Appeal No. 374 of 2014. Case: Akshat Tandon and Ors. Vs Securities and Exchange Board of India. Securities and Exchange Board of India

Case Number:Appeal No. 374 of 2014
Party Name:Akshat Tandon and Ors. Vs Securities and Exchange Board of India
Counsel:For Appellant: Nimay Dave, Advocate and Rashida F. Savliwala, Advocate i/b. Dhruve Liladhar & Co. and For Respondents: Rajesh Nagory, Advocate, Mihir Mody and Saurabh Bachhawat, Advocates i/b. K. Ashar & Co.
Judges:J.P. Devadhar, J. (Presiding Officer), Jog Singh and Dr. C.K.G. Nair, Members
Issue:Securities And Exchange Board Of India Act, 1992 - Sections 15A(a), 15A(b), 15J
Judgement Date:October 05, 2016
Court:Securities and Exchange Board of India
 
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Order:

J.P. Devadhar, J. (Presiding Officer)

  1. Appellants herein are aggrieved by the order passed by the Adjudicating Officer of Securities and Exchange Board of India ('SEBI' for short) on 31st July, 2014. By the said order penalty is imposed on the appellants under section 15A(a) and 15A(b) of the Securities and Exchange Board of India Act, 1992 ('SEBI Act' for short) for violating Regulations 3(3) and 3(4) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (SAST Regulation, 1997).

  2. Counsel for the appellants fairly submitted that the appellants who are the promoters of Shree Bhawani Paper Mills Ltd. ('Target Company' for convenience) holding 54% shares had acquired shares of the Target Company on various dates specified in the impugned order in excess of the limits prescribed under Regulations 3(3) and 3(4) of the SAST Regulations, 1997, as a result whereof the appellants were required to notify/submit report to the respective authorities within the time stipulated therein. Counsel for the appellants further submitted that since the appellants have failed to notify or submit report as contemplated under Regulation 3(3) and 3(4) of SAST Regulations, 1997, the appellants have violated the aforesaid regulations and for the aforesaid violations penalty could be imposed on the appellants under section 15A(a) and 15A(b) of the SEBI Act. However, it is submitted by the counsel for the appellants that in the present case, the penalty imposed is excessively high and unreasonable harsh for the following reasons:-

    1. In the absence of any evidence to show that there was any disproportionate gain or unfair advantage to the appellants or loss caused to the investors as a result of the alleged violations, the Adjudicating Officer is not justified in imposing such huge penalty against the appellants.

    2. As the target company was incurring huge losses and has been declared as 'sick' by the Board for Industrial and Financial Reconstruction (BIFR) the delay in making the disclosure ought to have been condoned and in any event exorbitant penalty ought not to have been imposed on the appellants.

    3. In the impugned order penalty is imposed against the appellants without considering the mitigating factors set out in section 15J of the SEBI Act which is wholly unjustified. Accordingly it is submitted that the impugned penalty be set aside and in the alternative, it is submitted that the impugned...

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