IN THE SUPREME COURT OF INDIA1 SLP NO. 110 OF 2012 PETITIONER Vs.

RESPONDENT RUBY LIMITED AND SLP NO. 130 OF 2012 PETITIONER Vs. RESPONDENT SOLITAIRE LIMITED SHAREHOLDERS ASSOCIATION SHAREHOLDERS ASSOCIATION

I. 1.

DELISTING OF EQUITY SHARES OF THE COMPANY Solitaire Limited (the Company), is a public company incorporated under the laws of India, which was listed on the Bombay Stock Exchange (the BSE) on October 9, 1999. Mr. Zenic Hegal is the founder Promoter of the Company and holds 24% shares in the Company (the Founding Promoter). Ruby Limited, a company incorporated under the laws of Mauritius, is the copromoter (the Promoter) of the Company and prior to the Delisting Offer (as defined below), the Promoter held 71% of the paid-up share capital of the Company. With the objective of obtaining full ownership of the Company, which will provide the Promoter with an increased operational flexibility to support the Companys business; and to provide an exit opportunity to the public shareholders of the Company, through its letter dated January 3, 2010 addressed to the Board of Directors of the Company (the Board, and such letter, the Request Letter), the Promoter proposed to voluntarily delist the equity shares of the Company from the BSE by acquiring up to such number of equity shares held by the public shareholders representing 29% of the paid-up share capital (the Delisting Offer) in accordance with the SEBI (Delisting of Equity Shares) Regulations, 2009 (the Delisting Regulations). In the Request Letter, the Promoter also intimated the Board that it was willing to acquire the shares tendered pursuant to the Delisting Offer at a price not exceeding INR 150 per equity share (Attractive Price). It was disclaimed that the Attractive Price should in no way be construed as: (i) a ceiling or maximum price for the purposes of the book building process under the Delisting Regulations, and the public shareholders were free to tender their shares at any price higher than the floor price; or (ii) a commitment by the Promoter to acquire all or any shares tendered in the Delisting Proposal by the shareholders if the discovered price arrived at under the Delisting Regulations was equal to or less than the Attractive Price; or (iii) a restriction on the board of

2.

3.

Participants are instructed to prepare one consolidated memorial for all the issues on behalf of the Petitioner (i.e. Shareholders Association) and one common consolidated memorial for all the issues on behalf of the Respondents (i.e. the Promoter and the Company).

directors of the Promoter to subsequently approve an acquisition of the shares from the public shareholders at a price in excess of the Attractive Price. Similar disclaimers were incorporated in the delisting documents, including the public announcement and the letter of offer. 4. The Board, by its resolution dated January 6, 2010, approved the Delisting Offer, subject to approval of the shareholders of the Company, in-principle approval from the BSE, and Promoters compliance with all the applicable laws, including the Delisting Regulations. The Delisting Offer was carried out in accordance with the book building process as prescribed under the Delisting Regulations. This included the determination of: (i) the floor price, which was INR 110 per share; (ii) the discovered price, which was INR 125 per share. The Promoter fixed the discovered price as the exit price for the purposes of the Delisting Offer of the Company. Consequent to the Delisting Offer, the shareholding of the Promoter reached 97% of the paid-up share capital of the Company and in terms of Regulation 17 of the Delisting Regulations, the Delisting Offer was deemed successful. On June 9, 2010, the BSE issued a notice communicating that the trading in the equity shares of the Company will be discontinued w.e.f. June 13, 2010. Further the scrip of the Company will be delisted from the BSE records w.e.f. June 15, 2010. Starting from January 6, 2010 the share prices of the Company witnessed extreme volatility wherein the share price reached up to INR 145. For all those public shareholders whose shares were not acquired by the Promoter or who did not tender their/its shares during the Delisting Offer, the Promoter issued an exit offer letter, in accordance with Regulation 21 of the Delisting Regulations, pursuant to which the remaining public shareholders could validly tender their equity shares to the Promoter at the exit price during a period of up to 12 months (i.e. June 15, 2011) following the date of delisting of the equity shares from the BSE. A section of the public shareholders (Dissenting Shareholders) of the Company had tendered their/its shares at the Attractive Price in anticipation that the Promoter will announce an exit price which is at least equal to the Attractive Price, if not more. These public shareholders (who collectively held 3% of the Companys share capital) formed an association (the Shareholders Association) and filed a letter dated August 9, 2010, with the Securities and Exchange Board of India (the SEBI) alleging that: (i) by disclosing the Attractive Price, which was not contemplated by the Delisting Regulations, the Promoter had breached the said regulations; and (ii) the practice of disclosing the Attractive Price was fraudulent in nature, as it misled the public shareholders. Accordingly, the Shareholders Association requested SEBI to direct the Promoter to offer a price equal to or more than the Attractive Price, with interest. Through its order dated December 12, 2010 SEBI dismissed the complaint filed by the Shareholders Association. Challenging the decision of SEBI, the Shareholders Association preferred an appeal to the Securities Appellate Tribunal (the SAT). Upon admitting the matter and agreeing with the reasoning of SEBI, the SAT also dismissed the appeal vide its order dated May 15, 2012. Aggrieved by the SAT order, the Shareholders Association filed a Special Leave Petition before the Supreme Court of India (the Supreme Court) against the SATs order dated May 15, 2012. The Supreme Court was pleased to issue notice, grant leave and list the matter for final disposal.

5.

6.

7.

8.

9.

10. Simultaneously, the Founding Promoter of the Company filed a letter dated August 11, 2010, with the SEBI alleging that the Promoter of the Company had not purchased the shares offered by the Founding Promoter of the Company during the Delisting Offer. The Founding Promoter contended 2

that as per the prohibition contained in the Delisting Regulations, it did not participate in the price fixation process, but there is no prohibition for a Promoter of any company to participate in the Delisting Offer, especially, where there are two (2) Promoters in a company. The Founding Promoter further contended that the Promoter of the Company had a mala fide intention to deprive the Founding Promoter of the opportunity to sell the shares and thereby declining exit from the Company in an oppressive manner. 11. Through its common order dated December 12, 2010, SEBI also dismissed the complaint filed by the Founding Promoter. Challenging the decision of SEBI, the Founding Promoter preferred an appeal to the SAT. Upon admitting the matter and agreeing with the reasoning of SEBI, the SAT also dismissed the appeal vide its common order dated May 15, 2012. Aggrieved by the SAT order, the Founding Promoter filed a Special Leave Petition before the Supreme Court against the SATs order dated May 15, 2012. The Supreme Court was pleased to issue notice, grant leave and list the matter for final disposal. REDUCTION OF SHARE CAPITAL

II.

12. Consequent to the exit window process as contemplated under Regulation 21 of the Delisting Regulations, the shareholding of the Promoter reached 96.5% of the paid-up share capital of the Company. In other words, except for the Dissenting Shareholders, remaining public shareholders had tendered their shares to the Promoter at the exit price under the Delisting Offer. 13. With a view to obtain complete shareholding in the Company, the Promoter considered the option of reduction of the issued and paid-up share capital of the Company in accordance with Section 100 of the Companies Act, 1956 (the Companies Act). In this regard, the Board passed a resolution: (i) to extinguish and cancel the shares held by the Dissenting Shareholders; and (ii) to return the capital to such Dissenting Shareholders at INR 135 per equity share each so cancelled and extinguished. Once the relevant special resolution was passed in the general meeting and the shareholders meeting, the company petition was filed with the Honble High Court of Bombay (the Bombay High Court) under Section 100 of the Companies Act seeking sanction of the court. The Dissenting Shareholders opposed the company petition filed by the Company before the Bombay High Court. 14. Vide its order dated April 19, 2012, the Bombay High Court sanctioned the resolution to reduce the share capital of the Company. Aggrieved by the same, the Dissenting Shareholders filed a Special Leave Petition before the Supreme Court against the Bombay High Courts order dated April 19, 2012. On May 1, 2012, the Supreme Court issued notice and was pleased to grant leave and list the matter for final disposal. ISSUES FOR CONSIDERATION

III.

Since both the Speical Leave Petitions (filed by the Dissenting Shareholders) arose out of related set of facts and circumstances, the Chief Justice of India directed that the said Special Leave Petitions be heard together and directed that the matters be listed before a three-judge bench to hear and decide the following: Whether the Promoter had breached the Delisting Regulations by disclosing the Attractive Price, which is not contemplated under the said regulations. Whether the disclosure of the Attractive Price by the Promoter was fraudulent in nature.

Whether the Founding Promoter could have participated in the Delisting Offer. Whether the order of the Bombay High Court be set aside. To consider all other matters which the court might consider necessary in the interest of justice.

The matter is now placed for hearing and arguments before the Supreme Court.