WTM/ASB/CFD/19/2024-25
SECURITIES AND EXCHANGE BOARD OF INDIA
ORDER
Under Sections 11(1) and 11(2)(h) read with Regulations 11(5) and 32 of the
Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011
On Application filed by Digvijay Laxhamsinh Gaekwad (Danny Gaekwad
Developments & Investments, Florida)
In the matter of Religare Enterprises Limited
Background:
1. Religare Enterprises Ltd. (“REL” / “Target Company”) is a listed Core
Investment Company (CIC) registered with the Reserve Bank of India (RBI) as
a Non-Deposit taking Non-Banking Financial Company (“NBFC”). REL is listed
on BSE, NSE and under Permission to Trade category on Metropolitan Stock
Exchange of India. REL is a company with no identifiable promoter.
2. M.B. Finmart Private Limited, Puran Associates Private Limited, VIC
Enterprises Private Limited and Milky Investment & Trading Company
(collectively referred to as “Burman Group”) are public shareholders of the
Target Company. The Burman Group, which was holding 21.54% equity shares
of REL, proposed to buy from the market up to 5.27% of equity shares of REL,
at a price of not more than Rs.235 per equity share, on September 25, 2023.
3. The said proposed market purchase order, which was subject to receipt of
relevant approvals from various regulatory authorities, would have increased
the shareholding of the Burman Group beyond 25%, as a result of which they
were obligated to make an open offer to the shareholders of the Target
Company, in terms of Regulations 3(1) and 4 of SEBI (Substantial Acquisition
of Shares and Takeovers) Regulations, 2011 (“SAST Regulations, 2011”).
Accordingly, public announcement dated September 25, 2023 was made under
Regulation 3(1) and 4 of SAST Regulations, 2011 by the Burman Group, for
Order on the Application by Digvijay Laxhamsinh Gaekwad in the matter of Religare
Enterprises Ltd. Page 1 of 10
acquiring up to 9,00,42,541 fully paid-up equity shares of face value of Rs.10
each, representing 26% of the Expanded Voting Share Capital to be acquired
at a price Rs.235 per equity share. The Detailed Public Statement (DPS) for
acquiring the shares was made by the Burman Group on October 04, 2023.
4. While the Burman Group attempted to obtain the requisite regulatory approvals
in order to discharge the open offer obligations under SAST Regulations, 2011,
the management of REL failed to extend the required cooperation in this regard.
Consequently, SEBI, vide order dated June 19, 2024, inter alia, directed REL
to make necessary applications for obtaining the required regulatory approvals.
Subsequently, after grant of approval by SEBI and RBI in December, 2024, the
Burman Group proceeded with the open offer process. The tendering period
opened on January 27, 2025, which was to close on February 07, 2025.
5. In the meantime, Digvijay Laxhamsinh Gaekwad (Danny Gaekwad
Developments & Investments, Florida) (“the Applicant”) submitted a letter
dated January 24, 2025 read with letter dated January 26, 2025 to SEBI through
REL. Vide the said letters, the Applicant, inter alia, requested SEBI to grant
requisite exemption from strict enforcement of Regulation 20 of the SAST
Regulations, 2011 to allow the Applicant to make a competing offer for 55% of
outstanding equity share capital of REL, at a price of Rs.275 per equity share.
6. As the abovementioned letters were not an exemption application in terms of
Regulation 11 of the SAST Regulations, 2011, SEBI vide letter dated January
28, 2025 returned the said letters to the Applicant, through REL.
7. Subsequently, the Applicant, vide letter dated February 01, 2025 (received by
SEBI vide email dated February 02, 2025) submitted an application (“the
Application”) under Regulation 11(1) of SAST Regulations, 2011 seeking
exemption from strict enforcement of Regulations 20(1) and 20(5) of the SAST
Regulations, 2011 with respect to the proposed competing offer. The payment
of prescribed fee was made by the Applicant only after SEBI sought for the
details relating to payment of fee in terms of Regulation 11(4) of the SAST
Regulations, 2011. In the Application, the Applicant, inter alia, stated his
willingness to submit competing open offer for 55% of outstanding share capital
of REL at price of Rs. 275 per share and requested SEBI to allow the Applicant
to make public announcement of competing offer in larger interest of public
Order on the Application by Digvijay Laxhamsinh Gaekwad in the matter of Religare
Enterprises Ltd. Page 2 of 10
shareholders of REL. The Applicant further requested SEBI to issue directions
to keep the Burman Group’s open offer in abeyance to enable public
shareholders to tender their shares in both, i.e., the Burman Group’s open offer
as well as the competing offer made by the Applicant.
8. In the meantime, a Writ Petition, viz., Sapna Govind Rao vs. Union of India &
Ors. [WP (Civil) No. 727 of 2025] was filed in Hon’ble High Court of Delhi by
Ms. Sapna Govind Rao (“the Petitioner”), a holder of 500 shares of REL,
praying for a stay on the open offer by the Burman Group. The matter was
heard on February 04, 2025.
9. During the hearing, the Hon’ble High Court was informed about receipt of
aforementioned application of the Applicant by SEBI. The Hon’ble High Court,
vide an interim order dated February 04, 2025 directed SEBI to decide on the
Application filed by the Applicant within shortest possible time in accordance
with law and further directed that the process of open offer made by the Burman
Group shall continue and same shall be subject to outcome of the proceedings
before the Hon’ble High Court.
10. The Petitioner in the abovementioned proceedings filed appeal [Sapna Govind
Rao vs. Union of India & Ors. - Civil Appeal arising out of Special Leave Petition
(SLP) (C) No. 3726 of 2025)] before the Hon’ble Supreme Court of India praying
for leave to appeal against the interim order dated February 04, 2025 passed
by the Hon’ble High Court of Delhi. The Petitioner, inter alia, sought interim
relief of grant of ex-parte ad-interim stay on the open offer initiated by the
Burman Group, pending the final adjudication of the SLP, and a direction to
SEBI and RBI to consider and adjudicate upon the competing offer of Rs. 275
per share submitted by the Applicant.
11. Simultaneously, the Applicant filed an appeal [Digvijay Laxhamsinh Gaekwad
(Danny Gaekwad) vs. Sapna Govind Rao & Ors. – Civil Appeal arising out of
SLP (C), @ Diary No. 6576/2025] before the Hon’ble Supreme Court, inter alia,
seeking a leave to appeal against the abovementioned order dated February
04, 2025 passed by the Hon’ble High Court of Delhi. The Applicant sought stay
of operation of interim order and open offer of the Burman Group till the disposal
of the appeal.
Order on the Application by Digvijay Laxhamsinh Gaekwad in the matter of Religare
Enterprises Ltd. Page 3 of 10
12. The Hon’ble Supreme Court, after hearing all the parties on facts, disposed of
both the appeals vide an order dated February 07, 2025 and directed the
following:
“1. The appellant, Digvijay Laxhamsinh Gaekwad (Danny Gaekwad) or their
nominee/applicant before SEBI, as suggested by his counsel, shall deposit
a sum of ₹600 crores in terms of the 2011 SEBI Regulations, in the form of
cash and/or bank guarantee, on or before 12.02.2025. In case the amount
is not deposited by the said date, the directions in the present order shall be
automatically vacated without further reference to the Court.
2. The public offer, which is to close today, will be continued till 12.02.2025.
In case the appellant, Digvijay Laxhamsinh Gaekwad (Danny Gaekwad) or
their nominee/applicant before SEBI, deposits ₹600 crores in terms of the
2011 SEBI Regulations, the offer will continue till the end of third day post
the date of the order to be passed by SEBI on the application of the
appellants.” (Emphasis supplied)
13. Subsequently, pursuant to a Miscellaneous Application (Diary No. 7916/2025
in Civil Appeal No. 2197/2025) file by the Applicant, the Hon’ble Supreme Court,
vide an order dated February 12, 2025, directed the following:
“Without going into these controversies, we permit the applicant to deposit
600 crores by way of transfer to a bank account nominated by the RBI. To
enable the applicant to deposit the money by 02.00 p.m. (Indian Standard
Time) on 13.02.2025, we direct the RBI to permit such deposit by giving
details of an appropriate bank account as well as the SWIFT number
immediately, so as to enable the applicant to transfer the amount in terms
of this order by 02.00 p.m. (IST) tomorrow, i.e., 13.02.2025.
We, however, clarify that except this modification to the above extent, the
other terms and conditions mentioned in the order dated 07.02.2025 shall
remain unaffected.”
14. In the meantime, in respect of the Application filed by the Applicant, a personal
hearing for the Applicant was scheduled to be held on February 12, 2025 at
SEBI, which was later rescheduled to February 14, 2025, due to the Applicant’s
request for a virtual hearing at a suitable time considering time zone difference
Order on the Application by Digvijay Laxhamsinh Gaekwad in the matter of Religare
Enterprises Ltd. Page 4 of 10
between India and the United States of America. The Applicant failed to attend
the hearing this morning, even though the web link for virtual hearing was sent
to him on February 13, 2025 at 12:35 IST. However, Mr. Uday S. Patil,
Executive Director, and Nipun Lodha, Director, of the Applicant’s Merchant
Banker, PL Capital Markets Pvt. Ltd., was present before me in person for the
hearing.
Consideration of the Application by SEBI:
15. At the outset, I note that the Applicant has made the Application under
Regulation 11(1) of the SAST Regulations, 2011 which pertains to grant of
exemption from requirement of making open offer. However, the exemption
sought by the Applicant does not pertain to seeking relief from making open
offer but for allowing him to make competing open offer. Even though the
Application made by the Applicant is not covered under Regulation 11(1), I have
considered the Application, in terms of the order of the Hon’ble Supreme Court
of India.
16. The Application filed by the Applicant along with his other submissions have
been examined. The following has been observed in respect of the same.
Provisions of Regulations 20(1) and 20(5) of the SAST Regulations, 2011
17. The Applicant requested for exemption under Regulation 11(1) of SAST
Regulations, 2011 from the strict enforcement of Regulations 20(1) and 20(5)
of SAST Regulations, 2011 thereby permitting him to make public
announcement of a competing open offer.
18. The Applicant has contended before the Hon’ble Supreme Court that the date
on which the public announcement was made by the Burman Group would be
January 18, 2025. As per the Applicant, the approval was initially not given by
the RBI and was finally granted on December 09, 2024. The Applicant’s case
is that the object and purpose of making a public offer is to ensure that the
members of the public, who hold shares, can offload and sell their shares to the
group which is acquiring shares at the threshold limit and which may,
thereupon, have a say or control over the management of the company. Target
Company had to seek approval from the RBI. The Applicant submitted that as
Order on the Application by Digvijay Laxhamsinh Gaekwad in the matter of Religare
Enterprises Ltd. Page 5 of 10
the public offer was dated January 18, 2025, its application would be within the
time period, as prescribed under Regulation 20 of the SAST Regulations, 2011.
19. As per the order of the Hon’ble Supreme Court of India dated February 07,
2025, the question to be decided in this matter relates to the date of public
announcement of the open offer, as contemplated in Regulation 20(1) of the
SAST Regulations, 2011.
20. I note that as per Regulation 13(1) of the SAST Regulations, 2011, “The public
announcement referred to in regulation 3 and regulation 4 shall be made in
accordance with regulation 14 and regulation 15, on the date of agreeing to
acquire shares or voting rights in, or control over the target company. Further,
as per Regulation 13(2)(a), such public announcement, in the case of market
purchases, has to be made prior to placement of the purchase order with the
stock broker to acquire the shares, that would take the entitlement to voting
rights beyond the stipulated thresholds.
21. I note that, as referred to in Paras 2 and 3 of this Order, the Burman Group had
placed the purchase order for shares beyond the threshold limit and the public
announcement on September 25, 2023. Accordingly, I find that the date of
public announcement of the Burman Group has to be taken as September 25,
2023 and not January 18, 2025, as contended by the Applicant. I note that
January 18, 2025 is the date of dispatch of letter of offer by the Burman Group
and the same cannot be treated as the date of public announcement.
22. As per Regulation 20(1) of SAST Regulations, 2011, the public announcement
of a competing open offer has to be made within fifteen working days of date of
Detailed Public Statement (DPS) made by a proposed acquirer. Further, as per
Regulation 20(5) of the SAST Regulations, 2011, no person shall be entitled to
make a public announcement of open offer after fifteen working days from the
date of publication of DPS until the expiry of offer period. In the instant case, it
is noted that the DPS by the Burman Group was made on October 04, 2023.
Accordingly, I find that the public announcement for competing open offer, in
terms of Regulation 20(1) could have been made only within 15 working days
of the DPS made by the acquirer who made the first public announcement, i.e.,
Order on the Application by Digvijay Laxhamsinh Gaekwad in the matter of Religare
Enterprises Ltd. Page 6 of 10
fifteen working days from the date of DPS, viz., October 04, 2023, which was
made by the Burman Group.
23. As per Regulation 20(8) of SAST Regulations, 2011 the schedule of activities
and tendering period for original and competing open offer has to be carried out
with identical timelines. The intent of Regulation 20(8) of SAST Regulations,
2011 is that both open offers (original open offer and competing open offer) run
parallel to each other, so that they are competing with each other whereby
shareholders can tender shares in either of the open offer. However, in the
instant case, the tendering period of Burman Group’s open offer opened on
January 27, 2025 and would have closed on February 07, 2025. In this
situation, if the competing open offer is allowed to be made near to the close of
the open offer, as in the instant case, the same would result in a never-ending
process, which would go against the interests of the shareholders. The same
is not the intent of Regulation 20(8) of SAST Regulations, 2011.
24. Further as on February 13, 2025, a total of 2,31,025 shares have already been
tendered in the open offer made by Burman Group. In this situation, if the
competing open offer is allowed to be made by the Applicant, the shareholders
who have tendered shares in the open offer made by Burman Group would be
unable to participate in competing open offer.
25. It is important to note that although the Applicant and the Petitioner before the
Hon’ble High Court had sought the relief of stay of the open offer by the Burman
Group from the Hon’ble High Court of Delhi and the Hon’ble Supreme Court,
the said relief was not granted.
26. The Applicant before the Hon’ble Supreme Court had also pleaded that the
public offer should be the higher of the two – the acquisition price (as on
September 25, 2023) or the market price prevailing on January 18, 2025 (which
is claimed by the Applicant as the date of public announcement). In this regard,
it has already been observed above that the date of public announcement was
September 25, 2023 and not January 18, 2025. As the purchase order for
acquisition of shares and the public announcement were made on the same
date, i.e., September 25, 2023, the question of difference in price does not
arise. I note that the offer price in this case has been calculated in the specified
Order on the Application by Digvijay Laxhamsinh Gaekwad in the matter of Religare
Enterprises Ltd. Page 7 of 10
manner, which is provided under Regulation 8(2) of the SAST Regulations,
2011.
Regulatory approvals required
27. As the Applicant has sought to make a competing open offer for 55% of the
outstanding share capital of the Target Company, any such open offer can
succeed only if required regulatory approvals are obtained by the Applicant
from various regulators, including SEBI and RBI. It is noted that the Applicant
is yet to apply for any of such approvals. Further, even if applications are made
by the Applicant for such approvals, there is no certainty that the approvals
would be granted in the first place. Further, it is noted that in case the Applicant
applies for various regulatory approvals, the processing of such applications is
likely to take time.
28. In the given scenario, if the competing open offer is allowed to be made by the
Applicant, the same would entail keeping the open offer process by the Burman
Group on hold for an uncertain period in a situation where the decision of
regulators on the competing open offer cannot even be predicted. The same
shall not only be prejudicial to the interest of the Burman Group, an existing
shareholder of the Target Company, which has devoted considerable effort,
time and resources to be able to make the open offer, but also to the
shareholders who have already tendered shares in the open offer by Burman
Group. In case, Applicant is unable to receive the required statutory or
government approvals, the competing open offer would become infructuous. In
such a scenario, the entire exercise of keeping Burman Group’s open offer on
hold will be futile. It is important to note that Burman Group is a stakeholder in
this process and as a shareholder of the Target Company, is entitled to
protection of its rights, just like other shareholders.
Monetary resources for making competing open offer
29. As per Regulation 25(1) of the SAST Regulations, 2011, “Prior to making the
public announcement of an open offer for acquiring shares under these
regulations, the acquirer shall ensure that firm financial arrangements have
been made for fulfilling the payment obligations under the open offer and that
the acquirer is able to implement the open offer, subject to any statutory
approvals for the open offer that may be necessary.”
Order on the Application by Digvijay Laxhamsinh Gaekwad in the matter of Religare
Enterprises Ltd. Page 8 of 10
30. It is noted that although the price offered by Applicant in the proposed
competing open offer is Rs. 275 per equity share, (a premium of Rs.40 per
equity share over the offer made by the Burman Group), the Applicant has failed
to demonstrate his ability to meet the financial obligation for making the
competing open offer.
31. As on the date of this order, the Applicant has failed to deposit Rs.600 Crore,
as directed by the Hon’ble Supreme Court of India vide its order dated February
07, 2025 read with order dated February 12, 2025, which would have shown
the Applicant’s commitment towards making the competing open offer. In the
absence of adequate proof of financial resources required for making the
competing open offer, the Application by the Applicant does not appear to be
bonafide. It seems frivolous and aimed solely at hindering the open offer
process.
32. The right of a bonafide applicant to make an independent open offer is not
curtailed in any manner. Given the same, at this stage, it does not seem
appropriate to allow competing open offer by the Applicant, only on the ground
that the price offered by the Applicant is more than the price offered by the
Burman Group.
33. Having observed as above, I note that the role of the Applicant’s Merchant
Banker, PL Capital Markets Pvt. Ltd., calls into question its role in doing the due
diligence while taking on the assignment of the competing open offer. The
Applicant paid the application money days after submitting the Application and
that too after a query was made in this regard by SEBI. The Merchant Banker,
during the hearing today, appeared clueless about the credentials of the
Applicant and was found to have failed to do proper due diligence and KYC of
his client before accepting the mandate.
34. Having considered the above-mentioned factors in totality, I am of the view that
the grant of exemption sought by the Applicant would not be in the interest of
the shareholders. A competing offer, which is not backed by financial capability,
would disrupt market dynamics and erode investor confidence. In view of the
above, I do not deem it fit to grant the exemptions, as sought by the Applicant.
Order on the Application by Digvijay Laxhamsinh Gaekwad in the matter of Religare
Enterprises Ltd. Page 9 of 10
Directions
35. In view of the observations and findings recorded in the preceding paragraphs
and in order to protect the interests of the shareholders of the Target Company,
I, in exercise of the powers conferred upon me under Sections 11(1) and
11(2)(h) read with Section 19 of the SEBI Act, 1992 and Regulations 11(5) and
32 of SAST Regulations, 2011 hereby dispose of the Application dated
February 01, 2025 filed by the Applicant.
36. This Order shall come into effect immediately.
37. A copy of this order shall be served upon the Applicant for information.
DATE: FEBRUARY 14, 2025 ASHWANI BHATIA
PLACE: MUMBAI WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA
Order on the Application by Digvijay Laxhamsinh Gaekwad in the matter of Religare
Enterprises Ltd. Page 10 of 10
