Page 14 - Banking Finance JANUARY 2017

LEGAL UPDATE

LEGAL

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Acquiring company not entitled to appoint target
Foreign award declined
company directors: SC in absence of agreement
The Supreme Court has set aside the pointment of directors during the 'of- The Delhi High Court has declined to
ruling of the Securities Appellate Tribu- fer period' violated Regulation 22(7) of enforce a
nal (SAT) and held that an acquiring the SEBI Acquisition of Shares and Take-
f o r e ig n
company, its directors and as- over Regulations. It imposed a a w a r d
sociates cannot appoint direc- penalty of Rs 25 lakh on the
because
tors of the target company acquirers. there was
during the offer period. In this However, SAT reversed the or- no express agreement between a
case, Securities & Exchange der on the question when the Singapore exporter, Virgoz, and Na-
Board of India vs Burren Energy offer period starts. According tional Agricultural Coop Federation
India Ltd, the acquisition of an to it, the period is one between
Indian company was done by an English the date of entering the memorandum of India (NAFED) on buying palm oil.
company via entities in Mauritius and of understanding or public announce- The arbitral tribunal constituted un-
California. der the Palm Oil Refiners Association
ment and the date of completion of for-
Two directors were appointed on the malities. Reversing the ruling, the Su- of Malaysia Rules had accepted the
board of the target company on the preme Court declared that the period claim of the Singapore firm against
date of the share purchase agreement. started from the date of a concluded NAFED.
The public announcement was made contract, namely the share purchase It moved the high court for the ex-
the next day. SEBI found that the ap- agreement. ecution of the award. NAFED re-
sisted, arguing that there was no
Casual labour circulars quashed signed contract and there were only
The Uttaranchal High Court has described the attitude of the central govern- negotiations through a broker.
ment as "callous" which issued instructions to its au- Virgoz showed communications be-
thorities in the northern border areas that casual tween the two entities as binding
workers should not be allowed to complete 240 days contracts.
of continuous service lest they claim regularisation un- Deciding the case, Virgoz Oils & Fats
der labour laws. PTE vs NAFED, the court accepted

While quashing such circulars, the court directed the the version of NAFED, stating that
government to frame a scheme to absorb workers who had completed 240 days, there was no meeting of minds or
pay them minimum wages, implement all labour laws, provide them well-lit, airy agreement in writing, which was a
pre-fabricated houses, free medical care at military hospitals and other benefits. requirement of the Arbitration Act.

14 | 2017 | JANUARY | BANKING FINANCE

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