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CLB says Bajoria violated Takeover Code provisions

Reeba Zachariah

The Company Law Board has upheld Bombay Dyeing's contention that jute baron Arun Bajoria and his associates have contravened the provisions of the Takeover Code in not disclosing their acquisitions when it crossed critical threshold limits.

In its order dated July 4, 2001, the CLB has disposed off the petition by ruling that "the respondents (Bajoria and associates) acting in concert, have contravened the provisions of Regulation 7 of the Takeover Code by not disclosing their acquisition beyond 5 per cent shares in the company."

Further, the CLB ruled that Bajoria and associates will have to reduce their holding to below the specified trigger point of 5 per cent. But since Bajoria has already diluted his stake in Bombay Dyeing to below 5 per cent, the CLB noted that it was not taking any action since, "the shares in excess of 5 per cent have already been reportedly transferred as permitted by Section 111 A (5) during the pendency of the present proceedings."

The CLB order was yet to reach Bajoria's counsel in Calcutta, sources close to Bajoria said. Bombay Dyeing had petitioned the CLB saying that since Bajoria and associates had failed to disclose their acquisition of shares in the company beyond 5 per cent, the "CLB should declare that the acquisition of the shares by Bajoria and group in violation of regulation 7 be (declared) null and void."

It also asked the CLB to order "rectification of the register of members" by deleting the names of the acquirers in respect of all shares acquired by them.

This implied that the Bajoria group would have had to reduce its holdings to below 5 per cent.

Bajoria had pleaded before the CLB that his acquisition was of a creeping nature and it may have exceeded five per cent without the company being informed. In any case, the situation was corrected later and as the holding was below five per cent at present, there was no cause for action at this stage.

Another petition filed by Bajoria before the CLB alleging mismanagement in the affairs of Bombay Dyeing is to come up for hearing on August 17.

The matter of alleged violation of the Takeover Code is also pending with the Securities and Exchange Board of India, which is yet to deliver a final order.

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