Shikhar Consultants Ltd. vs Sebi

DATE : 09.04.2018

Appeal No. 35 of 2018

Shikhar Consultants Ltd. A/41, Nandjyot Industrial Estate, Near Safed Pool, Andheri Kurla Road, Andheri East, Mumbai - 400 072. ..... Appellant

Versus

Securities and Exchange Board of India SEBI Bhavan, C-4A, G-Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051. ...... Respondent

Mr. Krishnagopal M. Chandak, Authorized Representative with Mr. Shekhar J. Asawa, Authorized Representative for the Appellant.

Mr. Vishal Kanade, Advocate with Mr. Chirag Bhavsar, Advocate i/b MDP & Partners for the Respondent.

CORAM : Justice J. P. Devadhar, Presiding Officer Dr. C. K. G. Nair, Member

Per : Justice J. P. Devadhar (Oral)

1.

This appeal is filed to challenge the order passed by the Adjudicating

Officer ('A. O.' for short) of Securities and Exchange Board of India

('SEBI' for short) on November 29, 2017. By the said order penalty of

Rs. 8 lac is imposed on the appellant under Section 15HB of Securities and

Exchange Board of India Act, 1992 ('SEBI Act' for short), inter-alia, for

not complying with the directions contained in the SEBI circular dated

August 13, 2012.

2

2. As per SEBI circular dated August 13, 2012, it was obligatory on part

of all the listed companies including the appellant to obtain SCORES

authentication by September 14, 2012.

3. Admittedly, the appellant did not apply for and obtain SCORES

authentication within the time stipulated under the SEBI circular dated

August 13, 2012. Appellant applied for SCORES authentication belatedly

on July 26, 2017 and the same was granted to the appellant on July 31,

2017.

4. As the appellant failed to obtain SCORES authentication within the

time stipulated in the circular August 13, 2012, the A. O. has held that the

appellant is guilty of violating the SEBI's circular dated August 13, 2012

and, accordingly, imposed penalty of Rs. 8 lac on the appellant.

5. Authorized representative of the appellant fairly admitted that the

appellant is guilty of not obtaining SCORES authentication within the time

stipulated in the SEBI circular dated August 13, 2012. However, he

submitted that in the facts of present case penalty of Rs. 8 lac imposed on

the appellant is unjustified for the following reasons :-

a) Trading in the shares of the company has been suspended since

February 12, 2003.

b) On May 16, 2016 new Board of Directors (BOD) including the

appellant took over the company with a view to revive the

company which was in deep financial crisis.

c) On receiving show cause notice dated June 20, 2017, the

appellant company operated by the new BOD applied for

SCORES authentication on July 26, 2017 and, accordingly, 3

SCORES authentication was granted to the appellant on July 31,

2017.

d) Till January 17, 2018, there was not a single investor's grievance

made by an investor against the company.

e) In similar cases, the A. O. of SEBI has deemed it fit not to

impose any monetary penalty against those entities.

Accordingly, it is submitted that the penalty imposed against the appellant

company deserves to be quashed and set aside. Alternatively, it is

submitted that minimum penalty imposable under Section 15HB of SEBI

Act be imposed on the appellant.

6. Counsel for SEBI on the other hand submitted that in the present case

violation of SEBI circular dated August 13, 2012 is admitted by the

appellant. For such violation penalty imposable under Section 15HB of

SEBI Act is upto Rs. 1 crore and the A. O. after taking into consideration

all mitigating factors has imposed penalty of Rs. 8 lac which cannot be said

to be unreasonable or excessive.

7. We have carefully considered the rival submissions.

8. By failing to obtain SCORES authentication within the stipulated

time, appellant has violated the SEBI circular dated August 13, 2012 is not

in dispute. However, apart from various mitigating factors set out

hereinabove, it is seen that in several similar cases, the A. O. of SEBI has

deemed it fit not to impose any penalty against those entities even though

the minimum penalty imposable is Rs. 1 lac under Section 15HB of SEBI

Act.

9. In these circumstances, while directing the Aadjudicating Officers of

SEBI to ensure that they pass orders in consonance with the provisions of 4

SEBI act, in the facts of present case, having regard to the mitigating

factors set out hereinabove, we deem it proper to reduce the penalty from

Rs. 8 lac to Rs. 1 lac being the minimum penalty imposable under Section

15HB of SEBI Act.

10. Appeal is partly allowed in the aforesaid terms with no order as to

costs.

Sd/-

Justice J. P. Devadhar Presiding Officer

Sd/-

Dr. C. K. G. Nair Member 09.04.2018 Prepared & Compared by PTM