Kirtibhai Chhaganbhai Patel vs Sebi

BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI Date of Decision: 20.02.2015

Appeal No. 356 of 2014

Kirtibhai Chhaganbhai Patel 10- Ghanshyam Park Society, Jodhpurgam Road, Ahmedabad- 380 015 Gujarat ...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. 357 of 2014

Aditya Yogeshbhai Patel 15, Dev Kuter-II, Bopal Amboli Road, Near Amboli Bus Stand, Ahmedabad- 380 058, Gujarat ...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. Dakshesh Vyas, Advocate with Mr. Durgesh Kulkarni, Advocate i/b Lex Firmus for the Appellant in Appeal Nos. 356 of 2014 & 357 of 2014.

Mr. Kumar Desai, Advocate with Mr. Manish Acharya, Advocate i/b Vigil Juris for the Respondent in Appeal Nos. 356 of 2014 & 357 of 2014. 2

CORAM: Justice J.P. Devadhar, Presiding Officer A.S. Lamba, Member

Per: Justice J.P. Devadhar (Oral)

1.

Appellants in these two appeals are aggrieved by the common order

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

Exchange Board of India ("SEBI" for short) on July 22, 2014, whereby

the AO has imposed penalty of ` 5 lac on each of the appellants under

Section 15A(b) of the Securities and Exchange Board of India Act, 1992

("SEBI Act, 1992" for short). Since the appellants have challenged

common order dated July 22, 2014, both these appeals are heard

together and disposed of by this common decision.

2. Facts relevant to these two appeals are that on April 16, 2012 the

appellants were appointed as Additional Directors of Kanel Oil and

Exports Industries Ltd. ("KOEIL" for short). On that day appellant in

Appeal No. 356 of 2014 held 3,50,000 shares and the appellant in

Appeal No. 357 of 2014 held 1,75,010 shares of KOEIL. Under

regulation 13(2) of SEBI (Prohibition of Insider Trading) Regulations,

1992 ("PIT Regulations, 1992" for short) it was obligatory on the part of

the appellants to make disclosures to the company in respect of the

aforesaid shareholding held by each of them. Although, it is claimed by

the appellants they had made declaration within the stipulated time,

counsel for the appellant fairly stated before us that there is no material

to substantial the said claim and as per the records, the disclosures were

made on October 25, 2014.

3

3. Counsel for the appellants submitted that in view of the findings

recorded in the impugned order to the effect that it is difficult to quantify

any gain or unfair advantage accrued to the appellants and further

holding that the defaults are not repetitive in nature, the AO of SEBI is

not justified in imposing the penalty of ` 5 lac against each appellant.

4. We see no merit in the above contentions.

5. Admittedly, the delay in the present appeal in making disclosures

under regulation 13(2) of PIT Regulations, 1992 is more than 6 months.

For each days delay, penalty under Section 15A(b) of the SEBI Act, 1992

is imposable at the rate of ` 1 lac per day subject to a maximum of

` 1 crore. In the present case, although the penalty imposable is ` 1 crore

against each appellant the AO after taking into consideration all mitigating

factors has imposed penalty of ` 5 lac on each appellant which cannot be

said to be unreasonable to excessive.

6. For the aforesaid reasons, we see no merit in the appeal and same is

hereby dismissed with no order as to costs.

Sd/-

Justice J.P. Devadhar Presiding Officer

Sd/-

A S Lamba Member 20.02.2015 Prepared & Compared By: PK