Thyrocare Diagnostics Private Limited vs Sebi
- CitationAppeal No. 304 of 2014
Ratio decidendi
The rule this decision rests on
Where a violation under a particular provision has been settled through a consent order, the Adjudicating Officer is not empowered to impose a penalty for that same violation under some other provision, because the object of consent proceedings is to avoid multiplicity of proceedings and, once the violation is settled, no further action in respect of it under any other provision arises. Where the Tribunal has earlier held, in a decision concerning the same contravention, that a penalty cannot be sustained for reasons stated in that decision, the penalty imposed for that contravention is set aside on the same reasoning, while the disclosure obligation under the applicable regulation remains enforceable and may be directed to be complied with within a fixed time.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Date of Decision : 28.01.2016
Appeal No. 304 of 2014
Thyrocare Diagnostics Private Limited D/37-1, TTC Industrial Area, MIDC, Turbhe, Navi Mumbai - 400 703. ...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. T.J. Pandian, Advocate for the Appellant.
Mr. Kumar Desai, Advocate with Mr. Saurabh Bachhawat and Ms. Shruti Chiniwar, Advocates i/b K. Ashar & Co. for the Respondent.
CORAM : Justice J.P. Devadhar, Presiding Officer Jog Singh, Member
Per : J.P. Devadhar (Oral)
1.
This appeal is filed against the order passed by the Adjudicating
Officer of Securities and Exchange Board of India ('SEBI' for short) on
June 24, 2014. By the said order, penalty of Rs. 10 lakh is imposed against
the appellant under Section 15A(b) of SEBI Act for violating regulations
7(1) and 7(1A) read with regulation 7(2) of Securities and Exchange Board
of India (Substantial Acquisition of Shares and Takeovers) Regulations,
1997 ('SAST Regulations, 1997' for short) read with Regulation 35 of
Securities and Exchange Board of India (Substantial Acquisition of Shares
and Takeovers) Regulations, 2011 ('SAST Regulations, 2011' for short). 2
2. In the impugned order it is held that the appellant has committed
three violations relating to three transactions. Firstly, it is held that on
March 31, 2005 the appellant sold 8,000 shares of Eins Edutech Limited
('EEL' for short) which triggered disclosure obligation under regulation
7(1A) of SAST Regulations, 1997 and the appellant complied with the said
obligation after delay of 53 days. Secondly, it is held that on March 8, 2010,
the appellant acquired 58,000 shares of EEL and complied with the
disclosure obligation under regulation 7(1A) after a delay of one day.
Thirdly, it is held that on September 18, 2010 the appellant sold 86,100
shares of EEL but failed to make disclosures as contemplated under
regulation 7(1A) of the SAST Regulations, 1997.
3. As regards the first two violations are concerned counsel for SEBI
fairly states that since the said two violations were covered under the
consent order dated July 13, 2011, penalty imposed against the appellant in
respect of those two violations would not be sustainable. This Tribunal has
consistently held that where a violation under a particular provision is
subjected to a consent order, then, it is not open to the Adjudicating Officer
to impose penalty for the same violation under some other provision. In the
present case, admittedly, in respect of the first two violations, proceedings
were initiated against the appellant under regulation 3(3) and 3(4) of SAST
Regulations, 1997 and on filing consent application the said violations have
been settled on payment of settlement charges of Rs. 2,50,000 as per
consent order dated July 31, 2011. Therefore, once the two violations are
settled, the appellant cannot be penalised once again for the said two
violations under regulation 7(1) & 7(1A) of the SAST Regulations, 1997. In
other words, once the violations are settled, question of taking further action
in respect of those violations under any other provision does not arise at all.
Very object of consent proceedings is to avoid multiplicity of proceedings. 3
In these circumstances since the first two violations being settled
Adjudicating Officer is not justified in imposing penalty against the
appellant. As regards the third violation is concerned, counsel for SEBI
fairly states that in view of the decision of this Tribunal in case of Mr. Ravi
Mohan & Ors. vs SEBI (Appeal No. 97 of 2014 decided on December 16,
2015) although penalty imposed against the appellant cannot be sustained
for the reasons stated in the said decision, the appellant be directed to make
disclosure under regulation 7(1A) in respect of the third violation within
such time as this Tribunal deems fit and proper.
4. Accordingly, while setting aside the penalty imposed against the
appellant in the impugned order, we direct the appellant to make requisite
disclosure under regulation 7(1A) in respect of the transaction covered
under the third violation within a period of two weeks from today.
5. Appeal is disposed of in the above terms with no order as to costs.
Sd/-
Justice J.P. Devadhar Presiding Officer
Sd/-
Jog Singh Member
28.01.2016 Prepared and compared by:
msb
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