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16. Contention of the appellants that since regulation 10(1)(b)(viii) exempts Scheduled Commercial Banks/ PFI‟s from making open offer when shares are acquired by them on invocation of pledge, proviso to regulation 29(4) must also be construed to exempt Scheduled Commercial Banks/ PFI‟s from making disclosures when shares are acquired on invocation of pledge is without any merit, because, firstly exemption under regulation 10(1)(b)(viii) is a general exemption with reference to open offer obligation specified under regulation 3 and 4, whereas, exemption under the proviso to regulation 29(4) is a specific exemption with reference to such disclosure requirements as are specified under regulation 29(4). Secondly, disclosure requirements under regulation 29(1), 29(2) are with reference to actual acquisitions, whereas, disclosure requirements under regulation 29(4) is with reference to deemed acquisition. Since the proviso to regulation 29(4) uses the expression "such requirement" and does not use the expression "such requirements", it is evident that the expression "such requirement" is used in the context of deemed acquisitions specified under regulation 29(4) and not with reference to actual acquisitions specified under regulation 29(1)/29(2). Thirdly, regulation 10(1)(b)(viii) specifically exempts acquisition in the ordinary course of business by invocation of pledge by Scheduled Commercial Banks or Public Financial Institutions as a pledgee, whereas, proviso to regulation 29(4) does not refer to acquisition of shares by invocation of pledge. Thus regulation 10(1)(b)(viii) and proviso to regulation 29(4) operate in different fields and therefore, appellants are not justified in contending that since Scheduled Commercial Banks/PFI‟s are exempted from making open offer on acquisition of shares by invocation of pledge under regulation 10(1)(b)(viii), Scheduled Commercial Banks/ PFI‟s must also be held to be exempted from making disclosures under regulation 29(4) when they acquire shares by invocation of pledge.

17. Argument that the expression "shares taken by way of encumbrance" in regulation 29(4) would mean taking shares into the account of the pledgee on invocation of pledge is without any merit, because, firstly, object of regulation 29(4) is to introduce a deeming fiction and to treat shares taken by way of encumbrance to be deemed acquisition, even though taking shares by way of encumbrance does not involve actual acquisition of shares by a pledgee and the borrower continues to be registered as well as beneficial owner of the encumbered shares. To illustrate, where shares are encumbered by creation of pledge, pledgee does not acquire the shares till the pledge is invoked. However, under regulation 29(4), by a deeming fiction, the pledgee is treated to have acquired shares and is required to make disclosures. Where the shares are acquired on invocation of pledge, question of introducing deemed fiction would not arise because, in such a case, shares are actually acquired on invocation of pledge. Thus it is evident that the expression "taken" used in regulation 29(4) is used in the context of deemed acquisition of shares on creation of pledge and not actual acquisition of shares on invocation of pledge. Secondly, if the contention of the appellant that the expression "taken" in regulation 29(4) applies to taking shares into the account of the pledgee on invocation of pledge is accepted, then it would lead to absurdity, because, in such a case, Scheduled Commercial Banks/ PFI‟s would be exempt from making disclosures when shares are actually acquired on invocation of pledge and they are required to make disclosures when shares are deemed to be acquired under regulation 29(4). Since taking shares by creation of pledge to secure indebtedness and to release the shares on discharge of indebtedness is a rule and acquisition of shares on failure to discharge indebtedness is an exception, proviso to regulation 29(4) provides that Scheduled Commercial Banks and PFI‟s shall be exempt from making disclosures when shares are taken by them to secure indebtedness in the ordinary course of business. Since the object of regulation 29(4) is to relieve Scheduled Commercial Banks and PFI‟s from disclosure requirements arising from deemed acquisitions specified under regulation 29(4), it is evident that the expression "taken" used in regulation 29(4) relates to deemed acquisitions and not actual acquisition.

24. Argument of the appellants that failure on their part to make disclosures, if any, has not deprived investors important information regarding acquisition of shares by the appellant, because, requisite filing has been made by the Target Company is also without any merit. Obligation to make disclosures under regulation 29(1)/29(2) by Scheduled Commercial Banks/ PFI‟s on acquisition of shares by invocation of pledge is irrespective of the disclosures made by the Target Company. In other words, fact that the Target Company has made disclosures does not absolve Scheduled Commercial Banks and PFI‟s from making disclosures under regulation 29(1)/29(2) when shares are acquired by them on invocation of pledge. In the present case, admittedly the appellants have failed to make disclosures even after acquiring shares on invocation of pledge and hence, appellants cannot escape penal liability.

25. Although penalty is imposed on the appellants for the first time for violating disclosure provisions that triggered on acquisition of shares by invocation of pledge, it is a matter on record that various Scheduled Commercial Banks have been making disclosures as and when disclosure provisions are triggered on acquisition of shares by invocation of pledge. If various Scheduled Commercial Banks have been making disclosures from time to time, there is no reason as to why penalty ought not to be imposed on appellants for not complying with the disclosure provisions contained in Takeover Regulations, 2011. In these circumstances, we see no reason to interfere with the quantum of penalty imposed against the appellants.