Mr. Sachin Sharma vs Sebi

Date of Decision: 09.09.2019

Appeal No. 461 of 2018

Mr. Sachin Sharma 15, Gulmohar Extension, Indore- 452 001 ...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. Ashok Singh, Advocate for the Appellant.

Mr. Sumit Rai, Advocate with Mr. Mihir Mody and Mr. Sushant Yadav, Advocates i/b K. Ashar & Co. for the Respondent.

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

Per: Justice Tarun Agarwala (Oral)

1.

The appellant is the Managing Director of Pithampur

Steels Limited. By the impugned order the appellant has been

found guilty of violation of Regulation 13(4) of the Securities

and Exchange Board of India (Prohibition of Insider Trading)

Regulations, 1992 ("PIT Regulations, 1992" for convenience)

read with Regulation 13(5) of the PIT Regulations, 1992 and

Regulation 12 of the PIT Regulations, 2015 for failure to make 2

disclosure to the company and the Stock Exchange upon change

in shareholding limit on April 27, 2010.

2. A show cause notice was issued to the appellant to show

cause as to why penalty should not be imposed under Section

23H of the Securities Contracts (Regulation) Act, 1956

("SCRA" for convenience) and Section 15A(b) of the Securities

and Exchange Board of India Act, 1992 for non-disclosure

under PIT Regulations. The appellant submitted a reply

contending that he had duly made the disclosure under the

provisions of 13(4) read with 13(5) of the PIT Regulations,

1992 to the company as well as to the Stock Exchange but

copies of the disclosures were not traceable. The Adjudicating

Officer ("AO" for convenience) of SEBI after considering the

reply and the evidence that was brought on record held that the

appellant failed to make the necessary disclosure of acquisition

of 87,200 shares through off-market on April 27, 2010 which

triggered disclosure requirement under Regulation 13(4) of the

PIT Regulations, 1992. Since the violation was established the

AO imposed a penalty of ` 1 lakh.

3. Before this Tribunal a fresh ground has been raised

namely, that he had received the shares through physical share

certificates on March 22, 2003 and only applied for

dematerialization of the shares on April 26, 2010. The appellant 3

thus prayed that the matter should be remanded to the AO for

reconsideration.

4. Having heard the learned counsel for the parties, we are of

the opinion that the stand of the appellant that he had received

the shares in 2003 cannot be believed nor can it be accepted in

as much as before the AO a specific stand had been made that

he had made the necessary disclosure when he had received the

shares in 2010 not only to the company but also to the Stock

Exchange but proof of such disclosure could not be filed. The

appellant's admission on this aspect cannot be changed by

contending that he had received shares in 2003. This new

contention is further disbelieved by the fact that the appellant

had categorically stated in his letter dated December 01, 2014

that he only held 10,000 shares in physical form as on March

31, 2010. Thus, the contention that the appellant had received

87,200 shares in 2003 cannot be believed. Consequently for the

reasons stated aforesaid, the appeal lacks merit and is dismissed.

Sd/-

Justice Tarun Agarwala Presiding Officer Sd/-

Dr. C.K.G. Nair Member

Sd/-

Justice M. T. Joshi Judicial Member 09.09.2019 Prepared & Compared By: PK