The Arun Bajoria - Bombay Dyeing Tussle

As in the case of many other stock market scams, SEBI's role in the Bajoria/BD tussle was severely criticized. Besides being criticized for not formulating a clear takeover code, SEBI was also accused of delays in taking action against Bajoria after BD lodged the complaint. In fact, it was after the Bajoria case that SEBI made certain amendments to its takeover guidelines. SEBI had begun introducing changes in the takeover regulations in 2000, but it had to shift its attention to investigations following the Ketan Parekh scam in 2001.

In the pre-demat trading days, since the company made the delivery of shares, it could stop the transfer if any irregularities were noticed. However, trading in the dematerialized mode did not allow the companies to block the transfer of the shares and, thus, exposed the companies to risks. The onus was on the acquirer to inform the company that the 5% limit had been crossed. The only way out for a company was to petition SEBI and the CLB to take action against violations. If there were delays in these bodies taking action, there was little the company could do. Even while the BD case was on, Bajoria carried out a similar exercise with the paper major Ballarpur Industries Ltd. (BILT), by picking up a 10% stake in the company.