By Jayant M. Thakur, Chartered Accountant
BACKGROUND
An oft-litigated issue has been - when can a person be said to be in ‘control’ of a company? This is relevant not just in securities laws but to several other laws including the Insolvency and Bankruptcy Code, the Companies Act, 2013, Insurance law, Competition law, etc. The definition of ‘control’ under the SEBI Takeover Regulations, the Companies Act, 2013 and the IBC is on the same lines. Acquiring control of a company or even being in control has significant consequences. However, the definition of ‘control’ is very widely worded and has left doubts on how it would apply to facts. Thus, there has been uncertainty and hence litigation. As we will see later, SEBI did propose to make the definition more specific but later backtracked. Indeed, though a 12-year-old decision of SAT
(Subhkam Ventures (I) P. Ltd. vs. (2010) 99 SCL 159 (SAT) – ‘Subhkam’) gave fairly clear guidelines and principles on how this definition of ‘control’ should apply. The matter was appealed before the Supreme Court. But since the matter got resolved on other grounds, the Supreme Court consciously refrained from commenting on the merits and stated that its decision should not be taken as a precedent over the issue. This was interpreted particularly by SEBI as leaving the matter open putting even the SAT decision as without having any finality. The uncertainty then continued.
A recent decision
