Smiths & Founders (India) Ltd vs Sebi
- CitationAppeal No. 198 of 2019
Ratio decidendi
The rule this decision rests on
Where a penalty imposed by an Adjudicating Officer for non-compliance with continuous listing requirements rests on a shareholding-pattern obligation, and the appellant has subsequently filed the corrected shareholding pattern as directed under a BIFR order and the stock exchange has withdrawn its fines on that basis, the subsequent development is a material change in circumstances which requires the Adjudicating Officer to reconsider the matter afresh; the impugned penalty order is therefore set aside and the matter remitted to the Adjudicating Officer for a fresh order after affording the appellant an opportunity of hearing. Any amount deposited under protest pursuant to the impugned order is to abide the fresh order to be passed by the Adjudicating Officer.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Date of Decision : 07.08.2019
Appeal No. 198 of 2019
Smiths & Founders (India) Ltd. No. 505, 5th Floor, "Brigade Rubix", No. 20, HMT Main Road, Bengaluru - 560 013. ......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. Kunal Katariya, Advocate with Ms. Saurabhi Waknis, Advocate i/b Aagam Doshi for the Appellant. 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, Presiding Officer (Oral)
1.
We have heard the learned counsel for the parties. Since the
appellant failed to comply with the provisions of Rule 19 of the
Securities Contract (Regulation) Rules, 1957 (hereinafter referred to 2
as, SCRR) with regard to the continuous listing requirements, the
Adjudicating Officer (hereinafter referred to as, 'AO') imposed a
penalty of Rs. 4 lacs under Section 23E of the Securities Contracts
(Regulation) Act, 1956 (hereinafter referred to as, 'SCRA'). The
said penalty was imposed inspite of the fact that the appellant had
contended that the MPS requirement was not required to be done in
view of the order passed by Board for Industrial and Financial
Reconstruction (BIFR) pursuant to the scheme of rehabilitation.
2. Subsequent to the passing of the impugned order dated
December 20, 2018 Securities and Exchange Board of India
(hereinafter referred to as, 'SEBI') has issued a letter dated March 7,
2019 advising the appellant to file the correct shareholding pattern
with the stock exchange pursuant to the directions of BIFR order
dated February 20, 2014. Based on the fresh shareholding pattern
filed by the appellant, BSE Ltd. (BSE) by its communication dated
April 16, 2019 has withdrawn the fines imposed upon the appellant
with regard to the non-compliance of the MPS requirements.
3. In view of the aforesaid, we are of the opinion that in view of
the subsequent development, the AO is required to reconsider the
matter afresh. We accordingly, set aside the order dated December
20, 2018 and remit the matter to the AO with the direction to pass a
fresh order after giving an opportunity of hearing to the appellant. 3
4. It has been stated that pursuant to the order the appellant had
deposited the penalty amount of Rs. 4 lacs under protest. This
deposit would be subject to fresh orders that would be passed by the
AO.
Sd/-
Justice Tarun Agarwala Presiding Officer
Sd/-
Dr. C. K. G. Nair Member
Sd/-
Justice M. T. Joshi Judicial Member
07.08.2019 Prepared & Compared by PTM
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