Addendum to Final Order dated March 31, 2023 in the matter of Zee Entertainment Enterprises Limited
- Order No.WTM/AN/IVD/ID17/25871/2023-24
Ratio decidendi
The rule this decision rests on
Where the disgorgement of illegal gains has already been impounded under an interim order and deposited in an escrow account, the interest component of a disgorgement direction runs from the date of the last sale of positions until the date of deposit of those gains in the escrow account, and not until the date of actual payment to the Investor Protection and Education Fund. An ambiguous direction in a final order may be clarified by a later addendum that states the intent of the original direction. The words "till the date of actual payment" are read as "till the date of deposit of illegal gains in the escrow account", and the final order must be read with that clarification.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
WTM/AN/IVD/ID17/25871/2023-24 SECURITIES AND EXCHANGE BOARD OF INDIA Addendum to the Order dated March 31, 2023 bearing reference number WTM/AN/IVD/ID17/25354/2022-23 in the matter of Insider Trading by Certain Entities in the scrip of Zee Entertainment Enterprises Limited 1. Securities and Exchange Board of India (“SEBI”) has passed a Final Order dated March 31, 2023 bearing reference number WTM/AN/IVD/ID17/25354/2022-23 in the matter of Insider Trading by Certain Entities in the scrip of Zee Entertainment Enterprises Limited.
2. In the said Order, the following observation was made in paragraph 49 and pursuant to which directions were inter alia passed against Noticee Nos. 2 and 3 in paragraph 50 (ii) and (iii): “49. I also find that for the unlawful gains made by Noticee nos. 2 and 3, for their impugned trades during UPSI Periods appropriate directions of disgorgement of unlawful gains made along with interest are required to be issued. The illegal gains made by the Noticees have already been impounded by SEBI in terms of Interim Order dated August 12, 2021 and deposited in an escrow account. DIRECTIONS: 50. In view of the above, I, in exercise of the powers conferred upon me under Sections 11(1), 11(4), 11(4A), 11B(1) and 11B(2) read with Section 15G of SEBI Act, 1992 read with Section 19 of the SEBI Act, 1992 and SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995, hereby direct as under: i. …… ii. The Noticee No. 2 shall disgorge the amount of illegal gains of Rs. 7,51,99,771.80/- (Seven Crore Fifty One Lakh Ninety Nine Thousand Seven
Hundred Seventy One Rupees and Eighty Paisa Only) as mentioned in Tables 54-57 above along with simple interest @ 12% per annum from September 07, 2020 (i.e. the date on which last sale of positions took place as discussed in this Order) till the date of actual payment. The said amount shall be remitted to the Investor Protection and Education Fund (IPEF) as referred to in Section 11(5) of the SEBI Act, 1992, within 45 (forty five) days from the date of this Order and intimation may be forwarded to “The Division Chief, Investigation Division 17 (ID-17), Investigation Department, Securities and Exchange Board of India, SEBI Bhavan II, Plot No. C-7, “G” Block, Bandra Kurla Complex, Bandra (E), Mumbai-400051”; iii. The Noticee No. 3 shall disgorge the amount of illegal gains of Rs. Rs. 2,09,77,685/- (Two Crore Nine Lakh Seventy Seven Thousand Six Hundred and Eighty Five Rupees Only) as mentioned in Tables 58-60 above along with simple interest @ 12% per annum from September 23, 2020 (i.e. the date on which last sale of positions took place as discussed in this Order) till the date of actual payment. The said amount shall be remitted to the Investor Protection and Education Fund (IPEF) as referred to in Section 11(5) of the SEBI Act, 1992, within 45 (forty five) days from the date of this Order and intimation may be forwarded to “The Division Chief, Investigation Division 17 (ID-17), Investigation Department, Securities and Exchange Board of India, SEBI Bhavan II, Plot No. C-7, “G” Block, Bandra Kurla Complex, Bandra (E), Mumbai-400051;…. (Emphasis Supplied)”
3. In the context of paragraph 49 of the said Final Order, the directions at paragraph 50 (ii) and (iii) thereof were intended to record that interest on illegal gains would accrue from the date on which last sale of positions took place as discussed in the said Final Order till the date of the payment of illegal gains in the escrow account. To make this intent unambiguous and by way of clarification, the words ‘till the date of actual payment’ in paragraph 50 (ii) and (iii) of said Order shall be read as ‘till the date of deposit of illegal gains in the escrow account’.
4. The Order dated March 31, 2023 bearing reference number WTM/AN/IVD/ID17/25354/2022-23 shall always be read with this clarification.
Sd/-
DATE: APRIL 21, 2023 ANANTH NARAYAN G. PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA
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