Appeal No. 149 and 150 of 2014. Case: 1. Ensen Holdings Limited (Currently known as PIL Chemicals Pvt. Limited), 2. Mafatlal Industries Limited Vs Securities and Exchange Board of India. Securities and Exchange Board of India
| Case Number | Appeal No. 149 and 150 of 2014 |
| Counsel | For the Appellant: Mr. Vijay Menon, Advocate with Mr. Siddharth Shenoy, Advocate and For the Respondent: Mr. Kumar Desai, Advocate with Mr. Mihir Mody, Advocate |
| Judges | J.P. Devadhar, Presiding Officer and Jog Singh, Member |
| Issue | Securities and Exchange Board of India Act, 1992 - Section 15A(b) |
| Judgement Date | June 13, 2014 |
| Court | Securities and Exchange Board of India |
Order:
J.P. Devadhar (Oral)
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Appellants in these two appeals challenge adjudication orders passed by the Adjudicating Officer ("AO" for short) of Securities and Exchange Board of India ("SEBI" for short) both dated March 24, 2014, whereby penalty of ` 10 lac has been imposed upon each of the appellant under Section 15A(b) of the Securities and Exchange Board of India Act, 1992 ("SEBI Act, 1992" for short) for violating Regulation 8(1) and 8(2) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997 ("SAST Regulations, 1997" for short)
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Since facts in both these appeals are similar, by consent both these appeals are heard together and disposed of by this common judgement.
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Both appellants as promoters held shares amounting to 17.18% and 22.74% of Mafatlal Finance Company Ltd.
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On SAST Regulations, 1997 coming into force, appellants who held shares of Mafatlal Finance Company Ltd. in access of 15% were obliged to make yearly disclosures to that company in respect of their holding as on March 31, within 21 days from the end of each financial year.
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Counsel for the appellant fairly stated before us that yearly disclosures were not made by the appellants from 1998 till the shares were sold by them in the year 2008-2009/2010 and hence failure to make disclosures in all the above years technically constituted violation of Regulation 8(1) and 8(2) of SAST Regulations, 1997.
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Counsel for the appellant, however, submitted that penalty of ` 10 lac imposed upon each appellant is arbitrary and unreasonably excessive for the following reasons:-
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Having come to the conclusion that requisite disclosures were available in public domain in view of disclosures made under Clause 35 of the listing agreement during the period 2001-2008, AO was not justified in imposing heavy penalty of ` 10 lacs upon the appellant.
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AO failed to consider that there was neither disproportionate gain nor unfair advantage and there was no loss caused to the investors as result of non disclosure under Regulation 8(1) and 8(2) of SAST Regulations, 1997.
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Shareholding of the appellants had remained unaltered in all the years in question and therefore in the absence of any change in shareholding and quantum of shareholding being within the public domain, in view of declaration made under Clause 35 of listing agreement AO was not justified in imposing hefty penalty of ` 10 lac upon each appellants.
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AO failed to...
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