M/S. Mapro Industries Limited vs Sebi

BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI Date of Decision : 20.10.2015

Miscellaneous Application No. 53 of 2015 And Appeal No. 79 of 2015

M/s. Mapro Industries Limited 505, Corporate Corner, Sunder Nagar, Malad (W), Mumbai - 400064. ...... Appellant

Versus

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

Mr. J.J. Bhatt, Advocate with Ms. Rinku Valanju, Advocate for the Appellant.

Mr. Kumar Desai, Advocate with Mr. Mihir Mody, Ms. Shruti Chiniwar and Mr. Saurabh Bachhawat, Advocates i/b K. Ashar & Co. for the Respondent.

CORAM: Justice J.P. Devadhar, Presiding Officer Jog Singh, Member

Per: Justice J.P. Devadhar

Miscellaneous Application no.53 of 2015

There is delay of 4 days in filing the appeal. For the reasons stated in the

Miscellaneous Application the delay is condoned. Miscellaneous Application is

disposed of accordingly.

Appeal no.79 of 2015

1.

Appellant is aggrieved by the order passed by the Adjudicating Officer

('AO' for short) of Securities and Exchange Board of India (SEBI for short) on

November 27, 2014 whereby penalty of Rs.4 lakh is imposed on the appellant 2

under section 15A(b) of Securities and Exchange Board of India Act, 1992 (SEBI

Act for short) for failing to make disclosures under Regulation 8(3) of the

Securities and Exchange Board of India (Substantial Acquisition of Shares and

Takeover) Regulations, 1997 ('Takeover Regulations, 1997' for short) for the

financial year ended 31st March, 2005, 31st March, 2007, 31st March, 2009 and 31st

March, 2011.

2. Appellant is a listed company whose shares are traded on various stock

exchanges. It is not in dispute that for the financial years ended on 31st March,

2005, 31st March, 2007, 31st March, 2009 and 31st March, 2011 the appellant

company had failed to make disclosures to the stock exchanges within the time

stipulated under Regulation 8(3) of the Takeover Regulations, 1997. It is also not

in dispute that disclosures for the aforesaid financial year were made belatedly

after delay of 122 days, 143 days, 797 days and 44 days respectively.

3. Counsel for appellant, however, contended that the penalty imposed for the

aforesaid violation under Section 15A(b) of the SEBI Act is unjustified for the

following reasons:-

(a) Failure to make disclosures within the time stipulated under

Regulation 8(3) of the Takeover Regulations, 1997 has not prejudiced

any investor.

(b) There was no change in the shareholding of the erstwhile promoter

group except inter se transfer between the persons acting in concert with

promoters during the period 2005-2009 and therefore the delay in

making the disclosures has not affected the investor's interest in any

manner whatsoever.

(c) There is no mens rea involved for the delay in making disclosures

and therefore penalty ought not to have been imposed. 3

(d) On account of the IPO of the company, shareholding of the

promoters/persons in control over the company disclosed in the

prospectus were within the public domain and consequently delayed

disclosure of the said information under Regulation 8(3) had no effect

on the market and no commercial loss was caused to anyone.

(e) Delay in making disclosures under Regulation 8(3) was

unintentional, technical and inadvertent. Since there was no ulterior

motive for the delay in making disclosures, penalty ought not to have

been imposed.

(f) Failure to make disclosure under Regulation 8(3) was a

technical and venial breach for which such exorbitant penalty ought not

to have been imposed.

(g) The Adjudicating Officer has failed to take into consideration

various mitigating factors set out under Section 15J of the SEBI Act.

4. We see no merit in the above contentions. This Tribunal in Appeal no.199 of

2014 (Inland Printers Limited vs. SEBI) decided today i.e. on 20.10.2015 has held

that the obligation to make disclosures by a listed company to the stock exchanges

under Regulation 8(3) is mandatory. In the said decision it is further held that

irrespective of the fact that the promoter/persons in control over the company have

made disclosures to the company under Regulation 8(1) and 8(2) or not,

disclosures by the company to the stock exchanges have to be made within the

time stipulated under Regulation 8(3) of the Takeover Regulations, 1997.

5. A listed company which fails to make disclosures under Regulation 8(3) is

statutorily liable to pay penalty under Section 15A(b) of the SEBI Act. In the

present case, penalty imposable under Section 15A(b) of the SEBI Act as it then

stood was Rs.1 lakh for each day during which such failure continues or one crore

rupees whichever is less. Calculated at the rate of Rs. 1 lakh for each day's delay, 4

in the present case, the appellant would have been liable to pay more than several

crores of rupees. However, after taking into consideration all mitigating factors,

the Adjudicating Officer of SEBI has imposed penalty of Rs.4 lakh which cannot

be said to be unreasonable or excessively harsh.

6. In these circumstances, 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/-

Jog Singh Member

20.10.2015 Prepared and compared by RHN