Amul Gagabhai Desai vs Sebi
- CitationAppeal No. 283 of 2019
Ratio decidendi
The rule this decision rests on
The principle on which the Tribunal rests its decision is that a penalty for violation of a regulatory provision is to be fixed by reference to the number of instances of contravention, and a claim to parity with an earlier decision holds only where the factual position is comparable; where the number of instances differs materially, the earlier penalty does not set the measure and no parity arises. Where the appellant admits the contravention and challenges only the quantum, a penalty proportionate to the number of violations is not in error of law and will be sustained, unless it is shown to be excessive when measured against a comparable penalty imposed for a comparable number of violations, in which case it may be reduced to a level consistent with that comparison.
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: 05.11.2019
Misc. Application No. 471 of 2019 And Appeal No. 283 of 2019
Krunal Gopaldas Rana Z-1072, Khedavalano, Khando, Khambat- Cambay Anand- 388 620 ...Appellant Versus Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051 ...Respondent
WITH Appeal No. 284 of 2019
Amul Gagabhai Desai 135, Ranuja Nagar, Opp. Anand School Ahmedabad- 380 015 ...Appellant Versus Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051 ...Respondent
Mr. Nishant Upadhyay with Mr. Vijay Pandey and Mr. Akhil Sarathy, Advocates i/b Ms. Jyoti Pandey, Advocate for Appellants.
Mr. Chirag Bhavsar, Advocate with Ms. Eram Quraishi, Advocate i/b MDP & Partners for the Respondent.
CORAM: Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member Justice M. T. Joshi, Judicial Member 2
Per: Justice Tarun Agarwala (Oral)
Misc. Application No. 471 of 2019
Since a certified copy of the impugned order has been
filed, Misc. Application No. 471 of 2019 has become
infructuous and is dismissed as such.
Appeal Nos. 283 and 284 of 2019
1.
Even though separate orders have been passed, the issue is
the same and arises from a common show cause notice and
therefore both the appeals are being decided together.
2. In Appeal No. 283 of 2019 a penalty of ` 18 lakhs has
been imposed for violation of Regulation 7(1) read with 7(2) of
Securities and Exchange Board of India (Substantial Acquisition
of Shares and Takeovers) Regulations, 1997 ("SAST
Regulations, 1997" for convenience) and Regulations 13(1),
13(3) read with 13(5) of Securities and Exchange Board of India
(Prohibition of Insider Trading) Regulations, 1992 ("PIT
Regulations, 1992" for convenience). In Appeal No. 284 of
2019 a penalty of ` 6 lakhs has been imposed for violation of
the same provisions.
3
3. The learned counsel for the appellants submitted that the
violation of the provisions of the aforesaid regulations is
admitted and is only pressing for reduction in the quantum of
penalty. In support of his submission, the learned counsel placed
reliance upon the decision of this Tribunal in Shweta Dhiren
Agrawal vs. SEBI in Appeal No. 92 of 2019 and other
companion appeals decided on 03.05.2019, wherein this
Tribunal reduced the penalty from ` 6 lakhs to ` 3 lakhs on the
violation of Regulation 7 of the SAST Regulations, 1997 and
Regulation 13 of the PIT Regulations, 1992. The learned
counsel contended that since the issue is the same, similar relief
may also be given to the appellants.
4. We find that the submission of the learned counsel for the
appellants to be attractive in the first blush, but on a closer
scrutiny, we find that parity cannot be given to the present
appellants on the basis of the decision given by this Tribunal in
Shweta Dhiren Agrawal (Supra). In the case of Shweta Dhiren
Agrawal (Supra), the number of instances of non-disclosure was
less and consequently, penalty of ` 3 lakhs was imposed. In
Appeal No. 284 of 2019 a penalty of ` 6 lakhs has been
imposed for violation of 20 instances where provision of
Regulation 7 of the SAST Regulations, 1997 has been violated. 4
In Appeal No. 283 of 2019 the said appellant has violated 28
times the provision of Regulations 7 of SAST Regulations.
5. Thus, we are of the opinion that imposition of ` 6 lakhs
for violating 20 times the provision of Regulation 7 in Appeal
No. 284 of 2019 does not suffer from any error of law. In so far
as Appeal No. 283 of 2019 is concerned, if we take
Adjudicating Officer's order of Appeal No. 284 of 2019 we find
that the imposition of penalty in Appeal No. 283 of 2019
amounting to ` 18 lakhs is excessive and on the principle of
parity, we are of the opinion that violating 28 times the
provision of Regulation 7 of the SAST Regulations, 1997 and
Regulation 13 of the PIT Regulations, 1992 the penalty is
reduced to ` 8 lakhs.
6. For the reasons stated aforesaid, Appeal No. 283 of 2019
is partly allowed. The penalty of ` 18 lakhs is reduced to
` 8 lakhs. Appeal No. 284 of 2019 has no merit and is
dismissed.
Sd/-
Justice Tarun Agarwala Presiding Officer Sd/-
Dr. C.K.G. Nair Member Sd/-
Justice M. T. Joshi Judicial Member 05.11.2019 Prepared & Compared By: PK
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