Securities Appellate Tribunal
Abhimanu Exports Limited vs Sebi on 30 October, 2017
Author: J.P. Devadhar
Bench: J.P. Devadhar
BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Date of Decision: 30.10.2017
Appeal No. 261 of 2017
Abhimanu Exports Limited
D-3/2, Okhla Industrial Area,
Phase II,
New Delhi- 110 020 ...Appellant
Versus
Securities and Exchange Board of India,
SEBI Bhavan, Plot No. C-4A, G-Block,
Bandra-Kurla Complex, Bandra (East),
Mumbai - 400 051 ...Respondent
Ms. Stuti Shah, Advocate i/b J. Sagar Associates for the Appellant.
Mr. Mustafa Doctor, Senior Advocate with Ms. Aastha Vidhi and
Ms. Disha Saxena, Advocates i/b Dave & Girish & Co. for the
Respondent.
CORAM: Justice J.P. Devadhar, Presiding Officer
Dr. C.K.G. Nair, Member
Per: Justice J.P. Devadhar (Oral)
1.This appeal is filed to challenge the order passed by the Adjudicating Officer of Securities and Exchange Board of India ("SEBI" for short) on August 08, 2017. By the said order penalty of ` 10 lac is imposed on the appellant for violating regulation 8(3) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 ("Takeover Regulations, 1997" for short) read with regulation 35 of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011 ("Takeover Regulations, 2011" for short). 2
2. It is not in dispute that during the period from 1998-2009 the appellant was required to make annual disclosures to all the Stock Exchanges on which the shares of the appellant-company were listed under regulation 8(3) of the Takeover Regulations, 1997. It is also not in dispute that the disclosures under regulation 8(3) of the Takeover Regulations, 1997 were made by the appellant belatedly on April 23, 2010.
3. Sometime in February 2012 appellant had made suo moto consent application in relation to the delay in complying with regulation 8(3) of the Takeover Regulations, 1997. However, the said application was rejected on the ground that the appellant has failed to furnish the requisite documents sought by SEBI.
4. Thereafter, proceedings were initiated against the appellant and by the impugned order penalty of ` 10 lac is imposed under Section 15A(b) of the SEBI Act for violating regulation 8(3) of the Takeover Regulations, 1997.
5. Ms. Stuti Shah, learned counsel appearing on behalf of the appellant submitted that the impugned order is unsustainable, because, firstly, the impugned order is passed on the basis of facts set out in the consent application filed by the appellant and as per SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014 ("Settlement Regulations, 2014" for convenience) SEBI cannot rely upon the representation contained in the consent application in the proceedings initiated after rejection of the consent application. Secondly, by way of 3 an alternate argument it is submitted that since the appellant company is in deep financial crisis with no staff, the exorbitant penalty imposed against the appellant be quashed or reduced to the extent as this Tribunal deems fit and proper.
6. We see no merit in the above contentions.
7. Fact that the appellant, in the present case, was obliged to make yearly disclosures under regulation 8(3) of the Takeover Regulations, 1997 is not in dispute and the fact that the appellant in fact has made disclosures belatedly on April 23, 2010 is also not in dispute. In such a case, mere fact that the appellant had filed a suo moto consent application and the said application has been rejected by SEBI cannot be a ground for the appellant to contend that no action can be taken for the violations committed by the appellant. When a consent application is rejected SEBI would obviously be entitled to take action for the violations committed.
8. Reliance placed by counsel for the appellant on regulation 21(2) of the Settlement Regulations, 2014 is wholly misplaced. What that regulation provides is that, where the consent application is rejected, SEBI cannot make use of any proposal made or information furnished by the applicant in the proceedings initiated after the rejection of the consent application. It obviously means that the restriction is only in relation to the proposal or information which are exclusively within the knowledge of the applicant and the restriction is not applicable to uncontroverted facts set out in the consent application. In other words, uncontroverted facts set out in the consent application which are easily ascertainable 4 could be relied upon by SEBI in the proceedings initiated after rejection of the consent application. Therefore, argument of the appellant that the uncontroverted facts set out in the consent application could not relied upon by SEBI in the proceedings initiated after rejection of the consent application is without any merit.
9. Argument advanced on behalf of the appellant that the penalty imposed against the appellant deserves to be deleted or reduced is without any merit, because, in the present case, failure of the appellant to make annual disclosures relate to 12 financial years. Thus, 12 violations have been committed by the appellant and in view of inordinate delay in complying with the provisions contained in regulation 8(3) of the Takeover Regulations, 1997 the penalty imposable under Section 15A(b) of SEBI Act was ` 1 crore for each year. Thus, as against the penalty of ` 12 crore imposable in relation to 12 violations, the AO after considering all mitigating factors has imposed a penalty of `10 lac which cannot be said to be excessive or exorbitant.
10. In these circumstances, we see no reason to interfere with the impugned order. Accordingly, the appeal is dismissed with no order as to costs.
Sd/-
Justice J.P. Devadhar Presiding Officer Sd/-
Dr. C.K.G. Nair Member 30.10.2017 Prepared & Compared By: PK