SC serves notice to Sebi on Herbertsons acquisition row

The Supreme Court on Monday issued notice to the Securities and Exchange Board of India on a petition filed by United Breweries challenging a tribunal order asking Kishore R. Chhabria and Madanlal D. Chhabria to make an open offer to shareholders of Herbertsons Limited with October 27, 1994 as a reference date to calculate offer price. A bench comprising Chief Justice V.N. Khare and Justice S.B. Sinha issued the notice on three questions including the maintainability of the UB petition and posted the matter for further hearing on September 15. The Court also asked Sebi as to what would happen if it was found that the acquisition of 19.1% of the shares in Herbertsons Limited by Chhabrias were void and whether there could be ex post facto offers. Appearing for the Vijay Mallya-owned company, senior advocate Fali Nariman contended that August 1 decision of the Securities Appellate Tribunal (SAT) asking the Chhabrias to make an open offer would change the management structure of the Herbertsons Limited in which UB held 23.9% of shares. However, appearing for the Chhabrias, senior advocate Kapil Sibal questioned the locus standi of UB in the matter as it was not a party before the SAT and alleged that it was Mallya who had transferred the shares to Chhabrias. “Mallya is now having a change of mind and for that he could not be allowed to challenge his decision to transfer the shares to Chhabrias,” he said. The Court, while fixing the next hearing for Monday, said the competitive bidding for Herbertsons’ shares would go on as planned but the 19.1% held by the Chhabrias would be subject to its further orders. SAT had indicted Sebi for passing an order in the case without an adequate explanation and had reversed the regulator’s order asking UB group chairman Vijay Mallya to divest his holding in excess of 21.38% in Herbertsons through an open offer.