Cella Space Limited vs Sebi

Date of Decision: 30.04.2019

Appeal No. 88 of 2019

Cella Space Limited (formerly known as Sree Sakthi Paper Mills Limited) 57/2993/94, Sree Kailas, Paliam Road, Ernakulum, Cochin- 682 016 ...Appellant

Versus

1.

BSE Limited Floor 25, P. J. Towers, Dalal Street, Mumbai- 400 001

2. Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051 ...Respondents

Mr. Ankit Lohia, Advocate with Mr. Ajai Achuthan and Mr. Mehul Jain, Advocates i/b Bharucha & Partners for the Appellant.

Mr. Sagar Divekar, Advocate with Mr. Abhimanyu Mhapankar, Advocate for Respondent No. 1

Mr. Mihir Mody, Advocate with Mr. Sushant Yadav, Advocate i/b K. Ashar & Co. for Respondent No. 2

CORAM: Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member Justice M. T. Joshi, Judicial Member

Per: Justice Tarun Agarwala (Oral) 2

1. A reply has been filed by Respondent No. 1 which is taken

on record.

2. We have heard the learned counsel for the parties. The

appellant had filed an application for listing of 9,05,000 equity

shares on the exchange platform of the Respondent No. 1 which

was received by the Respondent No. 1 on August 20, 2018.

Regulation 108(2) of Securities and Exchange Board of India

(Issue of Capital and Disclosure Requirements) Regulations,

2009 ("ICDR Regulations" for convenience) provides that the

application for listing should be filed within 20 days from the

date of allotment. Since there was a delay of more than 49 days,

the Respondent No. 1 passed the impugned order dated August

21, 2018 imposing a fine of ` 9,80,000/- (Rupees Nine Lakh

Eighty Thousand Only) and an additional fine of `17,296.217/-

(Rupees Seventeen Thousand Two Hundred and Ninety Six and

Paise Twenty One Only). The appellant being aggrieved by the

aforesaid imposition of fine has filed the present appeal

contending that they were prevented for reasons which were

beyond their control namely; there was flood situation in Kerala

on account of which they could not comply with the

Regulations.

3

3. Respondent No. 1 in their reply have contended that since

the Regulation 108 of ICDR Regulations was violated by the

appellant the penalty became leviable under Regulation 111A

and 111B of the ICDR Regulations in terms of the Circular

issued by Securities and Exchange Board of India ("SEBI" for

convenience) from time to time. It was contended that

Respondent No. 1 has no flexibility to relax the violation and

imposition of fine.

4. Respondent No. 2 SEBI has filed a reply contending that

SEBI has the power to relax the strict enforcement of any

requirement of the ICDR Regulations. For facility Regulation

113 of ICDR Regulations is extracted hereunder:

"[113] [(1)] The Board may, in the interest of Investors or for the development of the securities market, relax the strict enforcement of any requirement of these regulations, if the Board is satisfied that:

(a) the requirement is procedural in nature;

or

(b) any disclosure requirement is not relevant for a particular class of industry or issuer; or

(c) the non-compliance was caused due to factors beyond the control of the issuer."

4 A perusal of Clause (c) of Regulation 113 of the ICDR

Regulations indicates that the Board has power to relax the strict

enforcement of the Regulation if the non-compliance was

caused due to factors beyond the control of the issuer.

5. In the light of the aforesaid Regulation and without going

into the veracity of the statement made by the appellant we

dispose off the appeal at the present stage directing the appellant

to move an appropriate application before SEBI under

Regulation 113 of the ICDR Regulations indicating the reasons

for non-compliance of Regulation 108 of the ICDR Regulations.

If such an application has filed, the Board will decide an

application expeditiously after giving an opportunity of hearing

to the appellant. Till the disposal of the application of the

appellant the impugned order passed by the Respondent No. 1

shall remain in abeyance.

6. Appeal is accordingly disposed off.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C.K.G. Nair Member Sd/-

Justice M. T. Joshi Judicial Member 30.04.2019 Prepared & Compared By: PK