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Chhabria open offer clears court hurdle

New Delhi, Sept. 15: The Supreme Court today refused to stay Kishore Chhabria’s open offer for Herbertsons while taking on record an affidavit of the Securities and Exchange Board of India (Sebi) seeking a direction to both the Mallya-owned United Breweries group and the Chhabria-run BDA group to divest their respective shares in the liquor major.

A division bench comprising Chief Justice V. . Khare and Justice S. B.Sinha adjourned the matter for further hearing to October 17 and upheld its order of September 8 which said that the competitive bidding for Herbertsons’ shares would go on as planned but the 19.1 per cent held by the Chhabrias would be subject to its further orders.

Sebi in its affidavit said that its August 1 order asking Mallya and Chhabrias to make open offers to divest their stakes in excess of 21.38 per cent and 10 per cent shares respectively in Herbertsons, should be upheld by the apex court.

Solicitor-General Kirit Raval said Sebi should not be concerned about who held the shares and reins of the target company as its only aim was protecting investors interest.

The Securities Appellate Tribunal had reversed the Sebi order and indicted it for passing an order in the case without an adequate explanation.

Earlier on September 8, the apex court had issued a notice to Sebi on a petition filed by United Breweries challenging a Tribunal order asking Kishore R. Chhabria and Madanlal D. Chhabria to make an open offer to shareholders of Herbertsons with October 27, 1994, as a reference date to calculate the offer price.

The court also asked Sebi as to what would happen if it were found that the acquisition of 19.1 per cent of the shares in Herbertsons by Chhabrias were void and whether there could be ex-post-facto offers.

Senior counsel for UB, Fali Nariman, argued that the Sebi decision directing the Chhabrias to make an open offer would change the management structure of Herbertsons, in which UB holds 23.9 per cent.

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