Waverley Investments Limited vs Sebi

BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI Date of Decision : 20.10.2015

Appeal No. 407 of 2014

Avail Holding Limited 209, Bhanot Plaza II, 3, D.B. Gupta Road, New Delhi - 110055. ...... Appellant

Versus

Securities and Exchange Board of India SEBI Bhawan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ...... Respondent

Mr. Deepak Dhane, Advocate with Mr. P.V. Nishanth, Advocate for the Appellant.

Mr. Kumar Desai, Advocate with Mr. Mihir Mody, Ms. Shruti Chiniwar and Mr. Saurabh Bachhawat, Advocates i/b K. Ashar & Co. for the Respondent.

And

Appeal No. 290 of 2015 Waverley Investments Limited 5, Clive Row, 2nd Floor, Kolkata - 700001. ...... Appellant

Versus

Securities and Exchange Board of India SEBI Bhawan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ...... Respondent

Mr. Deepak Dhane, Advocate with Mr. P.V. Nishanth, Advocate for the Appellant.

Mr. Kumar Desai, Advocate for the Respondent.

CORAM: Justice J.P. Devadhar, Presiding Officer Jog Singh, Member

Per: Justice J.P. Devadhar

1.

Since the dispute in these two appeals relate to imposition of penalty for

violating the Takeover Regulations framed by the Securities and Exchange Board of 2

India (SEBI for short) both these appeals are heard together and disposed of by this

common decision.

2. In Appeal no.407 of 2014 the Adjudicating Officer ('AO' for short) of SEBI

by his order dated August 12, 2014 has imposed a penalty of Rs.23 lakh on the

appellant under section 15A(b) of Securities and Exchange Board of India Act, 1992

(SEBI Act for short) for failing to make disclosures under Regulation 8(3) of the

Securities and Exchange Board of India (Substantial Acquisition of Shares and

Takeover) Regulations, 1997 ('Takeover Regulations, 1997' for short) for the

financial years ended 31st March, 1998 to 31st March, 2011.

3. In Appeal no.290 of 2015, the Adjudicating Officer of SEBI by his order

dated March 30, 2015 has imposed penalty of Rs.14 lakh on the appellant named

therein, under section 15A(b) of SEBI Act for failing to make disclosures under

Regulation 8(3) of the Takeover Regulations, 1997 for the financial years ended 31st

March, 1998 to 31st March, 2011.

4. Counsel for the appellant in both these appeals fairly stated that the delay in

making disclosures under Regulation 8(3) of the Takeover Regulations, 1997 was an

inadvertent error and as soon as the error was noticed disclosures were made

immediately thereafter. While contending that the failure in making disclosures

under Regulation 8(3) being a technical and venial error, the Adjudicating Officer is

not justified in imposing penalty, it is submitted that in any event the quantum of

penalty imposed is disproportionate to the violations committed.

5. We see no merit in the above contentions.

6. While disposing of Appeal no.199 of 2014 (Inland Printers Limited vs. SEBI)

today i.e. on 20.10.2015 this Tribunal held that the obligation to make disclosures by

a listed company to the stock exchanges under Regulation 8(3) of the Takeover

Regulations, 1997 is mandatory. Failure to make disclosures under Regulation 8(3)

entails statutory penal liability under Section 15A(b) of the SEBI Act. Penalty

imposable under Section 15A(b) of the SEBI Act at the relevant time was Rs.1 lakh 3

for each day during which such failure continues or one crore rupees whichever is

less. In Appeal no.407 of 2014 penalty calculated at the rate of Rs. 1 lakh for each

day's delay would be more than several crores of rupees. However, after taking into

consideration all mitigating factors, the Adjudicating Officer has imposed penalty

of Rs.23 lakh for failing to make disclosures under Regulation 8(3) for the financial

year ended 31st March, 1998 to 31st March, 2011which cannot be said to be

unreasonable. However, in Appeal no.290 of 2015, for the very violation, the

Adjudicating Officer of SEBI by his order dated March 30, 2015 has imposed

penalty of Rs.14 lakh on the appellant therein. It is relevant to note the violation

committed by the appellants in these two appeals relate to the same period i.e. for

the financial year ended March 31, 1998 to March 31, 2011. However, in Appeal

No.407 of 2014 penalty imposed is Rs.23 lakh, whereas, in Appeal No.290 of 2015,

the penalty imposed is Rs.14 lakh. Since the order passed in Appeal No.290 of 2015

on March 30, 2015 is subsequent in point of time wherein for delay in making

disclosures for the very same period, penalty imposed is Rs.14 lakh, we deem it

proper to reduce the penalty imposed on the appellant in Appeal no.407 of 2014,

from Rs.23 lakh to Rs.14 lakh as in case of appellant in Appeal no.407 of 2104.

6. Accordingly, while confirming the order passed by the Adjudicating Officer

in both the appeals, we confirm the penalty of Rs.14 lakh imposed on appellant in

Appeal no.290 of 2015 and in Appeal no.407 of 2014 we reduce the penalty

imposed on the appellant therein from Rs.23 lakh to Rs. 14 lakh.

7. Both the appeals are disposed of in the above terms with no order as to costs.

Sd/-

Justice J.P. Devadhar Presiding Officer

Sd/-

Jog Singh Member 20.10.2015 Prepared and compared by RHN