sebi:EAD/KS/VB/AO/04/2017-18

SEBI · SEBI · 2017-02-07 · K Saravanan, General Manager & Adjudicating Officer

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Facts / Headnote

Penalty imposed under Section 15A(b) of SEBI Act

Provisions invoked

• s. 24
• s. 15A
• s. 15
• s. 15J
• s. 15F

Regulations

• Reg. 13
• Reg. 29
• Reg. 13(4)
• Reg. 13(5)
• Reg. 29(2)
• Reg. 29(3)

Parties

• Shri Pravin Shah

Holding

The noticee violated Regulation 29(2) read with Regulation 29(3) of SAST, 2011 and Regulation 13(4A) read with Regulation 13(5) of PIT, 1992 by making disclosures with 17 days delay and is liable to monetary penalty of Rs. 2,00,000 under Section 15A(b) of the SEBI Act.

Full text

Page 2 of 16 APPOINTMENT OF ADJUDICATING OFFICER 2. Shri Suresh Gupta was appointed as Adjudicating Officer (AO), vide Order dated February 07, 2017 under Section 15-I of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as 'SEBI Act') read with Rule 3 of SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as ‘Adjudication Rules’) to inquire into and adjudge under the provisions of Section 15A(b) of the SEBI Act for the alleged failure on the part of the noticee to comply with the provisions of Regulation 29(2) of the SAST, 2011 and Regulation 13(4A) of the PIT, 1992. Subsequently, I have been appointed as the Adjudicating Officer vide Order dated August 07, 2017.

Page 3 of 16 shares, the shareholding of the noticee was 24,09,782 shares (i.e.3.98% of the total paid up capital of CMEL). (c) It was alleged in the SCN that this sale of shares exceeded the benchmark limit for disclosures to be made by the noticee to the Stock exchange and to the company in the prescribed format (Form D) as stipulated in terms of the provisions of Regulation 13(4A) read with 13 (5) of PIT, 1992. As per Regulation 13(4A) read with Regulation 13 (5) of the PIT, 1992, any person who is promoter or part of promoter group of a listed company has to disclose in Form-D to the company and to the stock exchange the change in shareholding if the change from the last disclosure exceeds Rs. 5 lakh in value or 25,000 shares or 1% of total shareholding or voting rights, whichever is lower within two working days of such sale. (d) Further, in terms of the provisions of Regulations 29(2) read with 29(3) of SAST, 2011, The noticee was under an obligation to disclose both to the Company and to the Stock Exchange where scrip is listed in the prescribed format within two working days the disposal of shares exceeding 2% of the total shareholding or voting rights in the company. As already brought out above, the noticee had sold 23,25,000 shares of representing 3.83% of the total shareholding in the company held by the noticee as on April 08, 2015 and therefore, the noticee was under an obligation to disclose such disposal of shares of CMEL both to the Stock Exchange and also to

Page 4 of 16 of the SAST, 2011 Regulation 13(4) r/w 13(5) of PIT, 1992 10.04.2015 27.04.2015 17 4. The Noticee vide letter dated August 31,2017 submitted his reply to the SCN and inter alia made the following submissions: (a) Due to resignation of Company Secretary coupled with my medical condition there may have caused an unintentional delay of 17 days in filing the disclosures under SEBI Takeover and PIT Regulation. (b) There was no mensrea for delay in filing the disclosure before investors / regulators. As soon as I was being made aware about the disclosure to be filed I immediately filed the same with the stock exchanges. (c) I would like to put light on the Hon'ble Supreme Court's decision in the matter of Bharjatiya Steel Industries Vs. Commissioner, Sales Tax, Uttar Pradesh, has distinguished its judgment in Chairman, SEBI Vs. Shriram Mutual Fund [(2006) 5 SCC 36] it is inter alia clarified "it is therefore, difficult to accede to the contention of Mr. Banerjee that under no circumstances absence of mensrea would not be a plea for levy of penalty. An assessing authority has been conferred with a discretionary jurisdiction to levy penalty. By necessary implication, the authority may not levy penalty. If it has the discretion not to levy penalty, existence of mensrea becomes a relevant factor." (d) I state that penalty should not be levied merely because there is default. I would like to cite SAT decision in Chandrakant Gandhi Stock Broker P. Ltd. Vs. Securities and Exc

Source: SecMarx — sebi:EAD/KS/VB/AO/04/2017-18. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.