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Ashok JaIn Vs. Securities and Exchange Board of India, Sebi Bhavan - Court Judgment

LegalCrystal Citation
CourtSEBI Securities and Exchange Board of India or Securities Appellate Tribunal SAT
Decided On
Case NumberAppeal No. 79 of 2014
Judge
AppellantAshok Jain
RespondentSecurities and Exchange Board of India, Sebi Bhavan
Excerpt:
.....exchange board of india (substantial acquisition of shares and takeover) regulations, 1997 (œsast regulations, 1997? for short), penalty of ` 13 lacs for alleged violation of regulation 8(1) and 8(2) of sast regulations, 1997 and penalty of rs.1 lac for alleged violation of regulation 30(2) read with regulation 30(3) of securities and exchange board of india (substantial acquisition of shares and takeover) regulations, 2011 (œsast regulations, 2011? for short) is the question raised in this appeal. 2. counsel for the appellant fairly stated that though the appellant has violated the provisions of sast regulations, 1997/sast regulations, 2011, in the facts of present case, lenient view ought to have been taken, because, firstly, at the relevant time dealings in scrip of tumus.....
Judgment:

J.P. Devadhar, Presiding Officer

(Oral)

1. Whether the Adjudicating Officer (œAO? for short) of Securities and Exchange Board of India (œSEBI? for shot) was justified in imposing penalty of ` 3 lacs for alleged violation of regulation 7(1A) read with regulation 7(2) of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997 (œSAST Regulations, 1997? for short), penalty of ` 13 lacs for alleged violation of regulation 8(1) and 8(2) of SAST Regulations, 1997 and penalty of Rs.1 lac for alleged violation of regulation 30(2) read with regulation 30(3) of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 2011 (œSAST Regulations, 2011? for short) is the question raised in this appeal.

2. Counsel for the appellant fairly stated that though the appellant has violated the provisions of SAST Regulations, 1997/SAST Regulations, 2011, in the facts of present case, lenient view ought to have been taken, because, firstly, at the relevant time dealings in scrip of Tumus Electric Corporation Limited were suspended and, non disclosure did not make any difference to the investors. Secondly no loss is caused to any investor on account of non disclosure and hence, penalty imposed upon the appellant be set aside to the extent as this Tribunal deems it fit and proper.

3. We see no reason to interfere with the order passed by the AO. Under SAST Regulations, 1997 as also under SAST Regulations, 2011 disclosures are liable to be made within specified days irrespective of the scrip being traded on the Exchange or not. Similarly, disclosures have to be made irrespective of whether investors have suffered any loss or not on account of non disclosure within the time stipulated under those regulations. In the present case, violation under regulation 7(1A) read with regulation 7(2) of SAST Regulations, 1997 relates to the sale transaction that took place on April 30, 2004. As against the obligation to make disclosure on May 2, 2004 under regulation 7(1A) read with regulation 7(2) of SAST Regulations, 1997, admittedly, disclosure has been made on January 2, 2013 i.e., after delay of 3167 days. Penalty under section 15A(b) of SEBI Act, at the rate of Rs.1 lac per day would be in excess of crore of rupees, but AO after taking into consideration all mitigating factors has imposed penalty of only Rs.3 lacs which cannot be said to be arbitrary or unreasonable.

4. Similarly, as per regulation 8(1) read with regulation 8(2) of SAST Regulations, 1997 appellant holding more than 15% shares of the target company was obliged to make yearly disclosure to the company within the period specified therein. Admittedly, during the period 2002 to 2011 appellant had failed to make yearly disclosures and disclosures were made belatedly on January 2, 2013 for all the years from 2002 to 2011. Since the delay in making disclosures under regulation 8(1) read with regulation 8(2) of SAST Regulations, 1997, ranged from 3909 days to 622 days (see para 22 of the impugned order), penalty imposable under Section 15A(b) of SEBI Act, 1992 for the period 2002 to 2011 would be more than rupees one core, but the AO after considering all mitigating factors has imposed penalty of Rs.13 lacs for all the years which cannot be said to be arbitrary or unreasonable or perverse.

5. Similarly, regulation 30(2) read with regulation 30(3) of SAST Regulations, 2011 requires yearly disclosure to be made by promoters and persons acting in concert to the Stock Exchange within 7 working days from the end of the financial year. Admittedly, disclosure under regulation 30(2) read with regulation 30(3) of SAST Regulations, 2011 was made on January 2, 2013 which was delayed by 265 days. Though penalty at the rate of Rs.1 lac per day was leviable for such belated disclosure, AO after taking into consideration all mitigating factors has imposed penalty of Rs.1 lac which cannot be said to be unreasonable or arbitrary.

6. For all the aforesaid reasons, we see no reason to interfere with the order passed by AO. Accordingly, appeal is dismissed with no order as to costs.


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