At, SEBI Securities Exchange Board of India Securities Appellate Tribunal
By, THE HONOURABLE MR. JUSTICE J.P. DEVADHAR
By, PRESIDING OFFICER
By, THE HONOURABLE MR. JOG SINGH
By, MEMBER & THE HONOURABLE MR. A.S. LAMBA
For the Appellant: S.K. Jain, Practicing Company Secretary. For the Respondent: Kumar Desai with Ms. Harshada Nagare, Advocates.
J.P. Devadhar, Presiding Officer
1. Whether the Adjudicating Officer ('AO' for short) of Securities and Exchange Board of India ('SEBI' for short), by impugned order dated December 17, 2013 was justified in imposing penalty of ` 3 lac on appellant under Section 15A(b) of Securities and Exchange Board of India Act, 1992 ('SEBI Act' for short) is the question raised in this appeal.
2. Penalty is imposed on the appellant for allegedly violating regulation 13(6) of the SEBI (Prohibition of Insider Trading) Regulations, 1992 ('PIT Regulations' for short).
3. Under regulation 13(6) of PIT Regulations, every listed company is required to disclose to all Stock Exchanges on which the company is listed, within two working days of receiving information specified under sub-regulations (1),(2),(2A),(3),(4) and (4A) of regulation 13 of PIT Regulations.
4. In the preset case, it is not in dispute that there is 14 days and 31 days delay in making disclosures on receiving information relating to acquisition of shares of the appellant company by its Managing Director Shri G. Suresh. Only dispute is, whether AO is justified in imposing penalty of ` 3 lac on appellant for above delay in making disclosures.
5. Basic argument of appellant is that the delay in making disclosure was unintentional and was on account of its Managing Director, travelling abroad at the relevant time. That argument has been considered by AO and only thereupon penalty of ` 3 lac has been imposed as against penalty of ` 45 lac imposable under Section 15A(b) of SEBI Act, at the rate of `1 lac per day for the delay of 45 days (14 days+31days). In such a case discretion exercised by AO cannot be said to be unreasonable or harsh.
6. Reliance was placed by appellant on the order of Whole Time Member ('WTM' for short) of SEBI dated February 20, 2014 in the appellants own case wherein it is held that for violating regulation 10/11 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 ('SAST Regulations, 1997' for short) the WTM of SEBI does not consider it to be a fit case to insist on public announcements under regulation 14(1) of SAST Regulations, 1997. That order has no bearing on the facts of present case, because firstly, in that case the dispute related to compliance of regulation 10/11 of SAST Regulations, 1997 which required making public announcement for acquisition of shares of a company, whereas, in the present case we are concerned with compliance of PIT Regulations, wherein penalty is imposable for non-compliance of PIT Regulations. Secondly, in the very same order relied upon by appellant, WTM of SEBI has held that not insisting on public announcement would not preclude SEBI from taking any other appropriate action at appropriate stage. Therefore, indulgence shown by WTM of SEBI in the aforesaid case has no relevance to the facts of present case where the appellant is seeking further reduction in the penalty imposed by AO for violating PIT Regulations.
7. Reliance placed by appellant on a decision of this Tribunal in Appeal No. 118 of 2013 dated 04.09.2013 (Vitro Commodities Private Limited Vs SEBI) is also misplaced. That case related to violations committed by appellant therein under regulation 13(1) of PIT Regulations which relates to disclosures to be made by a person acquiring shares or voting rights of any listed company in excess of the limits prescribed therein whereas in the present case, we are concerned with violation of regulation 13(6) of PIT Regulations which relate to the disclosures to be made by a listed company to the Stock Exchanges in which the company is listed. Thus the two provisions operate in different fields. Moreover, in that case penalty was reduced by this Tribunal because the appellant therein had not bought any shares of the company and increase in the shareholding of the shares of the company was on account of shares allotted to the appellant therein by way of bonus shares and amalgamation of the company with other companies, due to Court Orders and that the appellant therein believed 'bonafide' that no disclosure was required to be made due to such acquisition of shares. In those circumstances, this Tribunal deemed it fit to reduce the penalty from `10 lac to 1 lac. No such facts exist in the present case. Fact that, Managing Director of the company was travelling abroad at the relevant time cannot be a ground to escape penalty for not making disclosures within the time stipulated unde
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r regulation 13(6) of PIT Regulations. In any event, since AO after considering above facts to be a mitigating factor has taken a lenient view and imposed penalty of ` 3 lac as against penalty of ` 45 lac imposable under Section 15A(b) of SEBI Act, it cannot be said that the impugned order suffers from any infirmity. 8. For all the aforesaid reasons, we see no reason to interfere with the order impugned in this appeal. 9. Accordingly, appeal is dismissed with no order as to costs.