Mrs. Mithilesh Sharma vs Sebi

Date of Decision: 09.09.2019

Appeal No. 462 of 2018

Mrs. Mithilesh 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. Anubhav Ghosh, Advocate with Ms. Rashi Dalmia and Ms. Arjita Chaturvedi, Advocate i/b The Law Point 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.

For non-disclosure of the receipt of the shares from her

husband, a show cause notice was issued and, upon receipt of

the reply, the Adjudicating Officer ("AO" for convenience) of

Securities and Exchange Board of India ("SEBI" for

convenience) has imposed a penalty of ` 2 lakhs for violation of 2

Regulation 7 (1A) of the SEBI (Substantial Acquisition of

Shares and Takeover) Regulations, 1997 ("SAST Regulations"

for convenience). It was found that the appellant had received

75,76,935 shares from her husband through off-market.

Though, the shareholding of the promoters remained the same

i.e. 65.79% the receipt of the aforesaid shares through off-

market triggered acquisition of more than 3.8% of the share

capital and consequently the appellant was required to make

necessary disclosures to the company as well as to the Stock

Exchange.

2. The reply of the appellant before the AO of SEBI was that

necessary disclosures were made to the company as well as to

the Stock Exchange but no proof could be submitted.

Accordingly, the penalty was imposed.

3. Having heard the learned counsel for the parties, we find

that the shares were received by the appellant from her husband

who was the Managing Director of the company. The husband

made the necessary disclosures under Regulation 13(6) of the

Securities and Exchange Board of India (Prohibition of Insider

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

convenience) which fact is noted by the AO in paragraph 53 of 3

the impugned order. In the light of the aforesaid, the non-

disclosure by the appellant was only technical in nature in as

much as the information with regard to transfer of the shares

from husband to the appellant came in the public domain. Thus,

even though there was a violation as the appellant was also

required to make necessary disclosures under Regulation 7(1A)

of the SAST Regulations, we are of the opinion, that the penalty

imposed is excessive.

4. For the reasons stated aforesaid, the appeal is partly

allowed. Penalty of ` 2 lakh is reduced to ` 1 lakh. The penalty

shall be paid within a period of four weeks from today.

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