M/S. Saraf Holdings Pvt. Ltd. & Ors. vs Sebi
- CitationAppeal No. 188 of 2015
Ratio decidendi
The rule this decision rests on
The Adjudicating Officer's penalty order is quashed and the matter remanded for fresh decision on merits, because the appellants' threshold contention (that the inter-se transfers among promoters and persons acting in concert did not trigger regulation 11(1) of the SAST Regulations, 1997, as no additional shares were acquired) was not raised before the Adjudicating Officer and therefore could not be considered by the Tribunal in the first instance. The Tribunal records that the Supreme Court in SEBI v. Roofit Industries Ltd. has held that the Adjudicating Officer cannot apply the discretion under Section 15J of the SEBI Act while imposing penalty under Sections 15H and 15HA, but notes that a subsequent order in Siddharth Chaturvedi v. SEBI has referred that decision to a larger Bench; the Tribunal treats the point as unsettled pending that reference and, on that basis, sets aside the order to permit fresh adjudication with all contentions kept open.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI Date of Decision: 21.03.2016
Appeal No. 188 of 2015
1.
M/s. Saraf Holdings Pvt. Ltd.
17, Dover Road, Kolkata- 700 019
2. M/s. Surface Holdings Ltd.
9 New Road, 11th Floor, Kolkata-700 027
3. M/s. Tower Properties Pvt. Ltd. 17, Dover Road, Kolkata- 700 019
4. Ms. Aradhita Saraf "Anugrah", 9 New Road, Alipore, Kolkata- 700 027
5. Ms. Rama Devi Saraf "Anugrah", 9 New Road, Alipore, Kolkata- 700 027
6. Ms. Sujata Saraf "Anugrah", 9 New Road, Alipore, Kolkata- 700 027
7. Mr. Dev Saraf "Anugrah", 9 New Road, Alipore, Kolkata- 700 027 ...Appellants
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. Vinay Chauhan, Advocate with Mr. K. C. Jacob, Advocate i/b Corporate Law Chambers India for Appellants.
Mr. Kumar Desai, Advocate for the Respondent. 2
CORAM: Justice J.P. Devadhar, Presiding Officer Jog Singh, Member
Per: Justice J.P. Devadhar (Oral)
1. Appellants are aggrieved by the order passed by the Adjudicating
Officer ("AO" for short) of Securities and Exchange Board of India
("SEBI" for short) on January 16, 2015, whereby penalty of ` 50 lac is
imposed in the appellants under Section 15H(ii) of the Securities and
Exchange Board of India Act, 1992 ("SEBI Act" for short) to be paid by
them jointly and severally.
2. In the impugned order it is held that during the four Financial years
1997-98, 2004-05 (twice) 2005-06 on account of certain inter-se dealing
between the promoters triggered regulation 11(1) read with regulation
14(1) of Securities and Exchange Board of India (Substantial Acquisition
of Shares and Takeovers) Regulations, 1997 ("SAST Regulations, 1997"
for short) and since the appellants failed to comply with the requirements
of regulation 11(1) penalty of ` 50 lac has been imposed on the
appellants.
3. It is contended on behalf of the appellants that regulation 11(1)
gets triggered only when the promoters along with persons acting in
concert (PAC) with them have collected additional shares. In the present
case, the inter-se transfer amongst the promoters and their PAC cannot be
said to result in acquisition of additional shares and therefore, in the facts
of present case, it cannot be said that regulation 11(1) got triggered. 3
4. Admittedly, this argument of the appellants which goes to the root
of the matter was not canvassed before the AO and hence the said
argument could not be considered.
5. Moreover, the Apex Court in the case of SEBI vs. Roofit
Industries Ltd., reported in (2016) 194 Comp. Cas.186 (S.C.) has held
that while imposing penalty under Section 15H & 15HA, the AO cannot
apply the discretion provided under Section 15J of SEBI Act. However,
the Apex Court subsequently in the case of Siddharth Chaturvedi vs.
SEBI (Civil Appeal No. 14730 of 2015) has passed an order on March
14, 2016 stating that the decision of the Apex Court in case of Roofit
Industries Ltd. (supra) deserves consideration at the hands of a larger
Bench.
6. In these circumstances, we deem it proper to quash and set aside
the impugned order and restore the appeal for fresh decision on merits.
7. Accordingly, impugned order dated January 16, 2015 is quashed
and set aside and the matter is restored to the file of the AO for passing
fresh order on merits and in accordance with law.
8. All contentions of both sides are kept open.
9. Appeal is disposed of in the above terms with no order as to costs.
Sd/-
Justice J.P. Devadhar Presiding Officer
Sd/-
Jog Singh Member 21.03.2016 Prepared & Compared By: PK
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