Comfort Fincap Limited vs Sebi on 25 June, 2014

[Cites 2, Cited by 1]

Securities Appellate Tribunal

Comfort Fincap Limited vs Sebi on 25 June, 2014

Bench: J.P. Devadhar

 BEFORE THE             SECURITIES APPELLATE TRIBUNAL
                              MUMBAI

                                    Appeal No. 160 of 2014

                                    Date of Decision : 25.06.2014

Comfort Fincap Limited
22, Camac Street, Block-B,
Kolkata - 700 016.                                           ...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


Mr. Deepak Dhane, Advocate for the Appellant.

Mr. Kumar Desai, Advocate with Mr. Manish Acharya and Ms. Khushboo J.
Tatia, Advocates for the Respondent.


CORAM : Justice J.P. Devadhar, Presiding Officer
        Jog Singh, Member
        A.S. Lamba, Member

Per : J.P. Devadhar (Oral)




1.

This appeal is filed to challenge order passed by the adjudicating officer of Securities and Exchange Board of India ('SEBI' for short) dated March 20, 2014 whereby penalty of Rs. 10 lac has been imposed upon the appellant for violating regulation 8(3) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997 ('SAST Regulations, 1997' for short).

2. Counsel for the appellant fairly states that for nearly 13 years from 1998 to 2010 the appellant has failed to make yearly disclosures under regulation 8(3) of SAST Regulations, 1997. Counsel for the appellant, 2 however, submitted that the penalty of Rs. 10 lac imposed upon the appellant is arbitrary, excessive and violative of Section 15J of SEBI Act, 1992 for the following reasons:

(a) There was no intention to hide the transaction by not making disclosure under regulation 8(3) of SAST Regulations, 1997;

(b) Trading in the equity shares of the appellant were suspended on the Delhi Stock Exchange ('DSE') w.e.f. January 9, 2002 due to non-compliance of various clauses of listing agreement and the same was revoked w.e.f. January 16, 2012. Therefore, there being no trading in the shares on the exchange, adjudicating officer was not justified in imposing penalty of Rs. 10 lac which is highly unreasonable;

(c) Disclosures under regulation 8(3) of the SAST Regulations, 1997 are not disseminated by the stock exchanges and this reporting is only for academic purpose. Therefore, the findings recorded by the adjudicating officer that the investors were deprived of the important information is incorrect;

(d) There is no investor complaint against the appellant till date for not making disclosure under regulation 8(3) of SAST Regulations, 1997;

3. We see no merit in the aforesaid contentions. 3

4. Obligation to make disclosures under regulation 8(3) of SAST Regulations, 1997 is mandatory and that obligation is not dependent upon any of the circumstances set out hereinabove. Penalty for not making disclosures under regulation 8(3) SAST Regulations, 1997 for the respective year as per section 15A(b) of SEBI Act, 1992 is Rs. 1 lac per day or Rs. 1 crore whichever is lower. In the present case, penalty at the rate of Rs. 1 lac per day for the years 1998 to 2010 would be Rs. 1 crore per year, whereas, the adjudicating officer after considering all mitigating factors set out under section 15J of the SEBI Act, 1992 has imposed composite penalty of Rs. 10 lac for all the years which comes to less than Rs. 1 lac per year. In these circumstances, decision to impose penalty of Rs. 10 lac for all the years cannot be said to be unreasonable or excessive.

5. For all the aforesaid reasons, we see no reason to entertain the present appeal and the same is hereby dismissed with no order as to costs.

Sd/-

Justice J.P. Devadhar Presiding Officer Sd/-

Jog Singh Member Sd/-

A.S. Lamba Member 25.06.2014 Prepared and compared by:

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