Badri Vishal Tandon vs Sebi

Date of Decision: 20/06/2018

Misc. Application No.133 of 2018 And Appeal No.180 of 2018

Badri Vishal Tandon 33, Dayanand Marg, Allahabad - 211 002. U.P. ... Appellant

Versus

Securities and Exchange Board of India SEBI Bhavan, Plot No.C4-A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ... Respondent

Mr. Tanmaya Agarwal, Advocate i/b Mr. Rahul Sinha, Advocate for the Appellant.

Mr. Vishal Kanade a/w Mr. Nishant Upadhyay, Advocate 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)

Misc. Application No.133 of 2018 in Appeal No.180 of 2018:

1.

This Misc. Application is filed seeking condonation of delay in

filing the Appeal. For the reasons stated in the Misc. Application, delay

is condoned. Misc. Application is disposed of accordingly. 2

Appeal No.180 of 2018:

2. 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 29th December, 2017. By that order,

penalty of Rs.1.5 lac is imposed on the appellant under Section 15A(b)

of SEBI Act, 1992 for failing to make timely disclosures under

Regulation 7(1A) read with Regulation 7(2) of SEBI (Substantial

Acquisition of Shares and Takeovers) Regulations, 1997 ("1997

Regulations" for short).

3. It is not in dispute that pursuant to the approval given by the

Board of Directors of Shree Bhawani Paper Mills Ltd. ("the company"

for short) on 25th June, 2011, appellant as Karta of Ram Mohandas

Tandon (HUF) was allotted 22,50,000 shares by way of preferential

allotment which constituted 6.46% of the total share capital of the

company. Admittedly by a letter dated 25th June, 2011 the company

intimated the appellant about the allotment of said shares. Appellant

claims to have received that letter on 27th June, 2011. Thereafter,

22,50,000 shares were transferred to the demat account of the appellant

on 12th August, 2011.

4. It is not in dispute that as per Regulation 7(1A) read with

Regulation 7(2) of the 1997 Regulations, appellant was obliged to make

disclosures within two days of the receipt of intimation of allotment of

shares or acquisition of shares, as the case may be. 3

5. Since no disclosures were made within the stipulated time,

proceedings were initiated and by an order dated 31st July, 2014 penalty

of Rs.2 lac was imposed on the appellant. Appeal No.376 of 2014 was

filed by the appellant to challenge the decision of SEBI dated 31st July,

2014 and this Tribunal disposed of that appeal on 1st September, 2016

whereby the order of SEBI dated 31st July, 2014 was set aside and the

matter was restored to the file of AO for passing fresh order on merits

and in accordance with law. Accordingly, the appellant was heard and

by the impugned order penalty of Rs.1.5 lac is imposed on the

appellant. Challenging the aforesaid order, present appeal is filed.

6. Counsel for the appellant submitted that the impugned order

cannot be sustained for two reasons. Firstly, he submits that under

Regulation 7(1A) read with Regulation 7(2) of 1997 Regulations

disclosures were required to be made within two days of receipt of

intimation of allotment of shares or within two days of the acquisition

of shares or voting rights, as the case may be. In the present case,

shares were acquired by the appellant on 12th August, 2011 whereas the

disclosures were made on 30th June, 2011 and therefore SEBI is not

justified in holding that there was delay in making the disclosures.

Secondly, he submits that the letter dated 25th June, 2011 issued by the

company intimating the allotment of shares was received by the

appellant on 27th June, 2011 and the disclosures were made on 30th June,

2011. Thus, at the most it could be said that there was delay of one day 4

in making the disclosures. In such a case, it is submitted that the AO is

not justified in imposing penalty of Rs.1.5 lac on the appellant.

7. We see no merit in the aforesaid contentions.

8. Regulation 7(2) of 1997 Regulations mandates disclosure within

two days of the receipt of intimation of allotment of shares and where

there is no such intimation, disclosures were required to be made

within two days of acquisition of shares. In the present case,

admittedly, the appellant had received the letter dated 25th June, 2011

about the allotment of 22,50,000 shares on 27th June, 2011. Since

disclosures were not made within two days of receiving the intimation

of allotment of shares, AO was justified in holding that the appellant

had violated Regulation 7(1A) read with Regulation 7(2) of the 1997

Regulations.

9. Although the appellant claims to have made disclosures to the

company on 30th June, 2011 and the company forwarded the same to

the Bombay Stock Exchange (BSE) on 30th June, 2011, BSE has

confirmed that the letter of the company dated 30th June, 2011 was

received by them only on 11th July, 2011. In any event, there is nothing

on record to show that the appellant had made disclosures to the stock

exchange as contemplated under Regulation 7(1A) of 1997 Regulations.

Thus, it is evident that the appellant has failed to make disclosures to

the stock exchange as stipulated under Regulation 7(1A) of the 1997

Regulations.

5

10. Penalty imposable for such violations under Section 15A(b) of

SEBI Act is up to Rs.1 crore. In the present case, the AO after

considering all mitigating factors has imposed penalty of Rs.1.5 lac

under Section 15A(b) of the SEBI Act for violating Regulation 7(1A)

read with Regulation 7(2) of the 1997 Regulations which cannot be said

to be harsh or excessive.

11. In the result, we see no merit in the appeal and the same is

hereby dismissed with no order as to costs.

Sd/-

Justice J.P. Devadhar Presiding Officer

Sd/-

Dr. C.K.G. Nair Member 20/06/2018 Prepared & compared by-dg