Advance Lifestyles Ltd. vs Sebi

Date of Decision : 24.12.2019

Misc. Application No. 567 of 2019 And Appeal No. 531 of 2019

Advance Lifestyles Ltd. 2nd Floor, West Wing, Electric Mansion Appasaheb Marathe Road, Worli, Mumbai - 400025. ..... Appellant

Versus

BSE Ltd. 25th Floor, P J Towers, Dalal Street, Fort, Mumbai - 400 001. ...... Respondent

Mr. Rakesh Puri, Advocate i/b Lexvox Chambers for the Appellant. Mr. Sagar Divekar, Advocate with Mr. Abhimanyu Mhapankar, Advocate for the Respondent.

CORAM : Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member

Per : Justice Tarun Agarwala, Presiding Officer (Oral)

Misc. Application No. 567 of 2019 :

1.

For the reasons stated in the application, the delay in filing the

appeal is condoned.

2

Appeal No. 531 of 2019 :

1. The present appeal has been filed against the order of

Bombay Stock Exchange Ltd. (hereinafter referred to as, 'BSE')

dated August 19, 2019 and October 7, 2019 whereby a total penalty

of Rs. 20,40,000/- has been imposed for non compliance of various

provisions of Securities and Exchange Board of India (Listing

Obligations and Disclosure Requirements) Regulations, 2015

(hereinafter referred to as, 'Listing Regulations').

2. The facts leading to the filing of the present appeal is, that the

appellant is a public listed company and have more than 6800

shareholders. Under the Listing Regulations, the appellant was

required to comply with various provisions and upon failure penalties

could be imposed for non-compliance. In this regard, SEBI issued a

circular dated May 3, 2018 known as "Standard Operating

Procedure" which streamlined the process and adopted an uniform

approach in the matter of levy of fines for non-compliance of certain

provisions of the Listing Regulations. The said circular also

provided a discretion to the stock exchange to deviate from the

circular dated May 3, 2018 under exceptional circumstances only

after recording reasons in writing. Thus, flexibility and discretion 3

was provided to the stock exchange for levying penalties for non-

compliance of the Listing Regulations.

3. The exceptional circumstances indicated a list of events which

could be considered by the stock exchange for waiving or reducing

the quantum of penalty. The exceptional events were natural

calamity, seizure of books / computers by regulatory / statutory

authorities, the compliances not approved by the Board, directions

issued by the Court / regulator which prevented from making the

requisite disclosure and accidental damage.

4. The appellants made the following violations of the Listing

Regulations :-

Regulation Details Fine 31 Shareholding Pattern 1000 33 Financial results 35000 27(2) Corporate Governance Report 1000 27(2) Corporate Governance Report 22000 34 Annual Report 10000 13(3) Adequate steps for investor complaints 29000 44 Voting rights 10000 Composition of BOD including 17(1) 460000 appointment of woman Director Composition of BOD including 17(1) 460000 appointment of woman Director 18(1) Constitution of Audit Committee 184000 18(1) Constitution of Audit Committee 184000 Constitution of nomination and 19(1)/19(2) 184000 remuneration Committee

Constitution of Stakeholder relationship 20(2) 184000 Committee 20(2) Constitution of Stakeholder relationship 184000 4

Committee Appointment of qualified CS as 6(1) 92000 Compliance Officer Total Basic Fine 20,40,000

5. The first seven violations as indicated aforesaid were

complied by the appellant but the remaining violations have not been

complied till date and the violation is continuing till date. In this

regard, the appellant made a representation to the authorities

requesting for waiver / reduction of the penalty contending that for

not appointing the Company Secretary and two independent directors

on the Board / audit committee, the penalty may be waived under the

exceptional circumstances as carved out in the circular dated May 3,

2018. The representation was rejected and the appellant was directed

to deposit a penalty of Rs. 20,40,000/-.

6. Having heard the learned counsel for the parties, we find that

admittedly, the appellant has violated various provisions of the

Listing Regulations. The limited prayer made before us was that due

to unforeseen events, the stock exchange should have taken the

events as a mitigating factor to waive or reduce the quantum of

penalty. In this regard, we find that the exceptions carved out in the

circular dated May 3, 2018 relates to certain events which in the

instant case was not existing. Further, we find that there no

justification or any reason has been given as to why a Company 5

Secretary and the two independent directors could not be appointed.

In the absence of any cogent reasons, we do not find any justification

to reduce the quantum of penalty.

7. For the reasons stated aforesaid, we do not find any merit in

the appeal. Dismissed.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C. K. G. Nair Member 24.12.2019 Prepared & Compared by PTM