Anil Monga & Ors. vs Sebi

Date of Decision : 22.03.2016

Appeal No. 329 of 2015

1.

Anil Monga Khasra No. 230/232, Westend Marg, Saidulajab, New Delhi - 110030.

2. Rajesh Monga 184, Kohat Enclave, Pitampura, Delhi - 110034.

3. Renu Monga Khasra No. 230/232, Westend Marg, Saidulajab, New Delhi - 110030.

4. B.B. Gandhi 2/75, Punjabi Bagh West, New Delhi - 110026. ...Appellants

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. Ashok Chhabra, Advocate for Appellants.

Mr. Vikram Nankani, Senior Advocate with Mr. Tomu Francis, Advocate for the Respondent.

CORAM : Justice J.P. Devadhar, Presiding Officer Jog Singh, Member

Per : J.P. Devadhar (Oral)

1. This appeal is filed to challenge the order passed by the Adjudicating

Officer of Securities and Exchange Board of India ('SEBI' for short) on

March 25, 2015 whereby varying penalty for violating the provisions

contained in the SAST Regulations 2011 have been imposed on the

appellants, under Section 15 H(ii) & Section 15 A(b) of SEBI Act. 2

2. Penalty in the impugned order is imposed against the appellants

basically on three grounds. Firstly, it is held that on forfeiture of 7,89,100

equity shares of Emmsons International Ltd., the shareholding of appellants

along with others increased by 7.66% on August 5, 2005 which triggered

public announcement obligation under regulation 11(1) read with regulation

14(1) of the SAST Regulations 1997. Since public announcement was not

made, the appellants were held liable for penalty. Secondly, it is held that on

account of conversion of warrants on February 29, 2012 the shareholding of

the promoter group in the company increased by 7.95% and the public

announcement in respect thereof under regulation 13(2)(c) read with

regulation 13(1) of SAST Regulations 2011 has been made belatedly after

85 days delay and hence the penalty is levied. Thirdly, it is held that the

appellants had made delayed disclosures in contravention of regulation

29(2) of the SAST Regulation 2011 and hence penalty is levied.

3. As regards the first ground is concerned, counsel for the appellants

submitted that the issue is covered by the decision of this Tribunal in case of

Mr. Raghu Hari Dalmia & Ors. vs. SEBI (Appeal No. 134 of 2011 decided

on November 21, 2011) and the Adjudicating Officer was not justified in

distinguishing that decision. Counsel for SEBI fairly stated that the decision

of this Tribunal in case of Mr. Raghu Hari Dalmia would be applicable to

the present case and hence it would be just and proper to remand the case for

fresh decision on merits.

4. As regards the second ground is concerned, it is submitted that once

the public announcement was made though belatedly and once interest was

paid to the shareholders for the delay, the Adjudicating Officer was not

justified in imposing penalty. As regards the third ground is concerned, it is 3

submitted that the Adjudicating Officer has not considered the submission

made on behalf of the appellants.

5. The Apex Court in the case of SEBI vs. Roofit Industries Ltd.,

reported in (2016) 194 Comp. Cas.186 (S.C.) has held that while imposing

penalty under Section 15 H & 15HA the Adjudicating Officer has no

discretion to impose lesser penalty by considering the mitigating factors. Subsequently a Division Bench of the Apex Court in case of Siddharth

Chaturvedi vs. SEBI (Civil Appeal No. 14730 of 2015 decided on March

14, 2016) has referred the aforesaid decision to a larger Bench for

reconsideration.

6. For the aforesaid reasons and for the reason that the Adjudicating

Officer has failed to consider the decision of this Tribunal in case of

Mr. Raghu Hari Dalmia (Supra) properly and has also not considered the

submission made on behalf of the appellants for the delay in making

disclosures, we deem it proper to quash and set aside the impugned order

and restore the matter for fresh decision on merits.

7. Accordingly, the order impugned in the appeal is quashed and set

aside and matter is restored to the file of Adjudicating Officer of SEBI for

passing fresh order on merits and in accordance with law. All contentions

of both parties are kept open.

8. Appeal is disposed of in the above terms with no order as to costs.

Sd/-

Justice J.P. Devadhar Presiding Officer Sd/-

Jog Singh Member 22.03.2016 Prepared and compared by:

msb