Appeal No. 38 of 2014. Case: CG-Vak Software and Exports Limited Vs Securities and Exchange Board of India. Securities and Exchange Board of India

Case NumberAppeal No. 38 of 2014
CounselFor Appellant: Dr. Mr. S.K. Jain, Practicing Company Secretary and For Respondents: Mr. Kumar Desai, Advocate and Ms. Harshada Nagare, Advocate
JudgesJ.P. Devadhar, J. (Presiding Officer), Jog Singh, Member and A.S. Lamba, Member
IssueSecurities And Exchange Board of India Act, 1992 - Section 15A(b)
Judgement DateApril 23, 2014
CourtSecurities and Exchange Board of India


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

  1. Whether the Adjudicating Officer ("A.O." for short) of Securities and Exchange Board of India ("S.E.B.I." for short), by impugned order dated December 17, 2013 was justified in imposing penalty of ` 3 lac on appellant under Section 15A(b) of Securities and Exchange Board of India Act, 1992 ("S.E.B.I. Act" for short) is the question raised in this appeal. Penalty is imposed on the appellant for allegedly violating regulation 13(6) of the S.E.B.I. (Prohibition of Insider Trading) Regulations, 1992 ("P.I.T. Regulations" for short).

  2. Under regulation 13(6) of P.I.T. Regulations, every listed company is required to disclose to all Stock Exchanges on which the company is listed, within two working days of receiving information specified under sub-regulations (1), (2), (2A), (3), (4) and (4A) of regulation 13 of P.I.T. Regulations.

  3. In the preset case, it is not in dispute that there is 14 days and 31 days delay in making disclosures on receiving information relating to acquisition of shares of the appellant company by its Managing Director Shri G. Suresh. Only dispute is, whether A.O. is justified in imposing penalty of ` 3 lac on appellant for above delay in making disclosures.

  4. Basic argument of appellant is that the delay in making disclosure was unintentional and was on account of its Managing Director, travelling abroad at the relevant time. That argument has been considered by A.O. and only thereupon penalty of ` 3 lac has been imposed as against penalty of ` 45 lac imposable under Section 15A(b) of S.E.B.I. Act, at the rate of ` 1 lac per day for the delay of 45 days (14 days + 31 days). In such a case discretion exercised by A.O. cannot be said to be unreasonable or harsh.

  5. Reliance was placed by appellant on the order of Whole Time Member ("W.T.M." for short) of S.E.B.I. dated February 20, 2014 in the appellants own case wherein it is held that for violating regulation 10/11 of S.E.B.I. (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 ("S.A.S.T. Regulations, 1997" for short) the W.T.M. of S.E.B.I. does not consider it to be a fit case to insist on public announcements under regulation 14(1) of S.A.S.T. Regulations, 1997. That order has no bearing on the facts of present case, because firstly, in that case the dispute related to compliance of regulation 10/11 of S.A.S.T. Regulations, 1997 which required making public announcement for acquisition of shares of a...

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