Mumbai, Nov. 27: The Securities and Exchange Board of India (Sebi) today told a tribunal it had widened its investigation into the L&T open offer by putting the deal between the Birlas and Ambanis under the lens.
In a loaded message to Grasim, whose lawyers pleaded for the “stay to be stayed”, the Sebi counsel said: “If found guilty, Grasim, the A V Birla group flagship could even be barred from accessing the market.”
At a marathon hearing before the Securities Appellate Tribunal (SAT), the regulator argued that the deal has some interesting clauses, such as barring Reliance and its associates from acquiring L&T shares for five years.
Sebi said a clause prohibiting the seller (Reliance) from buying shares of L&T was not required if it was an ordinary deal. “Why should an industrial house be barred' This needs to be investigated,” Sebi lawyers argued.
They also picked holes in the way two nominees of Grasim — Grasim Kumar Mangalam Birla and Rajashree Birla — were co-opted on the L&T board after Reliance nominees quit.
Many Sebi arguments were based on the contentions of the Investors’ Grievance Forum (IGF) — a poor reflection on its ability to build a strong case.
The tables were turned as Goolam Vahanavati, senior counsel who usually holds the brief for Sebi, was arguing for Grasim; Rafiq Dada was pleading Sebi’s case.
The Grasim counsel picked holes in the Sebi stand, quoting from the correspondence exchanged by Grasim and L&T that indicated Grasim had absolutely no power over the L&T management. “The L&T demerger plan was booted out in 2000 itself when we had yet to invest in the company,” the Grasim counsel reasoned.
Deriding the regulator’s investigative capabilities, he said several facts have come to Sebi’s notice, adding that the affidavit is based on fresh evidence derived from newspaper reports obtained by the market watchdog on the basis of a Google search.