HLL to challenge Sebi order

HLL in a press communique said that it will appeal to the Central Government (Union Finance Ministry), the appellate authority in such cases. HLL said that prosecution if launched will be contested.

On Sebi’s view the company said: "Even taking Sebi’s view at face value, which the company strongly disagrees with, whatSebi does not take into account is that HLL had actually paid Rs 350.35 per share for the March 1996 transaction as against the ruling market price of Rs 318."

The company said it fails to understand how a transaction nine months later could form the basis for determining the compensation. It said that the interest alone on the payment of Rs 350.35 per share (a premium of 10 per cent) for purchasing the 8 lakh shares for the 9-month period, at a rate of 18 per cent per annum, is Rs 3.78 crore (Rs 47.30 per share). This is much more than the compensation Sebi has fixed, the company asserted, adding that Sebi totally overlooked this aspect.

HLL has been given 30-days time to appeal and HLL says it will do so. " HLL has no doubt whatsoever that it will stand vindicated." HLL maintains that the purchase of 8 lakh shares after direct negotiations was perfectly legal and valid, and UTI has made no grievance of it till date and further sold 4.7 lakh shares in December 1996.

HLL reiterated that it was in theknow of the proposed merger not as a connected company but as a primary party to the merger scheme with sister concern BBLIL. The company said that the news of the proposed merger was not unpublished and had been widely speculated.

Among the legal luminaries, the company has quoted Justice Bhagwati’s as saying:"It is undoubtedly true that HLL and BBLIL were under the common management and HLL must, therefore, be deemed to be connected with BBLIL, but the knowledge about the proposed merger, could not be said to have been received by HLL."