Smt. Shilpa Amit Kotia & Ors. vs Sebi

Order Reserved on: 24.06.2019

Date of Decision : 02.07.2019

Appeal No. 309 of 2017

1.

Smt. Shilpa Amit Kotia 2/B, State Bank Staff Colony, Near Navrang School, Naranpura, Ahmedabad - 380 013.

2. Shri Dhaval Ramesh Kotia 2/B, State Bank Staff Colony, Near Navrang School, Naranpura, Ahmedabad - 380 013.

3. Smt. Shwetha Dhaval Kotia 2/B, State Bank Staff Colony, Near Navrang School, Naranpura, Ahmedabad - 380 013.

4. Smt. Seema Rajiv Kotia A/73, Avani Complex, Near Naranpura Bus Stop, Naranpura, Ahmedabad - 380 013.

5. Shri Ravi Rajiv Kotia A/73, Avani Complex, Near Naranpura Bus Stop, Naranpura, Ahmedabad - 380 013. ..... Appellants Versus Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051. .... Respondent 2

Mr. Amit Kotia, Authorized Representative for Appellants.

Mr. Vishal Kanade, Advocate with Mr. Jinay Padh, Advocate i/b Dave & Girish & 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, Presiding Officer

1. For violating the provisions of Regulation 7(1A) read

with Regulation 7(2) of SEBI Substantial Acquisition of

Shares and Takeovers) Regulations, 1997 ('SAST

Regulations 1997' for short) the Adjudicating Officer ('AO'

for short) of the Securities and Exchange Board of India

('SEBI' for short) by order dated June 30, 2017 has imposed a

monetary penalty on the appellants a sum of ` 10 Lakhs under

Section 15A(b) of the SEBI Act, 1992 to be paid jointly and

severally. The appellants being aggrieved by the imposition of

the aforesaid penalty has filed the present appeal.

2. We have heard Shri Amit Kotia, Authorized

Representative for the appellants and Shri Vishal Kanade, the

learned counsel for the respondent. 3

3. The AO found that the appellants were persons acting in

concert and held more than 15% of the share capital of

Sungold Capital Limited and had failed to make timely

disclosures with regard to the sale of shares which resulted in

the change of their shareholding by more than 2% of the share

capital of the Company during the period April to June, 2009.

4. We find that in spite of issuance of show cause notice

no reply was submitted. Hence, the non-disclosure under

Regulation 7(1A) read with Regulation 7(2) of the SAST

Regulation, 1997 is admitted. The fact that the appellants

were persons acting in concert is also admitted since it has not

been denied. The appellants, however, submitted that they

were ignorant of the law, namely, that they were required to

make the necessary disclosures under Section 7(1A) and 7(2)

of the SAST Regulations, 1997. Further, the imposition of

penalty of ` 10 Lakhs is very excessive as their financial

conditions is not that sound after the 2001 earthquake in

Gujarat from which they could not recover financially. It was

submitted that on account of financial constraints they had to

sell their shareholding of the Company in order to make their

ends meet.

4

5. In our view, the controversy involved in the present

appeal, is squarely covered by a decision of this Tribunal in

the case of Mr. Ravi Mohan & Ors. vs. SEBI (Appeal No. 97

of 2014 decided on December 16, 2015) and decision of this

Tribunal in Mr. Rakesh Kathotia vs SEBI (Appeal No. 7 of

2016 decided on May 27, 2019) wherein it has been held that

for violation of Regulation 7(1A) and Regulation 7(2) of the

SAST Regulations, 1997 no penalty can be imposed. The

decision of Mr. Ravi Mohan has also been accepted by SEBI.

6. In the light of the aforesaid, the imposition of penalty

cannot be sustained and is quashed. The appeal is allowed.

In the circumstances, there shall be no order on costs.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C.K.G. Nair Member

Sd/-

Justice M.T. Joshi Judicial Member 02.07.2019 Prepared and compared by:msb