Spl Industries Ltd. vs Sebi

Order Reserved on: 6.8.2019 Date of Decision : 20.8.2019

Appeal No.411 of 2018

SPL Industries Ltd. C-2/54, 5th Floor, Rajasthali Apartments, Pitampura, New Delhi-110034. ... Appellant

Versus

BSE Limited P.J. Towers, Dalal Street, Mumbai - 400001, Maharashtra. ... Respondent

Mr. Deepak Dhane, Advocate with Mr. Ravi Kant Purohit, Advocate i/b. Corporate Pleaders for the Appellant.

Mr. Anubhav Ghosh, Advocate i/b. The Law Point for Respondent.

CORAM: Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member Justice M.T. Joshi, Judicial Member

Per : Justice Tarun Agarwala

1.

The appellant being aggrieved by the imposition of a

fine of Rs.5,54,600 for violation of Regulation 33 of the

Securities and Exchange Board of India (Listing Obligations

and Disclosure Requirements) Regulation, 2015 has preferred

the present appeal.

2. The facts leading to the filing of the appeal is that the

appellant is a public limited Company and its shares are 2

listed on the BSE Limited (hereinafter referred to as 'BSE')

as well as on the National Stock Exchange (hereinafter

referred to as 'NSE'). On December 14, 2017, a meeting of

its Board of Directors was held and unaudited financial

results for the quarter ending 30th September, 2017 were

approved. The meeting of the Board of Directors was

concluded on 6.15 p.m.

3. As per the circular dated 30th March, 2017 the

unaudited financial result was required to be uploaded on the

Company's website as well as on the stock exchange

platform within 30 minutes of the conclusion of the meeting

of the Board of Directors as well as within 24 hours. Since

there was only a partial compliance, a fine of Rs.5,54,600/-

was imposed as per the circular dated 30th November, 2015.

4. Before we proceed further it would be appropriate to

extract Regulation 33(3)(a) & (c) of the Listing Regulations:

"(3) The listed entity shall submit the financial results in the following manner:

(a) The listed entity shall submit quarterly and year-to-date standalone financial results to the stock exchange within forty-five days of end of each quarter, other than the last quarter.

(b) ............

3 (c) The quarterly and year-to-date financial results may be either audited or unaudited subject to the following:

(i) In case the listed entity opts to submit unaudited financial results, they shall be subject to limited review by the statutory auditors of the listed entity and shall be accompanied by the limited review report:

Provided that in case of public sector undertakings this limited review may be undertaken by any practicing Chartered Accountant."

5. From the aforesaid it is clear that the quarterly financial

results for the quarter ending 30th September, 2017 was

required to be uploaded on the stock exchange platform

within 45 days of the end of the quarter. As a result, the said

financial results were to be uploaded on 14th December,

2017. The manner of uploading of the financial results has

been clarified by circular dated 30th March, 2017. The said

circular provides as under:

"Financial Results are required to be submitted along with the Limited Review Report/ Audit Report first in PDF mode through the Listing Centre website - Corporate Announcement Filing System (CAFS) within 30 minutes of the conclusion of the Board Meeting as per the provisions of Regulation 30 of the LODR, 2015.

This is required to be followed by filing of the result in XBRL mode within 24 hours from the conclusion of the Board meeting."

4 6. From the aforesaid, it is clear that the limited review

report/audit report alongwith the financial results was

required to be uploaded on the Company's website and on

the stock exchange platform within 30 minutes of the

conclusion of the board meeting and the financial result in

XBRL mode was required to be uploaded within 24 hours

from the conclusion of the board meeting. The requirements

under the PDF mode and under the XBRL mode are different

and distinct. The financial results alongwith the audit report

is required to be uploaded within 30 minutes and the

comprehensive financial results in XBRL mode is requested

to be uploaded within 24 hours.

7. The imposition of fine has been provided in the circular

dated 30th November, 2015. Annexure to the said circular

relates to the imposition of fines under various Regulations.

Annexure 1 relating to imposition of fine for violation of

Regulation 33 is extracted hereunder:

ANNEXURE 1 IMPOSITION OF FINE

Regulation Fine payable for 1st non-

compliance

Regulation 33 `5000 per day of non-

Non submission of compliance till the date of the financial results compliance 5

within the period and prescribed under If non-compliance this regulation continues for more than 15 days, additional fine of 0.1% of Paid up capital of the entity or ` 1 crore whichever is less.

"Every recognized stock exchange shall review the compliance status of the listed entities within 15 days from the due date for compliance for the respective regulation and issue notices to the non-compliant listed entities to ensure compliance and pay fine as per this circular within 15 days from the date of the notice.

In any non-compliant listed entity fails to pay the fine despite receipt of the notice as stated above, the recognized stock exchange may initiate appropriate enforcement action, including prosecution."

From the aforesaid, if the information is not disseminated in

the stock exchange platform and on the Company's website

the penalty is Rs.5000/- per day till the non compliance

continues and if it continues for more than 15 days then

additional fine of 0.1% of paid up capital is automatically

levied.

8. In the light of the aforesaid provision it was contended

by the learned counsel that the appellant had uploaded the

financial results in XBRL mode within 30 minutes instead of

24 hours but on account of a glitch the appellant could not

upload the financial results alongwith the audit report within 6

30 minutes on the BSE platform though it was uploaded on

the NSE as well as on the Company's website. Further, the

said financial results were also published in the leading

newspapers thereafter. It was thus contended that when the

comprehensive report was uploaded within 30 minutes the

requirement of uploading the financial reports in PDF mode

alongwith the audit report was only a technical defect for

which the appellant should not be penalized.

9. In the alternative, it was contended that the stock

exchange was required to review the compliance status of the

listed companies within 15 days from the due date of

compliance by issuing a notice to ensure that compliance is

made and fines are paid as per the circular. It was contended

that the due date of compliance was 29th December and

therefore the stock exchange was required to issue a notice

immediately thereafter whereas in the instant case the notice

was issued by the stock exchange on 18th January, 2018. It

was contended that had the stock exchange issued notice on

29th December thereafter the appellant would have

immediately noticed the defect and would have removed it

and would not have allowed the fine to grow. 7

10. Having considered the submissions of the learned

counsel for the appellant we find that the regulations and the

circular require the financial results to be disseminated to the

public for a desired purpose so that the investors are made

aware of the financials of the Company. Thus, the limited

audit report alongwith the financial results are required to be

uploaded within 30 minutes of the conclusion of the Board of

Directors. The financial results have price sensitive

information and cannot remain unpublished and, therefore,

the said price sensitive information is required to be

disseminated within 30 minutes alongwith an audit report.

This was not done. The financial results uploaded in XBRL

mode did not contain the audit report which is a vital element

and, therefore, filing of the financial result in XBRL mode is

not compliance of Regulation 33 read with circular of 30th

March, 2017. Thus, when a particular act is required to be

done in a particular manner the same is required to be done in

that manner alone and not in any other manner. This principle

is well settled in a catena of cases starting from Taylor vs.

Taylor (1875) LR 1Ch D 426 and as recent as in Dharani

Sugars and Chemicals Ltd. vs. Union of India and Others, 8

(2019) 5 SCC 480. Thus there has been non compliance of

Regulation 33.

11. The contention that there was a duty cast upon the stock

exchange under clause 4 of Annexure 1 to the circular dated

30th November, 2015 to issue a notice immediately after the

completion of the due date of compliance in order to remind

the appellant to ensure compliance and pay the fine is

patently erroneous. Clause 4 only stipulates that if the listed

company fails to comply with the compliance status then it is

upon the stock exchange to issue notice giving one more

chance to the listed Company to ensure compliance and pay

fine failing which it would be open to the stock exchange

under clause 5 thereafter to initiate appropriate action

including prosecution other than the fine that is due and

payable. Needless to state, under the circular of

30th November, 2015, a uniform structure has been made for

non compliance with the listing regulations regarding non

submissions of certain periodic reports. If the compliance of

the listing regulations is not made in the manner and in the

period prescribed there would be an automatic imposition of

fine as per Annexure 1 thereto.

9

12. We however find that in the given case the imposition

of fine is excessive. There is no doubt that the limited audit

report alongwith the financial results in PDF form was

uploaded on the NSE website as well as on the Company's

website within 30 minutes of the conclusion of the Board

meeting. The financial results were also published in the

newspapers. Thus, there was no deliberate intention on the

part of the appellant to violate Regulation 33 of the Listing

Regulations. The violation, if any, appears to been done by

inadvertent mistake, by a human error. Considering the

aforesaid we are of the opinion that in the given

circumstances and in the interest of justice the penalty is

reduced to Rs.2,50,000/- which the appellant shall pay to the

respondent within four weeks from today. In the

circumstances of the case, the appeal is partly allowed. The

impugned order is modified to the extent stated aforesaid.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C. K. G. Nair Member 10

Sd/-

Justice M.T. Joshi Judicial Member

20.8.2019 Prepared and compared by RHN