shares purchased during the year it will come down
to 37,45,817 (66,22,086-28,76,269) or 3.15% of total paid up capital which was within the
permissible limit or less that 5%.

11. I have considered the SCN, replies / written submission submitted on behalf of all the
Noticees and other material available on record. I note that the SCN pertains to two distinct
acquisitions by Mr. Anil Vedmehta at two different points of time which allegedly triggered
the requirement to make a public announcement for an open offer, once under the Takeover
Regulations, 1997, and again under the Takeover Regulations, 2011.
12. The first allegation in the SCN is that the promote group of the target company during the
financial year 2010-2011 (i.e. the promoter group-I) violated regulation 11(2) of the Takeover
Regulations, 1997 consequent to acquisition of 13,15,053 shares (constituting 1.11% shares of
the target company) by Mr. Anil Vedmehta on April 16, 2010 by way of a bulk deal. In this
regard, the Noticees have submitted that there was a clerical error of calculation with respect

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to the shareholding pattern filed by the target company for the period ended March 31, 2010,
and in fact as on March 31, 2010, the shareholding of the promoter group of the target
company was 52.94 % and not 55.63% as mentioned in the SCN. The Noticees have further
submitted that the necessary steps have already been taken to rectify the said error.
13. It has been brought on record that subsequent to the revised filing by the target company,
BSE vide its email dated March 10, 2016 provided the comparison of shareholding of the
promoter group-I in the old and the revised shareholding pattern filed by the target company,
which is as under:
Old March 2010
29/04/2010

Revised March 2010

08/05/2015

44907960

44907960

Chetan Gosalia
Mamta Parikh
Bhavana Gandhi

1000
6000
1000

1000
6000
1000

Raj Kumar Jain

Paresh Parekh

1000
1000

1000
1000

Priyanka Mehta
Babulal Mehta

21213590
74000

18003590
74000

66205550 (55.63 %)

62995550 (52.94 %)

Receipt Date
Promoter Entities
Anil B Vedmehta

Total

14. I note from the material brought on record that the actual shareholding of promoters group-I as
on March 31, 2010 was 52.94% and not 55.63 %. Thus, the acquisition of 13,15,053 shares by
Mr. Anil Vedmehta on April 16, 2010 constituting 1.11% shares of the target company was
within the permissible creeping acquisition limit of 5% stipulated under regulation 11(1) of the
Takeover Regulations, 1997 and did not fall within the purview of regulation 11(2) thereof. In
view of the above, I find that the acquisition dated April 16, 2010 by Mr. Anil Vedmehta
increased the shareholding of the promoter group-I from 52.94% to 54.05% and did not trigger
the requirement of making a public announcement for an open offer under regulation 11(2)
of Takeover Regulations, 1997 which is only applicable in cases where the shareholding of the
promoter group of the target company is 55% or more.
15. The second allegation in the SCN pertains to the acquisitions made by Mr. Anil Vedmehta
during the financial year 2012-2013. As on March 31, 2012, the shareholding of the then
promoter group of the target company (i.e. promoter group-II) was 51.26%. On March 20, 2013,
Mr. Anil Vedmehta acquired 3,400 shares through open market transactions and 32,10,000

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shares through an off market transaction thereby, increasing the shareholding of promoter groupII by 5.56% during the financial year 2012-13, which triggered the requirement on part of the
promoter group-II to make the public announcement for an open offer under regulation 3(2) of
the Takeover Regulations, 2011.
16. In this regard, the Noticees submitted that during the financial year 2012-2013, the promoter
group did not purchase 66,22,086 shares. Further, the SCN mistakenly included 28,76,269
shares as purchases by the acquirer but in fact these shares were sold by the acquirer on March
25, 2013, March 26, 2013 and March 28, 2013. The Noticees submitted that if these shares
were excluded from the shares purchased during the year 2012-2013, the total number would
come down to 37,45,817 (66,22,086 - 28,76,269) or 3.15% of total paid up capital which was
within the permissible limit of 5%. The Noticees also submitted that 32,10,000 equity shares
which were transferred through an off-market transaction on March 20, 2013 to Mr. Anil
Vedmehta were actually transferred back to him as an iinter se transfer from his ex-wife who
was also a part of the promoter group of the target company.
17. With regard to the above submissions of the Noticees, I note from the material on record that
Mr. Anil Vedmehta acquired shares in the target company in several tranches during the
financial year 2012-2013 and his gross on-market purchase from April 1, 2012 to March 19,
2013 was 31,52,081 shares which constituted 2.65% of the total shareholding of the target
company. On March 20, 2013, Mr. Anil Vedmehta acquired 3,400 shares through open market
transactions and 32,10,000 shares through an off market transaction which resulted in the
increase of shareholding of the promoter group-II by 5.56% during the financial year 2012-13. It
is pertinent to note here that acquisitions mentioned above do not include the 28,76,269 shares
which were sold by Mr. Anil Vedmehta on March 25, 2013, March 26, 2013 and March 28,
2013. I, therefore, find that the question of deducting the said 28,76,269 shares from the total
number of shares acquired by Mr. Anil Vedmehta during the financial year 2012-2013 does
not arise. Further, I note with respect to off market acquisitions by Mr. Anil Vedmehta that
he acquired 2,53,000 shares during April 1, 2012 to March 19, 2013. On March 20, 2013, Mr.
Anil Vedmehta acquired 32,10,000 equity shares of the target company through an off market
purchase which according to him was an inter se transfer from his ex-wife, Ms. Priyanka Mehta
and therefore exempted under the Takeover Regulations, 2011. However, I note from the
material on record that Ms. Priyanka Mehta (an erstwhile promoter) was no longer disclosed
as a promoter of the target company in its shareholding pattern for the quarter ended
December 2012 and March 2013. In view thereof, the off market acquisition of 32, 10,000
shares on March 20, 2013 by Mr. Anil Vedmehta from Ms. Priyanka Mehta does not meet
the pre-requisites of regulation 10(1)(a)(ii) of the Takeover Regulations, 2011 and therefore
cannot be treated as an inter se transfer amongst promoters. In view of the above, I reject the

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submissions of the Noticees in this regard.

18. Considering the above, I find that the pursuant to the acquisition of 3,400 shares through open
market transactions and 32,10,000 shares through an off market transaction by Mr. Anil
Vedmehta on March 20, 2013, the collective shareholding of the then promoter group of the
target company (i.e. promoter group-II) increased by 5.56% of the total shareholding of the target
company which was in breach of the provisions of regulation 3(2) of the Takeover Regulations,
2011. I note that in the context of enforcement of regulation 10, 11 and 12 of the Takeover
Regulations, 1997 which is pari materia the provisions of regulations 3(1), 3(2) and 4 of the
Takeover Regulations, 2011, the Hon'ble Securities Appellate Tribunal ("SAT"), vide order
dated September 08, 2011 in the matter of Nirvana Holdings Private Limited vs. SEBI (Appeal no.
31/2011) observed as follows:
"The primary object of the takeover code is to provide an exit route to the public shareholders when there
is substantial acquisition of shares or a takeover. This right to exit is an invaluable right and the
shareholders cannot be deprived of this right lightly. It is only when larger interest of investor protection or
that of the securities market demands that this right could be taken away. Therefore, as a normal rule, a
direction to make a public announcement to acquire shares of the target company should issue to an acquirer
who fails to do that. The Board need not give reasons as to why such a direction is being issued because that
is the mandate of Regulations 10, 11 and 12. However, if the issuance of such a direction is not in the
interest of the securities market or for the protection of interest of investors, the Board may deviate from the
normal rule and issue any other direction as envisaged in Regulation 44 of the takeover code. In that event,
the Board should record reasons for deviation ."
19. I note that the object and purpose of Takeover Regulations, 1997 and Takeover Regulations,
2011 both is common i.e. to provide equality of treatment of all shareholders, to provide an
exit opportunity to the shareholders in the case of a substantial acquisition of shares or
takeover and to ensure that persons in control of a target company do not consolidate their
shareholding in the target company in a clandestine manner and to the detriment of other
shareholders. I further note that the guiding principle for the directions under regulation 32 is
the protection of interests of the investors and securities market. I, therefore, am of the view
that the above mentioned principles laid down by the Hon'ble SAT shall apply in the present
case also.
20. In the present case, the obligation of the promoter group-II to make the open offer has been
triggered on account of breach of regulation 3(2). Had the Noticees made the public
announcement on March 20, 2013 in accordance with the Takeover Regulations, 2011 and
complied with all related activities within the timelines specified therein, all formalities with

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respect to their public announcement and the open offer would have been completed on June
7, 2013.
21. I find that the promoter group-II has deprived the shareholders the exit opportunity at the best
offer price. In the facts and circumstances of the present case, I do not find any reason to
deviate from the normal rule to make a public announcement to acquire shares of the target
company in accordance with the provisions of Takeover Regulations, 2011, and issue any other
direction as envisaged in regulation 32.
22. I am also of the view that since the public announcement now would provide a delayed exit
opportunity to the shareholders of the target company, the promoter group-II should pay interest
on the consideration amount to the shareholders who tender their shares in the open offer and
who are eligible for interest as per law.
23. Considering the above, I, in exercise of powers conferred upon me under sections 11, 11B
read with section 19 of the SEBI Act, 1992 and regulations 32 of the Takeover Regulations,
2011, hereby issue the following directions:
a) Mr. Anil Vedmehta, Ms. Bhavana V Gandi, Ms. Mamta Parekh, Mr. Paresh Parekh, Mr.
Chetan Gosalia, Mr. Rajkumar Jain and Mr. Pulkit Vimal Mehta shall make a public
announcement to acquire shares of the target company in accordance with the provisions of
the Takeover Regulations, 2011, within a period of 45 days from the date of this order;
b) Mr. Anil Vedmehta, Ms. Bhavana V Gandi, Ms. Mamta Parekh, Mr. Paresh Parekh, Mr.
Chetan Gosalia, Mr. Rajkumar Jain and Mr. Pulkit Vimal Mehta shall, alongwith the
consideration amount, pay interest at the rate of 10% per annum from June 7, 2013 to the
date of payment of consideration to the shareholders who were holding shares in the target
company on the date of violation and whose shares are accepted in the open offer, after
adjustment of dividend paid, if any.
24. This order shall come into force with immediate effect.

Sd/Date: April 5th, 2016

Place: Mumbai

RAJEEV KUMAR AGARWAL

WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA

Order in the matter of Mobile Telecommunications Ltd.

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