Securities Appellate Tribunal
W.S. Industries (India) Limited vs Sebi on 19 September, 2019
Author: Tarun Agarwala
Bench: Tarun Agarwala
BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Date of Decision : 19.09.2019
Appeal No. 8 of 2019
W.S. Industries (India) Limited
108, Mount Poonamallee Road,
Porur,
Chennai - 600 116. ..... Appellant
Versus
1.BSE Limited Floor 25, P.J. Towers, Dalal Street, Mumbai - 400 001.
2. National Stock Exchange of India Limited Exchange Plaza, C-1, Block G, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ... Respondents Mr. Ankit Lohia, Advocate with Mr. Mehul Jain and Mr. Chirag Chhabra, Advocates i/b Bharucha and Partners for the Appellant.
Mr. Sagar Divekar, Advocate with Mr. Abhimanyu Mhapankar, Advocate for Respondent No. 1. Mr. Sachin Chandarana, Advocate with Ms. Shreya Anuwal, Advocate i/b Manilal Kher Ambalal for Respondent No. 2. CORAM : Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member Justice M.T. Joshi, Judicial Member 2 Per : Justice Tarun Agarwala, Presiding Officer
1. For non-compliance of the Regulation 17(1) of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 ('LODR Regulations' for short) BSE Limited ('BSE' for short) by an order dated October 10, 2018 and National Stock Exchange of India Limited ('NSE' for short) by an order dated November 5, 2018 have each imposed a monetary fine of Rs. 5,42,800/-. The appellant being aggrieved by the aforesaid orders have filed the present appeal.
2. The aforesaid fine has been imposed for not appointing a woman director in the Board of Directors of the Company.
3. With regard to the imposition of fine, SEBI had been issuing Circulars from time to time. By Circular dated May 3, 2018 a uniform structure for imposing a fine was specified for different violations to be imposed by the Stock Exchanges so that uniform action is taken by the Stock Exchanges. As per the Annexure - 1 to the Circular, a fine of Rs. 5000/- per day has been fixed for violation of Regulation 17(1) of LODR 3 Regulations. In paragraph 4 of the Circular the Stock Exchanges were directed to take action in case of non- compliance of the LODR Regulations as per Annexure - 1 to the Circular i.e. to say that if there was violation of Regulation 17(1) of the LODR Regulations the Stock Exchange was to impose a fine @ Rs. 5000/- per day. Paragraph 4 further states that the Stock Exchange may deviate from the above if found necessary only after recording reasons in writing. Thus flexibility was given to the Stock Exchanges to reduce the quantum of fine for reasons to be recorded in writing.
4. Based on the aforesaid Circular the learned counsel for the appellant submitted that appellant had valid reasons for not appointing a woman director under Regulation 17(1) of the LODR Regulations and thus contended that even though it has deposited the fine under protest it may be allowed to make a representation to the Stock Exchanges for reduction / waiver of the penalty in the given extenuating circumstances. This request of making a representation was opposed by the learned counsel for the Stock Exchanges contending that the appellant had made a representation for waiver / reduction of the fine and that the Stock Exchanges considered and found 4 that the fine cannot be reduced or waived. Such decision however has not been brought on record. It was also contended that the respondents have carved out a Standard Operating Procedure (Exhibit - 5 to the reply of BSE) wherein recommendations for waiver or reduction of fine could be considered to a certain extent. It was contended that in the list of events indicated in the said Standard Operating Procedure the appellant's case was not covered and therefore no useful purpose would be served in considering the representation afresh.
5. Having heard the learned counsel for the parties, we find that the Circular of SEBI dated May 3, 2018 gives unfettered power to the Stock Exchanges to deviate from the standard procedure given by SEBI for imposition of fine subject to recording reasons in writing. The Standard Operating Procedure carved out by BSE (Exhibit - 5 to the reply of BSE) only gives the indicative list of events and is not exhaustive. We somehow get this uncanny feeling that the BSE is not willing to reconsider the matter on merits and are approaching the situation with a closed mind. 5
6. There is another aspect which requires consideration. The violation, if any, made by the appellant is of Regulation 17(1) of LODR Regulations. It is not a Stock Exchange based violation where each Stock Exchange would be within its right to impose a fine. Prima facie only one fine could be imposed and not two sets of fines by the Stock Exchanges. This aspect of a violation of the LODR Regulations, in our opinion, is required to be considered by SEBI, namely, whether one set of fine could be imposed or two sets of fine could be imposed for the same violation by two Stock Exchanges. This aspect cannot be considered or decided by the Stock Exchanges.
7. We accordingly dispose of the matter directing the appellant to file a representation under Regulation 101 of the LODR Regulations before SEBI within four weeks from today giving the grounds for reduction / waiver of the fine imposed under Regulations 17(1) of the LODR Regulations. The appellant will also raise a ground as to whether one set of fine could be imposed for violation of Regulation 17(1) or the Stock Exchanges can impose separate fines for the same violation. Upon receipt of the representation SEBI will consider and decide the issues as stated in the representation 6 after giving an opportunity of hearing within six weeks thereafter. In the event the penalty is reduced or waived SEBI would issue appropriate directions to the Stock Exchanges for refund of the monies within a stipulated period.
8. Appeal is disposed of in the above terms with no order as to costs.
Sd/-
Justice Tarun Agarwala Presiding Officer Sd/-
Dr. C.K.G. Nair Member Sd/-
Justice M.T. Joshi Judicial Member 19.09.2019 Prepared and compared by:msb