Winner Applicant

TEAM CODE: 129A
BEFORE THE HONBLE SUPREME COURT OF INDIA
APPEAL NO.____________/ 2016

(UNDER SECTION 15Z OF THE SECURITIES EXCHANGE BOARD OF INDIA ACT,
1992)
DREAMSELLERS LIMITED
(APPELLANT)
V.
SECURITIES EXCHANGE BOARD OF INDIA
(RESPONDENT)
MEMORIAL FOR APPELLANT

_______________
2ND GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2016
TABLE OF CONTENTS
LIST OF ABBREVIATIONS ................................................................................... IV
INDEX OF AUTHORITIES ...................................................................................... V
STATEMENT OF JURISDICTION .......................................................................... X
STATEMENT OF FACTS ........................................................................................ XI
ISSUES RAISED .................................................................................................... XIII
SUMMARY OF ARGUMENTS............................................................................. XIV
ARGUMENTS ADVANCED ..............................................................................................1
ISSUE 1......................................................................................................................1
WHETHER THE PROVISIONS OF REGULATION 23 OF THE NEW TAKEOVER
REGULATIONS RELATING TO WITHDRAWAL OF OPEN OFFER COULD BE APPLIED
TO AN OPEN OFFER MADE UNDER THE 1997 TAKEOVER REGULATIONS? ..............1
[1.1] INTENT OF THE REGULATORS AND THE COMMITTEE .......................................1
[1.2] APPLICATION OF MISCHIEF RULE: HEYDONS CASE ........................................2
[1.3] SAVINGS CLAUSE TO BE INOPERATIVE DUE TO CONTRARIETY ........................3
ISSUE 2......................................................................................................................6
WHETHER IT CAN BE SAID THAT DREAMSELLERS HAD FAILED TO EXERCISE DUE
DILIGENCE AND THE FACTS RELATING TO THE FRAUD WERE KNOWN OR
COULD HAVE BEEN KNOWN BY DREAMSELLERS, IF DREAMSELLERS HAD
EXERCISED PROPER DUE DILIGENCE? .................................................................6
[2.1.] FACTS RELATING TO FRAUD EMERGED SUBSEQUENT TO THE OPEN OFFER....6
[2.2] VIOLATION OF GENERAL OBLIGATION BY DIRECTOR WHILE MAKING
DISCLOSURES..........................................................................................................8
[2.3] APPLICATION OF THE DOCTRINE OF INDOOR MANAGEMENT .........................8
[2.4.] THAT THE STANDARD OF DUE DILIGENCE DIFFERS FROM CASE-TO-CASE
DEPENDING ON REASONABILITY. ............................................................................9
ISSUE-3 .................................................................................................................11
ii
MEMORANDUM ON BEHALF OF APPELLANT
WHETHER SEBI HAD VIOLATED THE PRINCIPLES OF NATURAL JUSTICE IN THE

PRESENT CASE WHILE PASSING ITS ORDER REJECTING THE APPLICATION TO
WITHDRAW THE OPEN OFFER WITHOUT HEARING DREAMSELLERS? ...................11
[3.1] VIOLATION OF NATURAL JUSTICE PRINCIPLE ..............................................11

[3.2] UNNECESSARY DELAY FOR THE PERIOD OF 13 MONTHS ..............................13
ISSUE -4 ................................................................................................................15
WHETHER REGULATION 27(1) (D) OF THE 1997 TAKEOVER REGULATIONS IS TO
BE GIVEN AN INTERPRETATION WHEREBY, THE WORDS SUCH CIRCUMSTANCES AS
IN THE OPINION OF THE BOARD MERIT WITHDRAWAL ARE TO BE READ EJUSDEM
GENERIS WITH THE OTHER PROVISIONS OF REGULATION 27 (1) OF THE SAID
CODE I.E. AS CIRCUMSTANCES WHERE IT IS IMPOSSIBLE TO PERFORM THE OPEN
OFFER? ...................................................................................................................15
[4.1]. ESSENTIALS OF EJUSDEM GENERIS .............................................................15
[4.2] INTENT OF LEGISLATURE ....................................................................16
PRAYER ..................................................................................................................... XV
iii
LIST OF ABBREVIATIONS
%
Percentage
&
And
(P)
Private
Para
p.
Page
v.
Versus
AIR
All India Reporter
Bom
Bombay
Cal
Calcutta
Co.
Company
Comp.
Company
Ed.
Edition
ILR
Indian Law Report
Ltd.
Limited
M&A
Mergers and Acquisitions
Mad
Madras
Ors.
Others
Reg.
Regulation
SAT
Securities Appellate Tribunal
SC
Supreme Court
SCC
Supreme Court Reports
SCJ
Supreme Court Journal
SCR
Supreme Court Reporter
SEBI
Securities Exchange Board of India
Sec.
Section
Supp.
Supplementary
U/S
Under Section
W.B.
West Bengal
iv
INDEX OF AUTHORITIES
CASES REFERRED
ADJUDICATION ORDERS
1. Adjudication order in the matter of SEBI v. India bulls securities Ltd,SD/ Ao/88/2010,
(July
29,
2010)
available
at
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1356705349130.pdf ..................... 9, M
SAT CASES
1. Luxottica Group SpA v. SEBI, SAT Appeal No. 61/2002, (August 29, 2003), available at
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1299752868012.pdf .....................16, C
2. Pramod Jain v. Securities Exchange Board of India, SAT Appeal No. 111 of 2012, (
August
6,
2014),
available
at
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1407312252581.pdf .......................7, E
INDIAN JUDGMENTS
1. Amar Chandra Chakraborty v. Collector of Excise, (1972) 2 SCC 44.......................15, D
2. Ashok Kumar Sonkar v Union of India. (2007) 4 SCC 54...11, C
3. Ashok Kumar Thakur v. State of Bihar. (2008) 17 SCC 486..13, H
4. Bengal Immunity Co. v. State of Bihar, AIR 1955 SC 661...3, D
5. BHEL v. Globe Hi-Fabs Ltd., (2015) 5 SCC 718....17, G
6. Biren Gogoi v. State of Assam, (2008)1 Gau LR 467...................................................4, M
7. CCT v. Shukla & Bros.. (2010) 4 SCC 785.....13, H
8. Chander Kanta Bansal v. Rajinder singh Anand,.(2008) 5 SCC 117...6, B
9. Chern Taong Shang v. Commander S.D Baijal. 1988. 1 SCC 507...............................1, B
10. CIT v. McDowell and Co. Ltd., (2009) 10 SCC 755...15, B
11. CTT v. Kartos International, (2011) 6 SCC 705..17, F
12. G. L. Sultania v. SEBI. (2007) 5 SCC 133..13, H
v
13. Gammon India v. Special Chief Secretary and Others, (2006) 3 SCC 354..................4, K
14. Ganesh Santa Ram Sirur v. State Bank of India, (2005) 1 SCC 13.11, C
15. Grasim Industries Ltd. v. Collector of Customs, Bombay, AIR 2002 SC 1766..15, B
16. Housing Board of Haryana v. Haryana Housing Board Employees Union, AIR 1996 SC
434...17, G
17. Indian Overseas Bank v. Indian Overseas Bank Officers Assn...(2001) 9 SCC
540.................................................................................................................................14, J
18. Indian overseas Bank v. Industrial chain concern, (1990) SCC 1 484.9, O
19. Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd., AIR 1964 SC 1882....16, C
20. Jage Ram v. State of Haryana, (1971) 1 SCC 671..17, G
21. K. K. Kochuni v. State of Madras, AIR 1960 SC 1080...17, G
22. K. Veeraswami v. Union of India, (1991) 3 SCC 655..16, F
23. Kanai Lal v. Paramnidh, AIR 1957 SC 907..2, C
24. Kerala State Housing Board v. Ramapriya Hotels (p) Ltd.. (1994)5 SCC 672.............1, B
25. Kranti Associates (p) Ltd. v. Masood Ahmed Khan. (2010) 9 SCC 496.....13, H
26. Lilavati Bai v. State of Bombay, AIR 1957 SC 52117, G
27. Maharashtra University of Health Sciences v. Satchikitsa Prasarak Mandal, (2010) 3
SCC 786.....16, C; 17, G
28. Marfani and co. Ltd v. Midland Bank Ltd. (1968) 2 All ER 573..9, O
29. Mineral Development v. State of Bihar, AIR 1960 SC 468.11, C
30. Mohanlal Kanyalal v. Lalchand Motilal Malani, (1960)SCC OnLine Bom 119.........4, N
31. Municipal Corporation of Greater Bombay v. Bharat Petroleum Corporation Ltd., (2002)
4 SCC 219....................................................................................................................15, B
32. Mysore SEB v. Bangalore Woollen, Cottons and Silk Mills Ltd., AIR 1963 SC
1128..16, C
33. N. Narayanan v. Adjudicating officer, SEBI (2013)12 SCC 1528, I
34. Narayan Bhondeo Pimputkar v. Laxman Purshottam Pimputkar, (1974) 1 SCC
11.............................................................................................................................17, G
35. National Insurance Co. v. Bharat Bhushan. (2008)11 SCC 112....13, H
36. Nirma Industries v. SEBI, (2013) 8 SCC 20.7, G
37. Official Liquidator v. P.A. Tendolkar. (1973) 1 SCC 602..8, I
vi
38. Official Liquidator, Manasuabe & Co. (P.) Ltd. v. Commissioner of Police, [1968] 38
Comp. Cas. 884 (Mad.)..................................................................................................9, K
39. Padmasundara Rao v. State of T.N., AIR 2002 SC 1334. 1, B
40. R. K Mittal v. State of U.P., (2012) 2 SCC 232............................................................18, I
41. Raipur Development authority v. Anupam Sahkari Griha Nirman Samiti, (2000) 4 SCC
357.3, D
42. Raja Bhanu Pratap Singh v. Asstt. Custodian, AIR 1966 SC 245..............................16, C
43. Rajasthan State Electricity Board v. Mohan Lal, AIR 1967 SC 1857.........................16, F
44. Sahara India Real Estate Corp. Ltd & Ors v. Securities & Exchange Board of India &
Anr, (2012)10 SCC 603...................................................................................................8, I
45. Sangram Singh v. Election Tribunal, AIR 1955 SC 425.............................................11, C
46. Siddeshwari Cotton Mills (P) Ltd. v. Union of India, AIR 1989 SC 1019..................15, B
47. State of Bombay v. Ali Gulshan, AIR 1955 SC 810....................................................16, C
48. State of Gujarat v. Salimbhai Abdulgaffar Shaikh, AIR 2003 SC 3224........................2, B
49. State of Karnataka v. Kempaiah, AIR 1998 SC 3047.................................................15, B
50. State of Punjab v. Harnek Singh, (2002) 3 SCC 481.....................................................4, L
51. State of Punjab v. Mohar Pratap Singh. (1955)1 SCR 893...........................................4, L
52. State of Uttar Pradesh v. Maharaja Dharmender Prasad Singh, AIR 1989 SC 997..12, E
53. State of Uttaranchal v. Kharak Singh. (2008) 8 SCC 236..............................................12C
54. Sunil Kumar v. State of West Bengal, AIR 1980 SC 1170.............................................11C
55. Syndicate Bank v. Venkatesh Gururao Kurati. 2006. 3 SCC 150...............................11, C
56. Thakur Amarasinghji v. State of Rajasthan, AIR 1955 SC 504..................................15, B
57. Travancore Rayons v. Union of India, AIR 1971 SC 862...........................................12, C
58. Tribhuban Parkash Nayyar v. Union of India, (1969) 3 SCC 99...............................16, F
59. U.P SEB v. Hari Shankar Jain, (1978) 4 SCC 16.......................................................16, C
60. Union of India v. Alok Jain, (2010) 5 SCC 349...........................................................16, B
61. Union of India v. Sankalchand, AIR 1977 SC 2328.3, D
62. Union of India v. Varma T. R., AIR 1957 SC 882.......................................................12, C
63. Venture Global Engineering v. Satyam Computer Limited and another, (2010) 8 SCC
660...................................................................................................................................8, J
64. Vikram Singh v. Union of India, (2015) 9 SCC 502....................................................16, C
vii
65. Western Transport Pty. Ltd. v. Kropp. 1964. 3 All ER 722............................................4, I

66. Yazdagi International (P) Ltd v. Auroglobal Comtrade (P) Ltd. (2014) 2 SCC 657...14, J
67. Zile Singh v. State of Haryana, AIR 2004 SC 51003, D
FOREIGN CASES REFERRED

1. Allen v. Emmerson, (1944) 1 ALL ER 344.................................................................16, C
2. Attorney General v. Bushopp, (1600) 1 Co Rep 76 ER 89............................................4, H
3. Barker v. American Mobil Power Corp., 64 F. 3d 1397, 1407......................................7, F
4. Dillman v. Nadelhoffer, 1G0111. 121, 43 N. E. 378.6, B
5. Hendricks v. W. U. Tel. Co., 120 N. C. 304, 35 S. E. 543, 78Am. St. Rep. 058...6, B
6. Heydons Case, (1584) 3 Co. Rep. 7a, p.7b: 76 ER 637...............................................2, D
7. Highland Ditch Co. v. Mumford. 5 Colo.3306, B
8. In Re Animation workers Anti-trust Litigation, Case No-14-CV-04062-LHK..............7, F
9. In re coordinated Petrial proceedings, 782 F. Supp. 498..............................................7, F
10. In Re Magnessium Oxide Anti-trust, 504 F. Supp 2d at 788..........................................7, F
11. Kropp v. Cobb & Co. Ltd., (1964) Queensland Reports 167........................................4, H
12. Llyod Bank, limited v. E.B. Savory & company respondents (1933) AC 201...............9, O
13. Magnhild v. McIntyre Bros. & Co, (1920) 3 KB 321..................................................16, C
14. Perry v. Cedar Falls, 87 Iowa, 315, 54 N. W. 2256, B
15. Rutledge v. Boston Woven House & Rubber Co., 576 F., 2d 248, 250..........................7, F
16. Yarmouth v. Simmons, (1878-1879) 10 Ch. D. 518.......................................................5, O
17. Ross v. London County, wesminster and Parks Bank Ltd, (1929) 1 KB 40..................9, N
18. Royal British Bank v. Turquand, [1856] 6 E&B 327....................................................8, K
BOOKS REFERRED
M. P. JAIN & S. N. JAIN, PRINCIPLES OF ADMINISTRATIVE LAW (6TH ED., 2011).
G.P.
SINGH, J., PRINCIPLES OF STATUTORY INTERPRETATION
BUTTERSWORTH
CRAWFORD
(12TH
ED., LEXIS NEXIS
2014).
EARL T., THE CONSTRUCTION OF STATUTES
(9TH
viii
ED., PAKISTAN LAW HOUSE,
2014).
RAMAIYA, A., COMPANIES ACT, 2013 (18TH ED., LEXIS NEXIS, 2014).
SALMOND ON JURISPRUDENCE (12th ed., universal law publishing co., 2010)
CRAIES ON STATUTE LAWS, (7TH ED., LEXIS NEXIS, 2012).

STATUTES AND REGULATIONS REFERRED
INDIAN CONTRACT ACT, 1872
INDIAN COMPANIES ACT, 2013
SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992
SEBI (SUBSTANTIAL ACQUISITION AND SHARES TAKEOVER) REGULATIONS, 1997
SEBI (SUBSTANTIAL ACQUISITION AND SHARES TAKEOVER) REGULATIONS, 2011
SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE

REQUIREMENTS) REGULATIONS, 2009
SECURITIES AND EXCHANGE BOARD OF INDIA (PROHIBITION OF FRAUDULENT AND UNFAIR

TRADE PRACTICES RELATING TO SECURITIES MARKET) REGULATIONS, 2003
ARTICLES REFERRED
Seth Dua & Associates, Joint Ventures & Mergers and Acquisitions in India: Legal and
Tax Aspects LexisNexis Butterworths, 5 (2006)..........................................................6, C
Vikrant Pachnanda and Vinee Unnikrishnan, Due Diligence issues that face M&As ,
(2011) PL November S-2...............................................................................................6, C
DICTIONARIES REFERRED
Blacks Law Dictionary 10th Edition
ix
STATEMENT OF JURISDICTION
The Appellants have approached this Honble Supreme Court of India, in the matter of
Dreamsellers Limited v. Securities Exchange Board of India, under Section 15(z) of the
Securities Exchange Board of India Act, 1992.
*Section 15(2) of the Securities exchange Board of India, 1992:
Appeal to Supreme Court:- Any person aggrieved by any decision or order of the Securities
Appellate Tribunal may file an appeal to the Supreme Court within sixty days from the date of
communication of the decision or order of the Securities Appellate Tribunal to him on any
question of law arising out of such order:
Provided that the Supreme Court may, if it is satisfied that the applicant was prevented by
sufficient cause from filing the appeal within the said period, allow it to be filed within a further
period not exceeding sixty days.
All of which is respectfully submitted
x
STATEMENT OF FACTS
1. On Januray 30, 2009 Artemis Pvt. Ltd borrowed Rs. 100 crore from Dreamsellers Ltd. and
pledged their equity shares as security. The debt was not paid by Artemis even after issuing a 30
days notice. Hence, on July 22, 2010 Dreamsellers invoked the pledge and acquired 12.5% of
equity shares of Artemis.
2. Unsure of whether the shares would pay off the debt, Dreamsellers decided to propose a voluntary
open offer under Regulation 10 of the securities and Exchange Board of India ( Substantial
acquisition of shares and Takeovers) 1997, to acquire upto 37.6% of equity shares of Artemis.
Subsequent to this, Dreamsellers made a public announcement on October 1, 2010 and published
in Financial express about the open offer and filed a draft open offer to SEBI.
3. Meanwhile, the lenders to Artemis have forced the Board of Directors to review the operations of
Artemis and in relation to it, the independent directors of the company have forced for an internal
audit of the company. Pursuant to the audit irregularities for the financial years 2005-2008 were
known.
4. Following this, the board of directors under the pressure of the independent directors appointed a
chartered accountant firm for a special investigative audit for the past 10 years of the company.
After the audit, the report submitted on Sept 30, 2010 said that around Rs 300 crore were
siphoned off and embezzled by the promoters of Artemis. This Report was also brought into
public domain on Oct 25, 2011 which resulted in market price being much higher than what it
should really be.
5. On Oct 30, 2011 in view of the above circumstances Dreamsellers through its merchant bankers
has sought for the withdrawal of the open offer to SEBI or as an alternative requested to consider
the re-pricing of the open offer. On Nov 1, 2011 SEBI issued its observations stating that once an
open offer is filed it cannot be withdrawn and also stated that Dreamsellers could have exercised
proper due diligence while putting forward the open offer.
6. Meanwhile the SEBI Takeover code, 2011 had been notified on September 23, 2011 and the same
came into existence on Oct 22, 2011. To this, the SEBI in its observation stated that regulation 23
of the new takeovers Act would not be applicable as the offer was made under the 1997 takeover
regulations.
xi
7. Aggrieved by SEBIs order, Dreamsellers filed an appeal before the securities appellate tribunal
(SAT) under section 15T of the SEBI Act, 1992 challenging on the grounds 1) That Artemis was
a Public listed company and the information that was published was the basis for all its decision
and the state of affairs of artemis were not known to Dreamsellers 2) That with the repeal of the
1997 takeover regulations, any old case law governing the old regulations would not come in way
at all 3) There was no way that dreamsellers could have known the fraud while making the open
offer 4) The open offer is not triggered by the pledge and the offer being voluntary would not
affect anyone 5) SEBI has not dealt with the alternative proposal of re-pricing of the offer.
8. SAT upheld SEBIs decision and stated that (i) Regulation 23 of the New takeover Regulation is
not applicable in the present case (ii) Regulation 27(1)(d) of the 1997 takeover has to be properly
interpreted and read along the words ejusdem generis to state the other situations where it is
impossible to make an open offer (iii) 1997 Takeover regulations have been well interpreted by
Honble Supreme court (iv) Dreamsellers ought to have conducted due diligence and by
conducting so, the fraud could have been known (v) There was no violation of the principles of
natural justice in the present case.
9. Aggrieved by SATs decision Dreamsellers filed an appeal to the Honble Supreme Court of India
under Section 15Z of the SEBI Act, 1992. Before the supreme court Dreamsellers contended that
(i) Both SEBI and SAT did not appreciate the fact that the large scale embezzlement and
siphoning of funds were known after the open offer was made and the same was known only by a
special investigative (ii) It is in itself a nullity that SAT renders a restrictive interpretation of
regulation 27 of the takeover regulations. Therefore, there is a case to be made for constituting a
larger bench to reconsider even the earlier rulings of the Supreme Court.
10. SEBI too has filed its reply. The pleadings were and the matter was posted for arguments. The
chief justice of India has constituted a larger bench to look into the matter in detail and if
necessary, even reconsider the earlier ratios.
xii
ISSUES RAISED
The following questions are presented before the Honble Supreme Court in the instant
matter:
ISSUE1- WHETHER THE PROVISIONS OF REGULATION 23 OF THE NEW TAKEOVER REGULATIONS

RELATING TO WITHDRAWAL OF OPEN OFFER COULD BE APPLIED TO AN OPEN OFFER MADE
UNDER THE 1997 TAKEOVER REGULATIONS?
ISSUE 2- WHETHER
IT CAN BE SAID THAT DREAMSELLERS HAD FAILED TO EXERCISE DUE
DILIGENCE AND THE FACTS RELATING TO THE FRAUD WERE KNOWN OR COULD HAVE BEEN
KNOWN BY DREAMSELLERS, IF DREAMSELLERS HAD EXERCISED PROPER DUE DILIGENCE?
ISSUE 3- WHETHER SEBI HAD VIOLATED THE PRINCIPLES OF NATURAL JUSTUCE IN THE PRESENT
CASE WHILE PASSING THE ORDER REJECTING THE APPLICATION TO WITHDRAW THE OPEN
OFFER WITHOUT HEARING DREAMSELLERS?
ISSUE 4- WHETHER REGULATION 27 (1) (D) OF THE 1997 TAKEOVER REGULATION IS TO GIVEN
AN INTERPRETATION WHEREBY, THE WORDS
SUCH
CIRCUMSTANCES AS IN OPINION OF THE
BOARD MERIT WITHDRAWAL ARE TO BE READ EJUSDEM GENERIS WITH THE OTHER
PROVISIONS OF REGULATION
27(1)
OF THE SAID CODE I.E.
AS
CIRCUMSTANCES WHERE IT IS
IMPOSSIBLE TO PERFORM THE OPEN OFFER?
xiii
SUMMARY OF ARGUMENTS
ISSUE 1- WHETHER THE PROVISIONS OF REGULATION 23 OF THE NEW TAKEOVER REGULATIONS

RELATING TO WITHDRAWAL OF OPEN OFFER COULD BE APPLIED TO AN OPEN OFFER MADE
UNDER THE 1997 TAKEOVER REGULATIONS?
It is humbly submitted by the Appellant that the Reg. 23 of the New Takeover Regulations shall
be applicable to an open offer made under the provisions of the Old Takeover Regulations.
Furthermore, there lies a clear contrary manifestation of intention of the Regulators between the
two codes and the latter act is not a re-affirmation of the old act.
ISSUE 2- WHETHER
DILIGENCE AND THE FACTS RELATING TO THE FRAUD WERE KNOWN OR COULD HAVE BEEN
KNOWN BY DREAMSELLERS, IF DREAMSELLERS HAD EXERCISED PROPER DUE DILIGENCE?
It is humbly submitted before the Honble Supreme Court of India that Dreamsellers have
exercised the required due diligence and that the fraud was of such nature that it was impossible
for a third party such as dreamsellers to know. Moreover, on the Application of Doctrine of
Indoor management the party dealing with a company is not bound to embark on an investigation
on the regularities of the company.
ISSUE 3- WHETHER SEBI HAD VIOLATED THE PRINCIPLES OF NATURAL JUSTICE IN THE PRESENT
CASE WHILE PASSING ITS ORDER REJECTING THE APPLICATION TO WITHDRAW THE OPEN OFFER
WITHOUT HEARING DREAMSELLERS?
The Appellant humbly submits that the SEBI had violated the principles of natural justice by not
only denying the appellant with an opportunity of an oral hearing to present its case but also
rejecting their application for withdrawal without a justified reason.
xiv
ISSUE 4- WHETHER
REGULATION
27(1) (D)
OF THE
1997
TAKEOVER REGULATIONS IS TO BE
GIVEN AN INTERPRETATION WHEREBY, THE WORDS SUCH CIRCUMSTANCES AS IN THE OPINION

OF THE BOARD MERIT WITHDRAWAL ARE TO BE READ EJUSDEM GENERIS WITH THE OTHER
PROVISIONS OF REGULATION
27 (1)
OF THE SAID CODE I.E. AS CIRCUMSTANCES WHERE IT IS
IMPOSSIBLE TO PERFORM THE OPEN OFFER?
It is humbly submitted before the Honble Supreme Court of India that Regulation 27 (1) (d) of
the SEBI Substantial Acquisition of Shares and Takeover Regulation, 1997 (hereinafter referred
as Takeover Code, 1997) should not be read as ejusdem generis with the other provision of the
Regulation 27(1) as they are distinct from each other and do not form a single category or class so
as to apply the above mentioned principle.
xv
ARGUMENTS ADVANCED
ISSUE 1
WHETHER THE PROVISIONS OF REGULATION 23 OF THE NEW TAKEOVER
REGULATIONS RELATING TO WITHDRAWAL OF OPEN OFFER COULD BE APPLIED TO
AN OPEN OFFER MADE UNDER THE 1997 TAKEOVER REGULATIONS?
A. The Appellant humbly submits that the provisions of Regulation 23 of the SEBI (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011 (hereinafter referred to as New
Takeover Regulations) relating to withdrawal of open offer can be applied to an open offer made
under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereafter
referred to as Old Takeover Regulations). The Appellant humbly submits his arguments in the
two folds, viz., [1.1] Intent behind formulating the New Takeover Regulations [1.2] Application
of mischief rule: Heydons case [1.3] Savings Clause to be inoperative.
[1.1] INTENT OF THE REGULATORS AND THE COMMITTEE
B. The Appellant humbly submits that a statute is an edict of the legislature 1 and the conventional
way of interpreting the statute is to seek the intention of its maker.2 Whenever there are
circumstances wherein two interpretations can be made of a provision then the real intent behind
legislature is sorted. It is the duty of the judicature to act upon the true intention of the
legislature- the mens or the sentential legis.3
It is a well-settled principle that the intention of the Legislature must be found by reading the
statute as a whole. The different provisions in the statute should not be interpreted in the abstract
Padmasundara Rao v. State of T.N., AIR 2002 SC 1334.

Kerala State Housing Board v. Ramapriya Hotels (p) Ltd.. (1994)5 SCC 672; Chern Taong Shang v. Commander
S.D Baijal. (1988)1 SCC 507;
3
SALMOND, JURISPRUDENCE 152 (12th ed., 2010); J.P. Bansal v. State of Rajasthan, (2003) 5 SCC 134; Municipal
Committee ; Hoshiarpur v. Punjab SEBI (2010) 13 SCC 216.
2
1
but should be construed keeping in mind the whole enactment and the dominant purpose that it
may express4.
C. In the matter of Kanai Lal v. Paramnidh5, the Supreme Court held that it must always be borne
in mind that the first and primary rule of construction is that the intention of the legislature must
be found in words used by the Legislature. Further submitted, that the deliberations of the TRAC
committee reveal the intent for formulating the New Takeover Regulations.6 The object of
formulating the New Takeover Regulations is:
1.
To provide a transparent legal framework for facilitating takeover activities.
2.
To protect the interest of the investors in securities and the securities market, taking into
account both the acquirer and the other shareholders or investors and need of a fair,
equitable and transparent framework to protect their interest.
3.
To provide the acquirers with a transparent legal framework to acquire shares in or

control of the target company and to make an open offer.
[1.2] APPLICATION OF MISCHIEF RULE: HEYDONS CASE

D. The Appellant humbly points the mischief rule is intended to rectify MISCHIEF in the statute
and interpret the statute justly. The mischief Rule uses common law to determine how the statute
is interpreted. The mischief rule as laid down in Heydons case7 has laid down some conditions
which are to be satisfied (1)What was law before making of the Act? (2) What was the mischief
or the defect for which the law did not provide (3) hat is the remedy that the Act has provided
(4)What is the reason for the remedy?
Thus, the Appellant humbly submits that in the present case the application of the aforementioned
rule fits perfectly because 1997 Takeover regulations was not in conformity with the prevailing
regulations. Also, with the substantive amount of defects prevailing in the old takeover code,
TRAC decided to bring out the new takeover code. The true reason has been stated above in the
objective of the New Takeover Regulations
State of Gujarat v. Salimbhai Abdulgaffar Shaikh, AIR 2003 SC 3224

Kanai Lal v. Paramnidh, AIR 1957 SC 907.
6
TRAC Report, Takeover Regulations Advisory Committee,
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1287826537018.pdf.
7
Heydons Case, (1584) 3 Co. Rep. 7a, p.7b: 76 ER 637.
5
(July
2
19,
2010)
available
at
This rule hereby states that the courts must supress the mischief and advance the remedy. In the
matter of Bengal Immunity Co. v. State of Bihar8, S.R. Das, C.J.I held that: It is a sound rule of
construction of a statute firmly established in England as far back as 1584 for the sure and true
interpretations of all statutes.
E. One way in which the New Takeover Regulations has cured the defect of the former is to make an
additional clause in withdrawal of an open offer9. It has been equipped to accommodate
withdrawal of an open offer in situation where non-attainment of the condition is beyond the
control of the acquirer. The committee had made a lot of deliberations and had also examined the
regulations in jurisdictions of Australia, Singapore, Germany, United States and United Kingdom
wherein such a provision existed10.
F. Thus, the intent of the makers clearly shows that the previous regulations were not sufficient
enough to cover all the possible circumstances since it was to be construed in the strict sense. By
this new provision in the New Regulations, they have expanded the scope to protect the interest of
the acquirers as well.
1.3 SAVINGS CLAUSE TO BE INOPERATIVE DUE TO CONTRARIETY
1.3.1 INTERPRETATION BY VARIOUS AUTHORS
G. It is humbly submitted by the Appellant that the presence of the savings clause in the New
Takeover Regulations should be deemed to be inoperative because it defeats the purpose of the
regulations.
H. The purpose of a saving clause as explained by Justice G.P Singh11 while explaining the
difference between a proviso, exception and a saving clause that a saving clause is one which
protects the rights which the party previously had and does not give him any new right. However,
Bengal Immunity Co. v. State of Bihar, AIR 1955 SC 661; Union of India v. Sankalchand, AIR 1977 SC 2328;
Raipur Development authority v. Anupam Sahkari Griha Nirman Samiti, (2000) 4 SCC 357; Zile Singh v. State of
Haryana, AIR 2004 SC 5100.
9
Regulation 23(1)(c), Substantial Acquisition of Shares and Takeovers, SEBI Notification No. LAD-NRO/GN/201112/24/30181 (Sept. 23, 2011), available at http://www.sebi.gov.in/cms/sebi_data/commondocs/takeovernotifi_p.pdf.
10
TRAC Report, Takeover Regulations Advisory Committee, (July 19, 2010) available at
11
SINGH G.P., PRINCIPLES OF STATUTORY INTERPRETATION ( 12th ed., Lexis Nexis Buttersworth 2014).
3
it has also been pointed out that a saving repugnant to an enactment would be void for
contrariety12.
I. This position of law has also been established in the authoritative books of Crawford 13 wherein he
says, A savings clause is generally used in repealing statutes in order to prevent them from
affecting rights accrued, penalties incurred, duties imposed, or proceedings started under the
statute sought to be repealed. But if it is in irreconcilable conflict with the body of the statute
of which it is a part, it is ineffective or void
J. Even Craies14 in his book says, and that if the repugnant clause is in the form of a saving
clause, then this rule holds good no longer, for it is said that a saving clause which is repugnant
to the purview of the Act is to be rejected and treated as void
1.3.2 PRECEDENTS SET BY THE INDIAN JUDICIARY
K. In the matter of Gammon India v. Special Chief Secretary and Others15, the Supreme Court held
that whenever there is a repeal of an enactment and simultaneous re-enactment then the latter
should be considered to be a re-affirmation of the old law unless there is manifestation contrary to
the provisions of the Act. The court again relied on the authoritative books mentioned above.
L. In the matter of State of Punjab v. Harnek Singh16, the court observed that the purpose of the
section was to preserve the notifications, orders issued under the repealed enacment unless there
is contrary intention provided for in the re-enacted statute.
M. In the matter of Biren Gogoi v. State of Assam17, the Gauhati High Court had to deal with
contrary intention of the amended Rule 21 to that of the earlier one. The court applied the views
provided by the aforementioned authors and held that the savings clause i.e. Rule 28 should be
inoperative as it was against the intention of the legislature.
N. In the matter of Mohanlal Kanyalal v. Lalchand Motilal Malani18, the Bombay High Court had
to deal with S.65 of the Hyderabad Agricultural Debtors Relief Act, 1956. The court after relying
on the views of Crawford and Craies held that though these two clauses are worded as proviso, in
12
Alton Wood Case; Attorney General v. Bushopp, (1600) 1 Co Rep 76 ER 89; Kropp v. Cobb & Co. Ltd., (1964)
Queensland Reports 167, pp. 168, 169;Western Transport Pty. Ltd. v. Kropp. 1964. 3 All ER 722.
13
th
CRAWFORD EARL T., THE CONSTRUCTION OF STATUTES 300(9 Ed., Pakistan Law House, 2014).
14
th
CRAIES ON STATUTE LAWS 203-204(7 Ed., Lexis Nexis, 2012).
15
Gammon India v. Special Chief Secretary and Others, (2006)3 SCC 354.
16
State of Punjab v. Harnek Singh, (2002) 3 SCC 481; State of Punjab v. Mohar Pratap Singh. (1955)1 SCR 893.
17
Biren Gogoi v. State of Assam, (2008)1 Gau LR 467.
18
Mohanlal Kanyalal v. Lalchand Motilal Malani, (1960)SCC OnLine Bom 119.
4
substance, these are saving clauses and must be construed as such. Furthermore, the second part
of the proviso must necessarily be treated as void and ineffective.
O. Reliance can also be made to matter of Corporation of Yarmouth v. Simmons19 which approved
the famous Alton Woods Case.20 It has been humbly pointed out to the court the reason behind
the formulation of the New Takeover Regulations i.e. protection of the acquirers and investors.
The mischief which also existed in old regulations has also been pointed out the committee and
hence the new regulations i.e. the cure. The savings provision i.e. clause 35 (2) (c) allows the old
regulations to govern the parties, which is not in their best interest. This goes against the very
intent of the New Regulations and hence must be void for contrariety.
P. It is also humbly submitted that since the saving provision would be rendered void for contrariety
then the law as on the date of cause of action i.e. the 25th of October, 2011 would only mean that
the New Regulations must be applied and withdrawal must be allowed under the same.
19
20
Yarmouth v. Simmons, (1878-1879) 10 Ch. D. 518.

Supra Note 12.
5
ISSUE 2
WHETHER
DILIGENCE AND THE FACTS RELATING TO THE FRAUD WERE KNOWN OR COULD
HAVE BEEN KNOWN BY DREAMSELLERS, IF DREAMSELLERS HAD EXERCISED
PROPER DUE DILIGENCE?
A. It is humbly submitted before the Honble Supreme Court that Dreamsellers have exercised the
required due diligence on the documents that were available to them on the public domain. Also,
the fraud was of such nature that it couldnt be detected by a reasonable man, such as
Dreamsellers. The submission on this issue will be put forward into three folds viz, [2.1] That the
facts relating to fraud emerged subsequent to the Open Offer [2.2] That the directors have violated
their General Obligations in making the disclosures [2.3] That the Standard of Due diligence
differs from Case-to-case.
2.1 FACTS RELATING TO FRAUD EMERGED SUBSEQUENT TO THE OPEN OFFER.
B. According to the Blacks Law Dictionary21, due diligence is defined as, Such a measure of
prudence, activity, or assiduity, as is properly to be expected from, and ordinarily exercised by, a
reasonable and prudent man under the particular circumstances; not measured by any absolute
standard, but depending on the relative facts of the special case.22
C. Due diligence is a process which is performed prior to the purchase of a company or investment
in a company by the acquirer or the investor23. In case of a public listed company, the purchaser
or the buyer exercises the due diligence on the readily available documents of the financial
position of the Company such as the balance sheets, profits and loss accounts etc. This
information is to be made available by the Target Company to the acquirer/investor during this
process in order to investigate into all the relevant aspects of the past, present and predictable
future of the target company.24
21
10Th Ed.,Blacks Law Dictionary

Perry v. Cedar Falls, 87 Iowa, 315, 54 N. W. 225; Dillman v. Nadelhoffer, 1G0111. 121, 43 N. E. 378; Hendricks
v. W. U. Tel. Co., 120 N. C. 304, 35 S. E. 543, 78Am. St. Rep. 058; Highland Ditch Co. v. Mumford. 5 Colo.330;
Chander Kanta Bansal v. Rajinder singh Anand,. 2008. 5 SCC 117
23
Seth Dua & Associates, Joint Ventures & Mergers and Acquisitions in India: Legal and Tax Aspects, 5
(LexisNexis Buttersworth, 2006).
24
Vikrant Pachnanda and Vinee Unnikrishnan, Due Diligence issues that face M&As , (2011) PL November S-2
22
6
D. In the present case, the application for the withdrawal of the open offer filed by Dreamsellers was
rejected by SEBI stating that Dreamsellers were negligent and did not exercise the required due
care and diligence in detecting the fraudulent transactions while making the open offer. 25 Section
399 of the Companies Act, 2013 provides that all the documents, when registered with the
registrar becomes Public Documents and they can be inspected by anyone on payment of some
Nominal fee.26
E. The general rule that is followed by major acquisitions is that due diligence is conducted on the
documents in the public domain generally for the past three years 27.Hence, in the given case,
Dreamsellers have conducted due diligence on the documents that were available on the public
domain for the past three years which was prior to the Announcement of the Fraudulent
transactions in the public domain and even prior to the Internal Audit of the company which was
then believed to be fair and true.
F. In the case of In Re Animation workers Anti-trust Litigation28 it was stated by the Honble
court that The Plaintiff was diligent in conducting due diligence and is not at fault for the
concealed facts and circumstances which have emerged much later. Moreover, even assuming
this allegation were facially sufficient, it is impossible to declare at this stage that plaintiffs failed
to exercise due diligence to follow up on that which may or may not have been sufficient to excite
their suspicions as such inquiries were met with misrepresntations.
G. The reliance cannot be made on the precedent set up by the Supreme Court in the case of Nirma
Industries v. SEBI29 because in that case the Supreme Court observed that the appellants were
aware about the financial losses of the target company in addition to the winding up petitions filed
against the target company. However, in the present case, the information regarding fraudulent
transactions, embezzlement and siphoning off of funds and legal proceedings that were underway
was brought into the public domain after the special investigative audit which was subsequent to
the Public Offer.
25
Moot Proposition, P. 2 11.

RAMAIYA, A., COMPANIES ACT, 2013 114 (18th Ed., Lexis Nexis, 2014
27
Pramod Jain v. Securities Exchange Board of India, SAT Appeal No. 111 of 2012, ( August 6, 2014), available at
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1407312252581.pdf
28
In Re Animation workers Anti-trust Litigation, Case No-14-CV-04062-LHK; Rutledge v. Boston Woven House &
Rubber Co., 576 F., 2d 248, 250, In re coordinated Petrial proceedings, 782 F. Supp. 498, In Re Magnessium Oxide
Anti-trust, 504 F. Supp 2d at 788; Barker v. American Mobil Power Corp., 64 F. 3d 1397, 1407.
29
Nirma Industries v. SEBI, 2013 8 SCC 20.
26
7
2.2 VIOLATION OF GENERAL OBLIGATION BY DIRECTOR WHILE MAKING DISCLOSURES

H. It is humbly submitted that SEBI rejected the Open offer of Dreamsellers on the grounds that the
appellant did not exercise proper due diligence. However, SEBI has failed to consider the fact that
the Artemis has committed fraud by siphoning of funds amounting to Rs 300 crores. This
information regarding fraud was brought to public notice only after the internal audit which later
turned into a special investigative audit. This asserts the fact that the irregularities were not even
known by the directors of the company until Independent directors forced them to conduct a
special investigation for the Artemis.
I. In the case of N. Narayanan v. Adjudicating Officer, SEBI30 it was held that A Company
performs through its directors who are entrusted to exercise their powers with the utmost care,
skill and diligence and if they fail to exercise due care and diligence because of which company
fabricate the figures and make false disclosures, the director shall be held liable for the false
disclosures.
J. In the present case, promoters have been involved in defrauding by siphoning off funds. The
Statutory Auditor who has the duty to check the accounts of a company annually, identify the
frauds of a company. However, in the given case, the Statutory Auditor of Artemis after
conducting his audit has failed to detect the fraud that was committed within the company. It is
pertinent to note that when the statutory auditor is unable to detect the fraud in the accounts of the
company, it would be absurd for the appellant to detect the fraud through the due diligence. The
Dreamseller relied on the Audit report certified by its annual statutory auditor31. Dreamsellers in
the general phenomena has conducted only due-diligence diligently which was within its purview
of operation
2.3 APPLICATION OF THE DOCTRINE OF INDOOR MANAGEMENT
K. The Doctrine of Indoor Management32 states that Persons dealing with company are not bound
to inquire into the regularity of internal proceedings. This principle was laid down in the case of
30
N. Narayanan v. Adjudicating officer, SEBI (2013)12 SCC 152; Sahara India Real Estate Corp. Ltd & Ors v.
Securities & Exchange Board of India & Anr, (2012)10 SCC 603; Official Liquidator v. P.A. Tendolkar. (1973) 1
SCC 602.
31
Venture Global Engineering v. Satyam Computer Limited and another, (2010) 8 SCC 660.
32
Royal British Bank v. Turquand, [1856] 6 E&B 327.
8
Official Liquidator, Manasuabe & Co. (P.) Ltd. v. Commissioner of Police33 where the learned
judge observed that The lenders to a company should acquaint themselves with the
memorandum of association, articles of association and other documents and statements made
available to them but they cannot be expected to embark upon an investigation as to legality and
regularity of the company
L. Applying the principle in the present case, Dreamsellers exercised their due diligence based on
the documents as a constructive notice available to them and according to this doctrine laid their
decision based on those documents. The facts relating to the fraud have emerged in a nature
which was not possible to be known by Dreamsellers as it is not bound to inquire into the
regularity of internal proceedings.
2.4. THAT THE STANDARD OF DUE DILIGENCE DIFFERS FROM CASE-TO-CASE DEPENDING ON
REASONABILITY.
M. The Appellant humbly submits that the concept of due diligence is such that it differs from case to
case. It has to be perused in light of facts and circumstances. In addition to that reasonability of
due diligence that can be performed also varies in different circumstances.
Thus, it is pertinent to note that the standard of due diligence that is exercised differs from caseto-case. In the case of SEBI v. Indiabulls Securities Ltd34., it was submitted by the learned
counsel of appellants stated that Due diligence was taken by SEBI from an order of the Honble
Supreme Court as Due diligence in law, means doing everything reasonable and not everything
possible. Due diligence as a prudent man would exercise in conduct of his own affairs.
N. Moreover, Due diligence doesnt mean Microscopic examination of details where a party assumes
him to be a amateur Detective.35Also, One is not under a duty continually scout around to uncover
claims which they have no reason to suspect they might have36
O. In furtherance to this, the law as laid in Marfani and co. Ltd v. Midland Bank Ltd37 and Indian
overseas Bank v. Industrial chain concern38 enumerates the bench mark or standards that should
33
Official Liquidator, Manasuabe & Co. (P.) Ltd. v. Commissioner of Police, [1968] 38 Comp. Cas. 884 (Mad.)
Adjudication order in the matter of SEBI v. India bulls securities Ltd,SD/ Ao/88/2010, (July 29, 2010) available at
35
Ross v. London County, wesminster and Parks Bank Ltd, (1929) 1 KB 40.
36
Supra note 8
37
Marfani and co. Ltd v. Midland Bank Ltd. (1968). 2 All ER 573; Llyod Bank, limited v. E.B. Savory & company
respondents (1933) AC 201
34
9
be accepted by a party while performing due diligence and how due diligence is subjective and
differs from case-to-case. Also, SEBI itself hasnt provided a certain guidelines on which due
diligence has to be exercised.
P. In the given case, the appellant has exercised proper due diligence, what should have been
exercised by a reasonable man. The appellant have inspected the accounts and the other
information available on public domain. The due diligence would include the inspecting the
documents and not investigating them. Therefore, the appellant has exercised proper due diligence
and the facts relating to the fraud could not have been known to the Dreamsellers.
38
Indian overseas Bank v. Industrial chain concern, (1990) SCC 1 484.
10
ISSUE-3
WHETHER
SEBI HAD VIOLATED THE PRINCIPLES OF NATURAL JUSTICE IN THE
PRESENT CASE WHILE PASSING ITS ORDER REJECTING THE APPLICATION TO

WITHDRAW THE OPEN OFFER WITHOUT HEARING DREAMSELLERS?
A. The Appellant humbly submits that the SEBI had violated the principles of natural justice by not
only denying the appellant with an opportunity of an oral hearing to present its case but also
rejecting their application for withdrawal without a justified reason. The SEBI has passed an order
for the rejection of application of withdrawal of open offer without providing the opportunity of
personal hearing. The appellant submits his arguments in two folds, viz., [3.1] Violation of
Natural Justice Principle and [3.2] Unnecessary Delay for the period of 13 Months.
3.1 VIOLATION OF NATURAL JUSTICE PRINCIPLE
B. The Appellant humbly submits that there was a clear violation of principles of natural justice as
the SEBI had failed to provide any reasoned order for the rejection of application of open offer..
The Appellant would substantiate their argument in two folds: [3.1.1] No reasonable opportunity
was provided [3.1.2] No proper justification was provided by the SEBI.
3.1.1 NO REASONABLE OPPORTUNITY
C. The rule of audi alteram partem ensures that no one should be condemned unheard.39 A person
against whom any action is sought to be taken or whose right or interest is being affected should
be given a reasonable opportunity to defend himself.40 This reasonable opportunity or the concept
of fair hearing depends on the facts and circumstances of each case.41 This is an elastic concept
and cannot be susceptible of easy and precise definition.42 However, where complex and technical
questions of facts are involved, oral/personal hearing becomes necessary in order to bring better
39
Sangram Singh v. Election Tribunal, AIR 1955 SC 425; Ashok Kumar Sonkar v Union of India. 2007. 4 SCC 54.
JAIN M. P. & JAIN S. N., PRINCIPLES OF ADMINISTRATIVE LAW 286 (6th ed., 2011).
41
Ganesh Santa Ram Sirur v. State Bank of India, (2005) 1 SCC 13; Syndicate Bank v. Venkatesh Gururao Kurati.
2006. 3 SCC 150.
42
Mineral Development v. State of Bihar, AIR 1960 SC 468; Sunil Kumar v. State of West Bengal, AIR 1980 SC
1170.
40
11
administration of justice and more satisfactory disposal of the grievances of the citizens. 43 This is
a settled principle of law that no material should be relied on against a person without giving him
a reasonable opportunity of explaining their case.44
D. In the given case, the appellant were not given a reasonable opportunity to defend their case.
There was no opportunity provided to them to counter the contentions raised by the board. On 30
October, 2011, Dreamsellers had written an application to Artemis for the withdrawal of an open
offer wherein it was stated that due to the emergence of extraordinary facts, i.e. embezzlement of
Rs. 300 crores by the directors of Artemis, they should be allowed to withdraw to perform the
open offer.45 On this note, SEBI passed an unjustified order without granting a reasonable
opportunity for the appellants to defend the case. The counsel strongly is certain circumstances
wherein the opportunity of personal hearing must be provided and should not be denied by the
Administrative authority.
3.1.1.1 WHEN OPPORTUNITY OF PERSONAL HEARING MUST BE PROVIDED?

E. The Honble Supreme Court46 has stated that personal hearing being given to the lessees by the
concerned authority when it satisfies two conditions:
(a)
Involvement of heavy financial stakes as the concerned person had already made large
investment on the project.
(b)
The need to determine factual matters of some complexities.
F. In the given case, Dreamsellers had made an investment of 100 crores in Artemis in form of
pledge after performing the proper due diligence. Due to the non-payment of the said amount, the
Dreamsellers had acquired 12.5% of the target company. Even though appellant have acquired the
shares, they were unsatisfied as the amount was huge.47 Thus, they wanted to acquire ownership
in the target company so that they can get back their money after the proper due diligence.
Subsequent to this, after a year the facts relating to fraud were known by the appellant. Under
such circumstances, the appellant wanted to withdraw the open offer and hence filed the
application to SEBI.
43
Travancore Rayons v. Union of India, AIR 1971 SC 862

Union of India v. Varma T. R., AIR 1957 SC 882; State of Uttaranchal v. Kharak Singh. 2008. 8 SCC 236.
45
Moot Proposition, Pg 1, 10.
46
State of Uttar Pradesh v. Maharaja Dharmender Prasad Singh, AIR 1989 SC 997.
47
Moot Proposition, Pg 1, 5.
44
12
G. The given case has a heavy financial stakes of Rs. 100 crores. If the appellant couldnt get this
huge amount back from the Artemis then they would incur huge losses. All of which, created a lot
of factual complexities when the information of fraud was in the public domain and thus has
become the reason for the appellant to withdraw the open offer. The above mentioned facts satisfy
the essentials of personal hearing.
3.1.2 NO PROPER JUSTIFICATION WAS PROVIDED BY SEBI

H. In furtherance, the counsel humbly submits that it is essential for an adjudicatory body to provide
a reason for its decision.48 In order to ensure that the valuation is a fair one, SEBI has to act
prudently and within its jurisdiction, not losing sight of the fact that a proposed takeover of a
company is a commercial venture. SEBI should apply its reasoned mind while passing any
order.49 The Supreme Court has held that if the authorities had failed to pass orders with proper
reasons then it would vitiate the order itself.50
I. In the given case, SEBI had rejected the application for the withdrawal of open offer of
Dreamsellers and had failed to provide any proper reason for the rejection. The board was silent
on the alternative request for re-pricing of the open offer prices. SEBI had merely stated that the
request for the withdrawal of open offer was not being considered favourably. Moreover the
board remained silent on the issue of re-pricing which shows that the order passed by them was
unjustified considering the fact that they ignored various issues mentioned in the application of
withdrawal which amounts to a violation of the natural justice principle.
3.2 UNNECESSARY DELAY FOR THE PERIOD OF 13 MONTHS
J. It is humbly submitted that SEBI has caused an unnecessary delay in accepting the application for
the open offer. The draft letter of offer is required to be filled with SEBI well within 14 days from
the date of the public announcement. Once the letter of offer is filled, SEBI was required to
dispatch the same to the shareholders immediately after 21 days. During 21 days, SEBI is
permitted to stipulate the changes required to be made in the letter of offer, before it is dispatched
48
Ashok Kumar Thakur v. State of Bihar. 2008. 17 SCC 486; Kranti Associates (p) Ltd. v. Masood Ahmed Khan.
2010. 9 SCC 496; National Insurance Co. v. Bharat Bhushan. 2008. 11 SCC 112.
49
G. L. Sultania v. SEBI. 2007. 5 SCC 133.
50
CCT v. Shukla & Bros.. 2010. 4 SCC 785;
13
to the shareholders.51 In the present case, the SEBI has got the draft letter of offer from the
Dreamsellers on 1st October, 2010, which was kept on hold with the SEBI till 1st November,
2011. SEBI has unjustifiably kept the draft letter of offer till the period of 13 months which has
caused an unnecessary delay in completing the open offer for the Dreamsellers. This arbitrary
action of SEBI has violated the principle of natural justice.52
51
Substantial Acquisition of Shares and Takeovers, SEBI Notification No. 124(E) (Feb. 20, 1997) available at
http://www.sebi.gov.in/acts/act15a.pdf.
52
Indian Overseas Bank v. Indian Overseas Bank Officers (2001) 9 SCC 540; Yazdagi International (P) Ltd v.
Auroglobal Comtrade (P) Ltd. (2014) 2 SCC 657.
14
ISSUE -4
WHETHER REGULATION 27(1) (D) OF THE 1997 TAKEOVER REGULATIONS IS TO BE
GIVEN AN INTERPRETATION WHEREBY, THE WORDS SUCH CIRCUMSTANCES AS IN
THE OPINION OF THE BOARD MERIT WITHDRAWAL ARE TO BE READ EJUSDEM
GENERIS WITH THE OTHER PROVISIONS OF REGULATION 27 (1) OF THE SAID CODE
I.E. AS CIRCUMSTANCES WHERE IT IS IMPOSSIBLE TO PERFORM THE OPEN OFFER?
A. The Appellant humbly submit that Regulation 27(1) (d) of the SEBI Takeover Code, 1997 should
not be read as ejusdem generis with the other provision of the Regulation 27(1) as they were
never meant to form a common genus as per the intent of the regulators. The Appellant humbly
submits his argument in two folds viz., [4.1] Essentials of Ejusdem Generis and [4.2] Intention of
legislature.
4.1 ESSENTIALS OF EJUSDEM GENERIS
B. It is humbly submitted before the Honble Court that the rule of ejusdem generis53 reflects an
attempt to reconcile incompatibility between the specific and general words.54 The purpose of the
rule is to ensure that all the words in a statute are to be construed as a whole and that no words in
a statute are presumed to be superfluous.55 The rule applies when following essentials are
satisfied: (1) the statute contains enumeration of specific words; (2) the subjects of enumeration
constitute a class or category; (3) that class or category is not exhausted by the enumeration; (4)
the general terms follow the enumeration; and (5) there is no indication of a different legislative
intent. 56 If any of the above essentials is not satisfied then the rule is inapplicable.
53
Thakur Amarasinghji v. State of Rajasthan, AIR 1955 SC 504; State of Karnataka v. Kempaiah, AIR 1998 SC
3047.
54
G.P. SINGH, J., PRINCIPLES OF STATUTORY INTERPRETATION (12th ed., Lexis Nexis Buttersworth 2014); 10Th
ed.,Blacks Law Dictionary.
55
Tribhuwan Prakash Nayyar v. Union of India, (1969) 3 SCC 99; Siddeshwari Cotton Mills (P) Ltd. v. Union of
India, AIR 1989 SC 1019.
56
Housing Board of Haryana v. Haryana Housing Board Employees Union, AIR 1996 SC 434; Grasim Industries
Ltd. v. Collector of Customs, Bombay, AIR 2002 SC 1766; Municipal Corporation of Greater Bombay v. Bharat
Petroleum Corporation Ltd., (2002) 4 SCC 219; CIT v. McDowell and Co. Ltd., (2009) 10 SCC 755; Amar Chandra
Chakraborty v. Collector of Excise, (1972) 2 SCC 442;
15
C. It is essential for the application of the ejusdem generis rule that enumeration things before the
general words must constitute a category or genus or a family, 57 so that the general words which
are following them can be given same color. 58 In case where it is not possible to find the genus
with the use of preceding words then the rule has no application.59
D. The class impossibility to perform the open offer doesnt apply in the above mentioned
provision. Though Clause (c) of Regulation 27 (1) of the code comes under the said genus but
Clause (b) doesnt come within it. The clause (b) of the said Regulation states that when statutory
approval(s) which is being required has been refused, open offer can be withdrawn. The statutory
refusal was made for a reason but if that reason is rectified then the approval is granted to perform
the open offer. Thus it cannot be construed that there always exists an impossible circumstance
under clause (b) unlike that of clause (c). If the acquirer makes the necessary changes then their
application would be accepted and approved by the SEBI board. Therefore clause (b) comes
under the class of difficulty to perform the open offer unlike the clause (c) which lies in the class
of impossibility to perform open offer. Therefore, here both the specific provision lies in different
classes.60
4.2 INTENT OF LEGISLATURE
E. It is humbly submitted by the appellant that for the application of the rule of ejusdem generis the
court should consider the intent of the legislature. The appellant would like to submit its argument
in two folds, viz., [4.2.1] Intent to confer wide powers on the SEBI, [4.2.2] Comparison with
1997 and 2011 Takeover Regulation and [4.2.3] Comparison with foreign legislation.
4.2.1 INTENT TO CONFER WIDE POWERS ON THE SEBI.
F. The Honble Supreme Court61 has held that the rule of ejusdem generis is neither final nor
conclusive and is attracted only when the specific words enumerated constitute a class and when
57
State of Bombay v. Ali Gulshan, AIR 1955 SC 810; Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd., AIR
1964 SC 1882; Raja Bhanu Pratap Singh v. Asstt. Custodian, AIR 1966 SC 245.
58
Maharashtra University of Health Sciences v. Satchikitsa Prasarak Mandal, (2010) 3 SCC 786; Allen v.
Emmerson, (1944) 1 ALL ER 344; Union of India v. Alok Jain, (2010) 5 SCC 349.
59
Vikram Singh v. Union of India, (2015) 9 SCC 502; U.P SEB v. Hari Shankar Jain, (1978) 4 SCC 16; Magnhild v.
McIntyre Bros. & Co, (1920) 3 KB 321; Mysore SEB v. Bangalore Woollen, Cottons and Silk Mills Ltd., AIR 1963
SC 1128.
60
Luxottica Group SpA v. SEBI, SAT Appeal No. 61/2002, (August 29, 2003), available at
61
Tribhuban Parkash Nayyar v. Union of India, (1969) 3 SCC 99; K. Veeraswami v. Union of India, (1991) 3 SCC
655; Rajasthan State Electricity Board v. Mohan Lal, AIR 1967 SC 1857.
16
there is no manifestation of intent to give broader meaning to the general words. 62 The intent or
purpose of the legislature behind the Regulation 27(1) was to give wide discretionary power to the
Board to decide the withdrawal of an open offer under meritorious circumstances. Thus, the
words such circumstances indicate a wide power to be conferred on the SEBI. If the court
interprets Regulation 27(1) (d) in context of other provision of Regulation 27(1) in the class of
impossibility to perform the open offer, then it would result in narrowing the scope and limiting
the powers of the SEBI thereby going against the intent of the legislature.
G. In the case of Narayan Bhondeo Pimputkar v. Laxman Purshottam Pimputkar,63 the Honble
Supreme Court has held that the general expression is to be read as comprehending only things of
the same kind as that designated by the preceding particular expressions, unless there is
something to show that a wider sense was intended. In the case of BHEL v. Globe Hi-Fabs
Ltd.,64 the narrow construction on the basis of ejusdem generis rule is impermissible where
broader construction is required to give effect to intention of the parties by adopting a purposive
construction.65
4.2.1.1 COMPARISON WITH THE ORIGINAL REGULATION
H. It is humbly submitted that a comparison between the amended Reg. 27 and unamended one
would indicate whether the intention of the regulators was to limit the powers of SEBI ejusdem
generis to impossibility. The provision states the following:
(27)(1) No public offer, once made, shall be withdrawn except under the following
circumstances:
(a) Omitted by Security and Exchange Board of India in year 2002.
(b) the statutory approval(s) required have been refused;
(c) the sole acquirer, being a natural person, has died;
(d) such circumstances as in the opinion of the Board merit withdrawal.66
I. On a bare perusal of the regulation it can be clearly inferred that it was never the intent of the
legislature to form a common genus of impossibility thereby limiting (d) to the purview of
impossibility. Clause (a) of Regulation 27(1) dealt with the cases of a competing bidder which
62
CTT v. Kartos International, (2011) 6 SCC 705;

Narayan Bhondeo Pimputkar v. Laxman Purshottam Pimputkar, (1974) 1 SCC 11.
64
BHEL v. Globe Hi-Fabs Ltd., (2015) 5 SCC 718; Jage Ram v. State of Haryana, (1971) 1 SCC 671; K. K. Kochuni
v. State of Madras, AIR 1960 SC 1080; Lilavati Bai v. State of Bombay, AIR 1957 SC 521
65
Maharashtra University of Health Sciences v. Satchikitsa Prasarak Mandal, (2010) 3 SCC 786;
66
Regulation 27, Substantial Acquisition of Shares and Takeovers, SEBI Notification No. 124(E) (Feb. 20, 1997),
available at http://www.sebi.gov.in/acts/act15a.pdf.
63
17
would entitle the first bidder to be exempted from making the open offer. The original intent of
legislature was very much clear that they didnt want to apply the class of impossibility to
perform the open offer. Thus each provision of Regulation 27(1) forms different class or
category which doesnt fulfil the essentials as laid down in the case of Housing Board of
Haryana v. Haryana Housing Board Employees Union.67 The doctrine of ejusdem generis is
used only if there is need to showcase the legislative intent. Giving it a restrictive meaning would
be against the legislative intention of the provision.
4.2.2 COMPARISON BETWEEN 1997 REGULATIONS AND 2011 REGULATIONS
J. The Appellant humbly submits that the intent of legislature can be found in the 2011 Regulations
under the corresponding Reg. 23 of the regulations. The intent of the regulators was to protect the
acquirers and permit them to withdraw their application for public offer if conditions were not
met which were beyond the control of the acquirer. This was one of the recommendations of the
Achuthan Committee in their TRAC Report68 and then this was added in the SAST Regulation,
2011.69
K. Thus on comparing the two provisions relating to withdrawal it can be clearly seen that Reg.
23(1)(d) cannot be held to be ejusdem generis in light of the preceding specific clauses since that
was never the intention of the legislature.
L. Therefore, the Regulation 27(1) (d) should not be restricted, by the application of rule of ejusdem
generis, with the other provisions of Regulation 27(1) within the class of impossibility to
perform the open offer.
4.2.3 COMPARISON WITH THE FOREIGN REGULATIONS
M. The reliance can be made to the Takeover Code of United Kingdom70, Hong Kong71 where the
intent of the legislature is clear, it can be seen that their regulations also permit the acquirer to
67
Housing Board of Haryana v. Haryana Housing Board Employees Union, AIR 1996 SC 434; R. K Mittal v. State
of U.P., (2012) 2 SCC 232.
68
TRAC Report, Takeover Regulations Advisory Committee, (July 19, 2010) available at
69
Regulation 23(1)(c), Substantial Acquisition of Shares and Takeovers, SEBI Notification No. LADNRO/GN/2011-12/24/30181
(Sept.
23,
2011),
available
at
http://www.sebi.gov.in/cms/sebi_data/commondocs/takeovernotifi_p.pdf.
.
70
United kingdom Takeover Code (last visited July 30, 2016) available at http://www.thetakeoverpanel.org.uk/wpcontent/uploads/2008/11/code.pdf.
18
withdraw their open offer in the exceptional circumstances which could not have been foreseen at
the time of the announcement of the offer even after carrying out due diligence.
N. Taking the legislative system that subsists in those jurisdictions it can be humbly contended that
Reg. 27(1) (d) is not confined to a particular situation or circumstance but gives a general power
to SEBI to permit withdrawal of open offer where the facts and circumstances in its opinion merit
withdrawal.
71
Hong kong Takeover Code (last visited July 30, 2016) http://www.sfc.hk/web/EN/assets/components/codes/filesprevious/web/codes/the-codes-on-takeovers-and-mergers-and-share-buybacks/The%20Codes%20on%20Takeovers%20and%20Mergers%20and%20Share%20Buy-backs%20-%202010-0625%2000:00:00.pdf.
19
PRAYER
In the light of the issues raised, arguments advanced and authorities cited, the Agent for the
Appellant humbly pray before this Honble Court to kindly adjudge and declare:
That the withdrawal of the open offer is permitted under Reg. 23 of the SEBI
(Substantial Acquisition of Shares and Takeover) Regulations, 2011.
That the cost of proceedings to be borne by the Respondent.
And pass any other appropriate order as the court may deem fit in the interest of equity, justice
and good conscience.
And for this act of Kindness, the Petitioner as in duty bound, shall forever pray.
Respectfully Submitted
Sd/Counsel for the Appellant
xv

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TEAM CODE: 129A

BEFORE THE HONBLE SUPREME COURT OF INDIA

APPEAL NO.____________/ 2016

MEMORIAL FOR APPELLANT

2ND GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2016

2ND GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2016

WHETHER SEBI HAD VIOLATED THE PRINCIPLES OF NATURAL JUSTICE IN THE

[3.1] VIOLATION OF NATURAL JUSTICE PRINCIPLE ..............................................11

2ND GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2016

All India Reporter

Indian Law Report

Mergers and Acquisitions

Securities Appellate Tribunal

Supreme Court Reports

Supreme Court Journal

Supreme Court Reporter

Securities Exchange Board of India

2ND GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2016

2ND GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2016

2ND GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2016

2ND GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2016

65. Western Transport Pty. Ltd. v. Kropp. 1964. 3 All ER 722............................................4, I

FOREIGN CASES REFERRED

M. P. JAIN & S. N. JAIN, PRINCIPLES OF ADMINISTRATIVE LAW (6TH ED., 2011).

SINGH, J., PRINCIPLES OF STATUTORY INTERPRETATION

ED., LEXIS NEXIS

EARL T., THE CONSTRUCTION OF STATUTES

ED., PAKISTAN LAW HOUSE,

2ND GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2016

SALMOND ON JURISPRUDENCE (12th ed., universal law publishing co., 2010)

CRAIES ON STATUTE LAWS, (7TH ED., LEXIS NEXIS, 2012).

INDIAN CONTRACT ACT, 1872

INDIAN COMPANIES ACT, 2013

SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

SEBI (SUBSTANTIAL ACQUISITION AND SHARES TAKEOVER) REGULATIONS, 1997

SEBI (SUBSTANTIAL ACQUISITION AND SHARES TAKEOVER) REGULATIONS, 2011

SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE

SECURITIES AND EXCHANGE BOARD OF INDIA (PROHIBITION OF FRAUDULENT AND UNFAIR

2ND GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2016

All of which is respectfully submitted

2ND GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2016

2ND GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2016

2ND GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2016

ISSUE1- WHETHER THE PROVISIONS OF REGULATION 23 OF THE NEW TAKEOVER REGULATIONS

IT CAN BE SAID THAT DREAMSELLERS HAD FAILED TO EXERCISE DUE

CIRCUMSTANCES AS IN OPINION OF THE

OF THE SAID CODE I.E.

IMPOSSIBLE TO PERFORM THE OPEN OFFER?

2ND GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2016

ISSUE 1- WHETHER THE PROVISIONS OF REGULATION 23 OF THE NEW TAKEOVER REGULATIONS

IT CAN BE SAID THAT DREAMSELLERS HAD FAILED TO EXERCISE DUE

2ND GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2016

GIVEN AN INTERPRETATION WHEREBY, THE WORDS SUCH CIRCUMSTANCES AS IN THE OPINION

OF THE SAID CODE I.E. AS CIRCUMSTANCES WHERE IT IS

IMPOSSIBLE TO PERFORM THE OPEN OFFER?

2ND GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2016

Padmasundara Rao v. State of T.N., AIR 2002 SC 1334.

2ND GNLU MOOT ON SECURITIES AND INVESTMENT LAW, 2016

To provide a transparent legal framework for facilitating takeover activities.