Mrs. Asha Agrawal vs Sebi
- CitationAppeal No.20 of 2019
Ratio decidendi
The rule this decision rests on
The tribunal's reasoning rests on two principles, applied to the appeals as a group. First, a failure to make the disclosure required by Regulation 7(2)(a) of the PIT Regulations is a contravention of that Regulation regardless of whether any gain was made or loss caused, so long as non-disclosure is admitted. Where the adjudicating officer has found that no disproportionate gain or unfair advantage was obtained and no investor loss was caused, the violation is technical in nature and the minimum penalty is the appropriate measure. Second, where co-noticees committing the same technical contravention, and having no prior offence, have been penalised at a uniform figure, imposing a materially higher penalty on another of them is disproportionate and discriminatory, and the penalty must be reduced to that uniform figure.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Date of Decision : 25.3.2019
Appeal No.20 of 2019
Mr. Nitin Agrawal 67/1, Behind Ralas Motors, Tatibandh, Raipur - 492 099. ..... Appellant
Versus
Securities and Exchange Board of India SEBI Bhavan, Plot No.C4-A, "G" Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400051. ..... Respondent
Mr. Deepak Dhane, Advocate i/b. Sterling Associates for the Appellant.
Mr. Karan Bhosale, Advocate with Mr. Chirag Bhavsar, Advocate i/b. MDP & Partners for the Respondent.
With Appeal No.21 of 2019
Mrs. Asha Agrawal 67/1, Behind Ralas Motors, Tatibandh, Raipur - 492 099. ..... Appellant
Versus
Securities and Exchange Board of India SEBI Bhavan, Plot No.C4-A, "G" Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400051. ..... Respondent
Mr. Deepak Dhane, Advocate i/b. Sterling Associates for the Appellant.
Mr. Karan Bhosale, Advocate with Mr. Chirag Bhavsar, Advocate i/b. MDP & Partners for the Respondent. 2
With Appeal No.22 of 2019
Mr. Ravi Agrawal 67/1, Behind Ralas Motors, Tatibandh, Raipur - 492 099. ..... Appellant
Versus
Securities and Exchange Board of India SEBI Bhavan, Plot No.C4-A, "G" Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400051. ..... Respondent
Mr. Deepak Dhane, Advocate i/b. Sterling Associates for the Appellant.
Mr. Karan Bhosale, Advocate with Mr. Chirag Bhavsar, Advocate i/b. MDP & Partners for the Respondent.
With Appeal No.24 of 2019
Mr. Anand Kumar Agrawal 67/1, Behind Ralas Motors, Tatibandh, Raipur - 492 099. ..... Appellant
Versus
Securities and Exchange Board of India SEBI Bhavan, Plot No.C4-A, "G" Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400051. ..... Respondent
Mr. Deepak Dhane, Advocate i/b. Sterling Associates for the Appellant.
Mr. Karan Bhosale, Advocate with Mr. Chirag Bhavsar, Advocate i/b. MDP & Partners for the Respondent.
With Appeal No.481 of 2018
Ms. Neha Agrawal 67/1, Behind Ralas Motors, Tatibandh, Raipur - 492 099. ..... Appellant 3
Versus
Securities and Exchange Board of India SEBI Bhavan, Plot No.C4-A, "G" Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400051. ..... Respondent
Mr. Deepak Dhane, Advocate i/b. Sterling Associates for the Appellant.
Mr. Karan Bhosale, Advocate with Mr. Chirag Bhavsar, Advocate i/b. MDP & Partners 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.
Even though separate orders have been passed we find that
since the issue is the same, therefore all the appeals are being
decided together. For facility, the facts in Appeal no.24 of 2019
is being taken into consideration.
2. The appellant was a promoter of Mahamaya Steel Industries
Limited which was a company incorporated under the Companies
Act, 1956.
3. As per Regulation 7(2)(a) of the Securities and Exchange
Board of India (Prohibition of Insider Trading) Regulations, 2015
(hereinafter referred to as "PIT Regulations") every promoter,
employee and director of the Company is required to disclose to
the company the number of such shares acquired or disposed of
within two trading days of such transaction if the value of the
shares traded, whether in one transaction or a series of 4
transactions over any calendar quarter, aggregates to a traded
value in excess of ten lakh rupees. An extract of Regulation
7(2)(a) of the PIT Regulations is given below for ready reference:
"7(2)(a) Every promoter, employee and director of every company shall disclose to the company the number of such securities acquired or disposed of within two trading days of such transaction if the value of the securities traded, whether in one transaction or a series of transactions over any calendar quarter, aggregates to a traded value in excess of ten lakh rupees or such other value as may be specified."
3. It transpires that the said Regulation was not followed by
the appellant and accordingly a show cause notice was issued to
the appellant to show cause as to why an enquiry should not be
initiated against him and penalty be not imposed under Section
15A(b) of Securities and Exchange Board of India Act, 1992
(hereinafter referred to as 'SEBI Act') for having failed to make
the relevant disclosure under the provisions of Regulation 7(2)(a)
of the PIT Regulations. The appellant submitted his reply and
thereafter the Adjudicating Officer passed an order holding him
guilty of violating the provision of Regulation 7(2)(a) of the PIT
Regulations and accordingly imposed a penalty of Rs.5,00,000
under Section 15A(b) of SEBI Act.
4. Similarly, in Appeal No.21 of 2019, the appellant Asha
Agrawal was imposed a penalty of Rs.2,00,000/-. In Appeal
No.20 of 2019 Nitin Agrawal vs. SEBI and in Appeal No. 22 of
2019 Ravi Agrawal vs. SEBI and in Appeal No.481 of 2018 5
Ms. Neha Agrawal the said appellants were imposed a penalty of
Rs.1,00,000/- each. The said appellants being aggrieved by the
imposition of penalty has filed the present appeal.
5. Having heard the learned counsel for the parties we find
that admittedly the disclosure was not made by the appellants and
thus there was a contravention of Regulation 7(2) (a) of the PIT
Regulations. We however find that the Adjudicating Officer has
given a specific finding that no disproportionate gain or unfair
advantage was made by any of the appellants while undertaking
the transactions in the shares of the Company nor any loss was
caused to the investors as a result of non disclosure of change of
the shareholding. In the light of this finding the violation is only
technical in nature for which the appellants, namely, Mr. Nitin
Agrawal, Mr. Ravi Agrawal and Ms. Neha Agrawal were
imposed a minimum penalty of Rs.1,00,000/- each. We however
find that the imposition of penalty of Rs.5,00,000/- in the case of
Mr. Anand Kumar Agrawal and Rs.2,00,000/- in the case of Asha
Agrawal is disproportionate and excessive. When three of the
promoters have been penalized by a sum of Rs.1,00,000/- each it
does not stand to reason for imposition of a higher penalty on the
appellant Anand Kumar Agrawal and Asha Agrawal. Such
imposition of higher penalty amounts to discrimination especially
when it was the first offence made by them.
6
6. For the reasons stated aforesaid, Appeal No.24 of 2019 is
allowed in part. The penalty of Rs.5,00,000/- is reduced to
Rs.1,00,000/-. Appeal No.21 of 2019 is allowed in part. Penalty
of Rs.2,00,000/- is reduced to Rs.1,00,000/-. The amount shall be
deposited within 30 days from today.
7. In so far as Appeal Nos. 20 and 22 of 2019 and 481 of 2018
are concerned, we do not find any infirmity in the impugned
orders. The appellants had violated Regulation 7(2)(a) of the PIT
Regulations and consequently the minimum penalty was
justifiable. These three appeals fail and are dismissed. In the
circumstances of the case, we direct the appellants to deposit
penalty amount within 30 days from today.
Sd/-
Justice Tarun Agarwala Presiding Officer
Sd/-
Dr. C. K. G. Nair Member
Sd/-
Justice M.T. Joshi Judicial Member
25.3.2019 Prepared and compared by RHN
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