Arabi Syed Mohammed Mohiuddin vs Sebi
- CitationAppeal No. 193 of 2014
Ratio decidendi
The rule this decision rests on
Where a penalty is imposed on several persons for the same category of non-disclosure, the quantum must be proportionate and consistent: a penalty fixed for failure to disclose a larger sale by a co-noticee, which has attained finality, cannot be applied without reduction to persons whose non-disclosed sales were comparatively small, and the penalty under Section 15A(b) of the SEBI Act for such failures is reduced accordingly. Where the violation of the model code of conduct consists of entering into opposite transactions within six months of a prior transaction, a penalty under Section 15HB of the SEBI Act is not comparable to the Section 15A(b) non-disclosure penalty and is not reduced merely because a co-noticee's penalty for non-disclosure has attained finality.
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: 10.07.2015
Appeal No. 193 of 2014
Arabi Syed Mohammed Mohiuddin Flat No. 1702, 17th Floor, Samarpan, Wing A, Kanakia Spaces, W E Highway, Borivali East, Mumbai -400 066 ...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. 195 of 2014
Dr. Prakash Balakrishna Kamath A 218 IRIS Court, Mahindra World City, Chengalpattu, Tamil Nadu- 603 002 ...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. 196 of 2014
Dipak Raghunath Shinde 2C 604, NG Suncity, Thakur Village, Kandivali (East), Mumbai ...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 2
WITH Appeal No. 197 of 2014
K. Samuel Premkumar C/202, Aster Valley of Flowers, Thakur Village, Kandivali (East), Mumbai ...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. 198 of 2014
Samir Ramesh Rawte Mahindra Research Valley Mahindra & Mahindra Ltd. Plot No. 41/1, Anjur Post Office, Mahindra World City, Chengelpet 603204, Kanchipuram District, Tamil Nadu ...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. 307 of 2014
Shri Pavan Kumar Sodani 1001, Swar, Veena Saaz, Near Videocon Tower, Thakur Complex, Kandivali (East), Mumbai - 400 101 ...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 3
WITH Appeal No. 308 of 2014 Dilip Yewale Flat No. 5, 3rd Floor, Geeta Apartments, P&T Colony, Behind Yahoo Hotel, Nasik 422 002 ...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
AND Appeal No. 309 of 2014
Sanjay Joglekar 25, Shefalee B, Mahim Makarand Society, Veer Savarkar Marg, Mahim (West), Mumbai -400 016 ...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. Gaurav Joshi, Senior Advocate with Mr. Raj Panchmatia, Mr. Peshwan Jehangir, Mr. Anindya Basarkod, Ms. Akriti Sarkar, Advocates i/b M/s. Khaitan & Co. for the Appellant in Appeal Nos. 193, 195 to 198 and 307 to 309 of 2014.
Mr. Kevic Setalwad, Senior Advocate with Mr. Rushin Kapadia, Advocate i/b K. Ashar & Co. for the Respondent in Appeal Nos. 193, 195 to 198 and 307 to 309 of 2014.
CORAM: Justice J.P. Devadhar, Presiding Officer Jog Singh, Member
Per: Justice J.P. Devadhar (Oral)
1.
Appellants in all these appeals, who are working as General
Manager/ Executive Vice President/ Credit & Commercial Head, with 4
Mahindra and Mahindra Limited ("the company" for short) are
aggrieved by the respective adjudication orders passed by the
Adjudicating Officer ("AO" for short) of Securities and Exchange Board
of India ("SEBI" for short) whereby penalty of ` 2 lac is imposed on
each of the appellant under Section 15A(b) of SEBI Act for violating
regulation 13(4) read with regulation 13(5) of the Securities and
Exchange Board of India (Prohibition of Insider Trading) Regulations,
1992 ("PIT Regulations" for short). However, in case of Shri Pavan
Kumar Sodani (Appellant in Appeal No. 307 of 2014) additional penalty
of ` 2 lac is imposed under Section 15HB of the Securities and
Exchange Board of India Act, 1992 ("SEBI Act" for short) for entering
into opposite transactions within six months following the prior
transaction in violation of Clause 4.2 of the model code of conduct
specified in Part A Schedule 1 read with regulation 12(1) of the PIT
Regulations. Since the dispute in all these matters is more or less
common, all these appeals are heard together and disposed of by this
common order.
2. Counsel for the appellants fairly stated that the appellants in all
these appeals are not pressing the respective appeals on merits but
requested that the quantum of penalty imposed on each appellant be
reduced in view the fact that the violation relates to the failure to
disclose trading in shares which is comparatively small. Counsel for
SEBI, on the other hand submitted that the penalty imposed is
reasonable and does not warrant interference by this Tribunal. 5
3. On perusal of the impugned orders passed in each case, it is seen
that each appellant during the relevant period had sold shares of the
company upto or less than 1000 shares except appellant in Appeal No.
307 of 2014 Shri Pavan Kumar Sodani had sold 500 shares on January
07, 2013, sold 500 shares on January 09, 2013, and bought 1000 shares
on January 17, 2013. The AO has imposed penalty of ` 2 lac under
Section 15A(b) on each of the appellant for failing to make disclosures
relating to sale transactions under regulation 13(4) read with regulation
13(5) of PIT Regulations and has imposed additional penalty of ` 2 lac
on Shri Pavan Kumar Sodani under Section 15HB of the SEBI Act for
entering into opposite transactions within six months following prior
transaction in violation of Clause 4.2 of the Model Code of Conduct
specified in Part A of Schedule 1 read with regulation 12(1) of the PIT
Regulations.
4. No doubt that the AO after taking into account all mitigating
factors has imposed penalty of ` 2 lac on each appellant under Section
15A(b) for violating regulation 13(4) read with regulation 13(5) of PIT
Regulations and imposed additional penalty of ` 2 lac on appellant in
Appeal No. 307 of 2014 under Clause 4.2 of the Model Code of Conduct
read with regulation 12(1) of the PIT Regulations. However, it is seen
that during the same period Shri Sudhir Prabhakar Pathak who is a
Senior Vice President (Manufacturing) of Mahindra and Mahindra
Limited (Appellant in Appeal No. 194 of 2014) had violated regulation
13(4) read with regulation 13(5) of PIT Regulations by failing to 6
disclose sale of 12000 shares of the company during the relevant period
and for the said violation the AO has imposed penalty of ` 2 lac. Today,
Shri Sudhir Prabhakar Pathak has withdrawn Appeal No. 194 of 2014
filed by him to challenge the penalty of ` 2 lac imposed on him. Thus,
the penalty of ` 2 lac imposed against Shri Sudhir Prabhakar Pathak has
attained finality.
5. Since the AO has imposed penalty of ` 2 lac on Shri Sudhir
Prabhakar Pathak under Section 15A(b) for failing to disclose sale of
12000 shares of the company during the relevant period, imposing
penalty of ` 2 lac on the appellants herein under Section 15A(b) for
failing to disclose sale of 1000 or less than 1000 shares of the company
during the same period would not be appropriate. Therefore, in our
opinion, it would be just and proper to reduce the penalty imposed on
each appellant under Section 15A(b) of SEBI Act from ` 2 lac to ` 1 lac.
However, there is no reason to reduce the reasonable penalty of ` 2 lac
imposed on Shri Pavan Kumar Sodani (Appellant in Appeal No. 307 of
2014) under Section 15HB of the SEBI Act, for violating Clause 4.2 of
the Model Code of Conduct specified in Part A, Schedule 1 read with
regulation 12(1) of the PIT Regulations, as it is not comparable with the
case of Shri Sudhir Prabhakar Pathak.
6. Accordingly, orders impugned in each appeal are modified by
reducing the penalty imposed under Section 15A(b) of SEBI Act from
` 2 lac to ` 1 lac and the additional penalty of ` 2 lac imposed under 7
Section 15 HB of SEBI Act on appellant in Appeal No. 307 of 2014 is
sustained.
7. All the appeals are disposed of accordingly with no order as to
costs.
Sd/-
Justice J. P. Devadhar Presiding Officer
Sd/-
Jog Singh Member 10.07.2015 Prepared & Compared By: PK
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