Jesingbhai Badarmal Parikh vs Sebi

BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI Date of Decision: 11/01/2018

Misc. Application No.303 of 2017 And Appeal No.331 of 2017

Jesingbhai Badarmal Parikh 21, Dhanushya Society, New Sama Road, Opp. Chanakyapuri, Vadodara, Gujarat - 390 008. ... 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

None for the Appellant.

Mr. Vishal Kanade a/w Mr. Rohan B. Agrawal, Advocates i/b MDP & Partners for the Respondent.

CORAM : Justice J.P. Devadhar, Presiding Officer Jog Singh, Member Dr. C.K.G. Nair, Member

Per : Justice J.P. Devadhar (Oral)

Misc. Application No.303 of 2017:

1.

There is delay of 30 days in filing this appeal. For the reasons stated in

the Misc. Application, the delay is condoned. The Misc. Application is

disposed of accordingly.

2 Appeal No.331 of 2017:

1. This appeal is filed by the appellant-in-person to challenge the order

passed by the Adjudicating Officer ("AO" for short) of Securities and

Exchange Board of India ("SEBI" for short) on 31st August, 2017. By the said

order, penalty of Rs. 6 lakh is imposed on the appellant under Section 15A(b)

of the SEBI Act for violating regulation 29(1) read with regulation 29(3) of

SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011

("Takeover Regulations, 2011") and regulation 13(1) and regulation 13(4A)

read with regulation 13(5) of SEBI (Prohibition of Insider Trading)

Regulations, 1992 ("PIT Regulations" for short).

2. The appellant has sent a letter dated 8/1/2018 wherein he has stated

that on account of ill health he is unable to attend the hearing and that the

appeal be disposed of on the basis of the averments made in the

Memorandum of Appeal. Accordingly, the appeal is taken up for hearing in

the absence of anyone appearing on behalf of the appellant.

3. In the impugned order it is held that for the quarter ending on March

31, 2012 the shareholding of the appellant in Minal Industries Limited ("the

company" for convenience) was nil and in the quarter ending on June, 2012,

the shareholding of the appellant in the company was 3,89,92,000 shares that

is, 20.32% of the total shareholding of the company. As the appellant failed to

make disclosures under the Takeover Regulations, 2011 and PIT Regulations,

show-cause notice was issued to the appellant and after hearing the

authorized representative of the appellant, the AO has passed the impugned

order on 31st August, 2017 imposing penalty of Rs.6 lakh under Section 3 15A(b) of SEBI Act for violating the Takeover Regulations, 2011 and PIT

Regulations.

4. In the Memorandum of Appeal, the appellant has advanced two

arguments. Firstly, it is contended that the appellant had not purchased any

shares of the company and it is only because appellant was shareholder of C.

Mahendra Jewels Pvt. Ltd. which merged with the company, appellant

received shares of the company on account of merger. In such a case, it is

submitted that neither the appellant can be said to have acquired shares of the

company nor can it be said that the disclosure obligations under the Takeover

Regulations, 2011 and PIT Regulations get triggered. Secondly, it is contended

that the appellant who is 84 years old is suffering from ill-health and as such

could not monitor his shareholding on day to day basis and hence penalty of

Rs.6 lakh imposed on the appellant being exorbitant and excessive be

quashed and set aside.

5. We see no merit in the above contentions.

6. First argument of the appellant that the shares of the company

acquired on account of merger do not trigger disclosure obligations

prescribed under the Takeover Regulations, 2011 and PIT Regulations, is

without any merit, because, this Tribunal in the case of Akriti Global Traders

Ltd. vs. SEBI (Appeal No.78 of 2014 decided on 30/9/2014) has held that the

disclosure obligations get triggered even when the shares are acquired due to

allotment of shares on amalgamation of the companies. Thus, the first

argument advanced by the appellant is without any merit.

7. Second argument of the appellant that he is 84 years old and on

account of ill-health he could not monitor his shareholding on day to day 4

basis and, therefore, lenient view ought to have been taken in the matter. In

para 6.1 of the memo of appeal, the appellant has stated that he is the

promoter of Minal Industries Ltd. Being a promoter of the company, the

appellant ought to have known that if his shareholding in the company was

nil in the quarter ending on March 31, 2012 and in the quarter ending in June,

2012, he received 3,89,92,000 shares of the company which constituted 20.32%

of the total shareholding, it would attract disclosure obligations under the

Takeover Regulations, 2011 and PIT Regulations. Thus, the appellant who is

promoter of the company cannot feign ignorance about his obligations under

the Takeover Regulations, 2011 and the PIT Regulations, especially when

shares are acquired to the extent of 20.32% of the entire shareholding. In any

event, as against the maximum penalty of Rs.1 crore imposable under Section

15A(b) of the SEBI Act for such violations, the AO after considering all

mitigating factors has imposed penalty of Rs.6 lakh which cannot be said to

be exorbitant or excessive.

8. In these circumstances, we see no reason to interfere with the

impugned order.

9. Appeal is accordingly dismissed with no order as to costs.

Sd/-

Justice J.P. Devadhar Presiding Officer

Sd/-

Jog Singh Member

Sd/-

Dr. C.K.G. Nair Member

11/01/2018 prepared & compared by-dg