Securities Appellate Tribunal (SAT) has upheld Sebi's order that had directed Filatex Fashions managing director and his wife to make a public announcement for acquiring the company shares within a stipulated time.
In April, 2013, Sebi had asked Filatex Fashions promoter and MD Prabhat Sethia, his wife Sangeeta Sethia and one Swaminathan Rajendran to make the public announcement within a period of three months as well as pay interest at the rate of 12 per cent per annum on the offer price to the shareholders.
Subsequently, Prabhat and Sangeeta Sethia had approached SAT challenging Sebi rulings in the case.
"In view of clear violation of the mandate of takeover regulations, we do not find any substance in the present case to take a lenient view in relation to making public announcement as also interest by altering the impugned order dated April 4, 2013," SAT said in an order dated May 5.
SAT noted that the acquisition of 3 lakh shares of Filatex Fashions each by Sangeeta and Rajendran on August 31, 2007 was effected at the instance of Prabhat Sethia.
The acquisitions has increased the shareholding of all the three indivuduals by 6.85 per cent in Filatex Fashions.
"This is admittedly beyond the shareholding limit of 5 per annum prescribed under... The takeover regulations which mandates the promoters and person acting in concert (PAC) to make public announcement and to make an open offer in accordance with the Takeover Regulations," SAT said.
"The appellants having failed to do so committed a violation of law and hence no fault can be found with the impugned order," it added.
Sebi had found that IFCI Venture Capital (earlier known as Risk Capital) on August 31, 2007 had sold the shares the firm to Sangeeta Sethia and Swaminathan Rajendran, who were acting as the front entities of Prabhat Sethia.
By the acquisition of these shares, the combined holding of the promoters had crossed the threshold limit. Their stake increased from 28.88 per cent as on quarter ended June 30, 2007 to 35.73 per cent as on August 31, 2007 making it mandatory for them to make a public announcement to acquire further shares.
