Delhi High Court refuses to stay Religare AGM amid Burman family open offer controversy

The Delhi High Court on Thursday refused to stay the Annual General Meeting (AGM) of Religare Enterprises Limited (REL) scheduled for February 7, amid controversy over a proposed takeover of REL by the Burman family, which owns Dabur [Sapna Govind Rao Vs Union of India]..A minority shareholder called Sapna Govind Rao has moved the Court alleging that the takeover is being mishandled and that the Burman family's offer undervalues REL shares. The offer by the Burman family to acquire REL is slated to be considered at the upcoming AGM. Justice Manoj Jain, who heard the matter found that the reasons given by Rao were not sufficient to stay the AGM. Therefore, it declined to grant Rao any such interim relief. .Rao, who holds 500 shares in REL, has challenged the Reserve Bank of India’s (RBI) conditional approval for the acquisition of REL by the Burman family. Rao's petition calls on the Court to quash the RBI’s approval dated December 9 2024. The plea also seeks greater transparency in the acquisition process. The Court today heard an application filed by Rao, by which it was contended that a competing offer has been received from M/s. Danny Gaekwad Developments & Investments, Florida, which values REL shares at ₹275 per share - a 17 per cent premium over the Burman family’s offer of ₹235 per share. Rao (petitioner) contended that this development necessitates a reconsideration of the acquisition process to protect the interests of minority shareholders..According to the petitioner, the competing offer - which was disclosed by REL to the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on January 24 - has fundamentally altered the acquisition landscape. The petitioner contends that proceeding with the Burman family’s offer would cause grave financial loss to public shareholders. Rao emphasised that the competing offer should be allowed to run parallel to the Burman family’s offer, ensuring a fair and competitive price discovery process. “The Competing Offer presents a higher valuation of REL shares, thereby prioritising and advancing the financial interests of minority shareholders, including the Petitioner," Rao's petition said..The petitioner also highlighted the urgency of the matter, noting that the open offer period for REL's proposed takeover by the Burman family runs from January 27, 2025 to February 7, 2025. Shareholders who sell their shares during this period unaware of the higher competing offer would face irreparable financial harm, Rao said.Additionally, the petitioner pointed out that REL’s AGM, scheduled for February 7, was announced before the competing offer was disclosed. Proceeding with the AGM under these circumstances would deprive shareholders of the opportunity to make an informed decision, violating principles of corporate governance and transparency, Rao argued. .The petitioner, therefore, urged the Court to direct Securities Exchange Board of India (SEBI) and the RBI to evaluate the competing offer and stay the Burman family’s acquisition process until a fair assessment is completed. The petition also sought a stay on the AGM to prevent any resolutions from being passed under what it calls “opaque and prejudicial circumstances.” “Proceeding with the AGM under such opaque and prejudicial circumstances would deprive the shareholders an opportunity to make an informed decision and will lead to irreversible harm to their rights," the plea said. .During today's hearing, the SEBI informed the High Court that the communications from Gaekwad have already been returned, meaning that the competing offer is no longer in play. Therefore, Rao's application to stay the AGM has become infructuous, the Court was told..Senior Advocate Dr. Abhishek Manu Singhvi, who appeared for one of the respondents contended that Rao's plea was foisted by a disgruntled director, Rashmi Saluja through a minority shareholder. Singhvi added that Saluja is slated retire (from directorship) by rotation on February 7 and she is trying to prevent the same. Senior Advocate Aryama Sundaram, who appeared for Rao, vehemently objected to these submissions.The case will be heard next on February 18. .Senior Advocate Sundaram, who appeared for Rao, was briefed by Advocate Rohini Musa. The respondents were represented by Senior Advocates Mahesh Jethmalani, Dayan Krishnan and Nalin Kohli. SEBI was represented by Senior Advocate Neeraj Malhotra and Advocate Nimish Kumar.