Securities Appellate Tribunal
Waverley Investments Limited vs Sebi on 20 October, 2015
Author: J.P. Devadhar
Bench: J.P. Devadhar
BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Date of Decision : 20.10.2015
Appeal No. 407 of 2014
Avail Holding Limited
209, Bhanot Plaza II, 3, D.B. Gupta Road,
New Delhi - 110055. ...... Appellant
Versus
Securities and Exchange Board of India
SEBI Bhawan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051. ...... Respondent
Mr. Deepak Dhane, Advocate with Mr. P.V. Nishanth, Advocate for the Appellant.
Mr. Kumar Desai, Advocate with Mr. Mihir Mody, Ms. Shruti Chiniwar and
Mr. Saurabh Bachhawat, Advocates i/b K. Ashar & Co. for the Respondent.
And
Appeal No. 290 of 2015
Waverley Investments Limited
5, Clive Row, 2nd Floor,
Kolkata - 700001. ...... Appellant
Versus
Securities and Exchange Board of India
SEBI Bhawan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051. ...... Respondent
Mr. Deepak Dhane, Advocate with Mr. P.V. Nishanth, Advocate for the Appellant.
Mr. Kumar Desai, Advocate for the Respondent.
CORAM: Justice J.P. Devadhar, Presiding Officer
Jog Singh, Member
Per: Justice J.P. Devadhar
1.Since the dispute in these two appeals relate to imposition of penalty for violating the Takeover Regulations framed by the Securities and Exchange Board of 2 India (SEBI for short) both these appeals are heard together and disposed of by this common decision.
2. In Appeal no.407 of 2014 the Adjudicating Officer ('AO' for short) of SEBI by his order dated August 12, 2014 has imposed a penalty of Rs.23 lakh on the appellant under section 15A(b) of Securities and Exchange Board of India Act, 1992 (SEBI Act for short) for failing to make disclosures under Regulation 8(3) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997 ('Takeover Regulations, 1997' for short) for the financial years ended 31st March, 1998 to 31st March, 2011.
3. In Appeal no.290 of 2015, the Adjudicating Officer of SEBI by his order dated March 30, 2015 has imposed penalty of Rs.14 lakh on the appellant named therein, under section 15A(b) of SEBI Act for failing to make disclosures under Regulation 8(3) of the Takeover Regulations, 1997 for the financial years ended 31st March, 1998 to 31st March, 2011.
4. Counsel for the appellant in both these appeals fairly stated that the delay in making disclosures under Regulation 8(3) of the Takeover Regulations, 1997 was an inadvertent error and as soon as the error was noticed disclosures were made immediately thereafter. While contending that the failure in making disclosures under Regulation 8(3) being a technical and venial error, the Adjudicating Officer is not justified in imposing penalty, it is submitted that in any event the quantum of penalty imposed is disproportionate to the violations committed.
5. We see no merit in the above contentions.
6. While disposing of Appeal no.199 of 2014 (Inland Printers Limited vs. SEBI) today i.e. on 20.10.2015 this Tribunal held that the obligation to make disclosures by a listed company to the stock exchanges under Regulation 8(3) of the Takeover Regulations, 1997 is mandatory. Failure to make disclosures under Regulation 8(3) entails statutory penal liability under Section 15A(b) of the SEBI Act. Penalty imposable under Section 15A(b) of the SEBI Act at the relevant time was Rs.1 lakh 3 for each day during which such failure continues or one crore rupees whichever is less. In Appeal no.407 of 2014 penalty calculated at the rate of Rs. 1 lakh for each day's delay would be more than several crores of rupees. However, after taking into consideration all mitigating factors, the Adjudicating Officer has imposed penalty of Rs.23 lakh for failing to make disclosures under Regulation 8(3) for the financial year ended 31st March, 1998 to 31st March, 2011which cannot be said to be unreasonable. However, in Appeal no.290 of 2015, for the very violation, the Adjudicating Officer of SEBI by his order dated March 30, 2015 has imposed penalty of Rs.14 lakh on the appellant therein. It is relevant to note the violation committed by the appellants in these two appeals relate to the same period i.e. for the financial year ended March 31, 1998 to March 31, 2011. However, in Appeal No.407 of 2014 penalty imposed is Rs.23 lakh, whereas, in Appeal No.290 of 2015, the penalty imposed is Rs.14 lakh. Since the order passed in Appeal No.290 of 2015 on March 30, 2015 is subsequent in point of time wherein for delay in making disclosures for the very same period, penalty imposed is Rs.14 lakh, we deem it proper to reduce the penalty imposed on the appellant in Appeal no.407 of 2014, from Rs.23 lakh to Rs.14 lakh as in case of appellant in Appeal no.407 of 2104.
6. Accordingly, while confirming the order passed by the Adjudicating Officer in both the appeals, we confirm the penalty of Rs.14 lakh imposed on appellant in Appeal no.290 of 2015 and in Appeal no.407 of 2014 we reduce the penalty imposed on the appellant therein from Rs.23 lakh to Rs. 14 lakh.
7. Both the appeals are disposed of in the above terms with no order as to costs.
Sd/-
Justice J.P. Devadhar Presiding Officer Sd/-
Jog Singh Member 20.10.2015 Prepared and compared by RHN