Alok Electricals Pvt. Ltd. And Others vs Sebi
- CitationAppeal No.77 of 2016
Ratio decidendi
The rule this decision rests on
The impugned penalty, which was imposed as the maximum amount without exercising any discretion by following the Supreme Court's decision in SEBI v. Roofit Industries, cannot be sustained once Parliament has, by a subsequent amendment, rendered that decision inoperative, because a penalty imposed without the exercise of discretion that the statute now requires cannot stand. Where the material relied upon to establish the appellants' status as persons acting in concert is disputed, the authority must determine the date from which such status arose, and must consider the consequences of that date for the quantum of any penalty before imposing one.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI Date of Decision: 20/04/2017
Appeal No.77 of 2016
1.
Alok Electricals Pvt. Ltd.
having its registered office at 4,Kiran Enclave, G.T. Road, Ghaziabad, Uttar Pradesh - 201 001.
2. Antique Texfab Pvt. Ltd.
having its registered office at 8, Vir Savarkar Block, Chhabra Complex, Shakapur, New Delhi - 110 092.
3. Balaji Texfab Pvt. Ltd.
having its registered office at 18, New Colony, Model Basti, New Delhi - 110 006.
4. Coronation Builders & Engineers Pvt. Ltd.
having its registered office at A-203, Shree Ganesh Apt., 93, Patparganj, New Delhi - 110 092.
5. Durga Fabricators & Engg. Pvt. Ltd.
having its registered office at D 77, Preet Vihar, New Delhi - 110 092.
6. Florid Infrastructure Pvt. Ltd.
having its registered office at 18, New Colony, Model Basti, New Dlehi - 110 006.
7. Mahima Developers & Builders Ltd.
having its registered office at 25-26, Gali No.16, Shahdra, New Delhi - 110 032.
8. Olive Vinimay Pvt. Ltd.
having its registered office at Room No.204 A, 2nd Floor, 13, K.B. Sarani, Kolkata - 700 080. 2
9. Pensive Agencies Pvt. Ltd.
having its registered office at D-77, Preet Vihar, New Delhi - 110 092.
10. Salasar Texfab Pvt. Ltd.
having its registered office at 4, Kiran Enclave, G.T. Road, Ghaziabad, Uttar Pradesh - 201 001.
11. Tanvi Fincap Pvt. Ltd.
having its registered office at 6-233, Doongar Mohalla, Farsh Bazar, New Delhi - 110 032.
12. Vibhut Builders & Engg. Pvt. Ltd.
having its registered office at D-77, Preet Vihar, New Delhi-110 092. ... Appellants
Versus
Securities and Exchange Board of India SEBI Bhavan, Plot No.C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051. ... Respondents
Mr. M.S. Bhardwaj, Advocate i/b MSB Legal for Appellants.
Mr. Akshay Patil a/w Mr. Mihir Mody and Mr. Saurabh Bachhawat, Advocates i/b K. Ashar & Co. for the Respondent.
CORAM : Justice J.P. Devadhar, Presiding Officer Dr. C.K.G. Nair, Member
Per : Justice J.P. Devadhar (Oral)
1. This appeal is filed to challenge the order passed by the
Adjudicating Officer ("AO" for short) of Securities and Exchange Board
of India ("SEBI" for short) on 30th December, 2015. By that order, AO
has imposed maximum penalty of Rs.1 crore on the appellants under
Section 15A(b) of SEBI Act, 1992 for violating regulation 7(1) read with 3
regulation 7(2) of SAST Regulations, 1997, to be paid by the appellants
jointly and severally.
2. On perusal of the impugned order, it is seen that the AO has
imposed maximum penalty of Rs.1 crore imposable under Section
15A(b) of SEBI Act by following the judgment of the Apex Court in the
case of SEBI vs. Roofit Industries Limited reported in (2016) 12 SCC 125. It is not in dispute that in the Finance Act, 2017, Parliament has sought
to render the decision of the Apex Court in case of SEBI vs. Roofit
Industries Ltd. (supra) nugatory by inserting an Explanation to Section
15J of SEBI Act. As a result, the penalty imposed against the appellants
without exercising any discretion cannot be sustained.
3. Although the appellants in their reply to the show-cause notice
had not disputed that when their shareholding in Era Infra Engineering
Ltd. exceeded 5% on 27/2/2009 they were the Persons Acting in Concert
("PAC" for short) with Kiran Group, appellants in their memo of
appeal have contended on the basis of documentary evidence that they
could be considered as PACs only with effect from 1st July, 2009. Since
we are inclined to set aside the impugned order and restore it for fresh
decision, we direct that the AO while passing the fresh order shall take
into consideration the plea of the appellants that they could be
considered as PACs only with effect from 1st July, 2009 and if so, what
would be the consequences on the penalty that may be imposed against
the appellants.
4
4. Accordingly, for the reasons stated hereinabove, we set aside the
impugned Order dated 30th December, 2015 and restore the matter to
the file of AO of SEBI for passing fresh order on merits and in
accordance with law.
5. Appeal is disposed of in the aforesaid terms with no order as to
costs.
Sd/-
Justice J.P. Devadhar Presiding Officer
Sd/-
Dr. C.K.G. Nair Member
20/04/2017 prepared & compared by-dg
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