SAT rejects Birlas’ plea on L&T takeover

The bid of the Aditya Birla group to take over Larsen and Toubro received a major setback with the Securities Appellate Tribunal (SAT) on Thursday rejecting the group’s plea for an interim relief and upholding the Securities and Exchange Board of India (Sebi) advice to keep the open offer on hold, pending a probe. Refusing to grant any interim relief, SAT presiding officer in his order said ‘in my view granting an interim order in the light of the facts of the case will tantamount to staying an investor protection measure put in operation by respondent (Sebi). I am not inclined to grant interim relief as prayed by Grasim Industries’. AV Birla flag ship Grasim Industries had approached the SAT against a Sebi order asking the company to defer its open offer for 20% stake in Land T. The arguments in this case were concluded on Wednesday. The open offer was slated to open on December 9, 2002. SAT has however, allowed Grasim to withdraw an amount of Rs 1170000000 deposited by it in the escrow account. ‘But since, the Sebi has asked the company to hold back its offer, Grasim will not be held responsible for not complying with time bound action. Since Grasim has been asked not to proceed with the offer it is but fair to allow the company to withdraw the money from the said account, if they so desire, and they will redeposit the requisite amount as and when the public offer is allowed to be made, which they are allowed to do so,’ SAT said. ‘Grasim and its investment arm Samruddhi Swastik Trading has not stated any urgency as to why the public offer should go unrestrained,’ SAT’s presiding officer C. Achuthan said in his order a day after parties concluded their arguments. ‘Sebi has acted well within its powers in ordering the investigations. They have received complaints even after the announcement of Grasim’s open offer for Land T... if it is allowed to go, then there is no effective remedy to make good the adverse effects of the same,’ SAT ruled. It said that on careful examination of regulations it was ‘difficult’ to accept Grasim’s version that all that Sebi could do is to call for a revised letter of offer. The tribunal also said that a public announcement in this case has already been made and further course of action has to be taken within a timeframe. ‘In that way there is an urgency. But since Sebi is asking to hold on further action (open offer), Grasim will not be responsible for not complying with the time bound action,’ SAT ruled. Investors’ Grievances Forum (IGF) president and BJP MP Kirit Somaiya, while welcoming the SAT order said, ‘It is a victory of small investors. IGF was fighting for the past 12 months against the injustice to the small investors of Land T. At last we got the justice today.’ He demanded that Sebi should complete all its investigations regarding Land T case within the next three months. A major complaint of investors was that Grasim offered only Rs 190 per share in the open offer while it paid over Rs 300 to Reliance while acquiring 10% stake in Land T.