FAR EAST INVESTMENTS LTD AND EUROPEAN INVESTMENTS LTD Vs. SECURITIES AND EXCHANGE BOARD OF INDIA AND ANANTA BARUA ADJUDICATING OFFICER
SECURITIES APPELLATE TRIBUNAL
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(1.) THE present appeal is directed against the order dated 24.5.2002 made by Respondent No. 2 (the adjudicating officer) imposing a monetary penalty of one lakh fifty thousand rupees on the Appellants, holding them guilty of violating regulation 7 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the Takeover Regulations).
(2.) The factual position, to the extent relevant to the case, as could be gathered from the records available, is as follows:
The Appellants are Overseas Corporate Bodies (OCBs) registered in Mauritius. They are companies incorporated under the Mauritius Companies Act, 1984. They have no office or permanent establishment in India. The Appellants, reportedly were set up and managed by PCL Legal Services (Mauritius) Ltd., (PCL) which in turn is stated to be a registered management company licensed by the Mauritius Offshore Business Activities Authority. The Appellants trade in shares on the secondary market through the approved market intermediaries and reports such transactions to the Authorised dealer through whom the Account under the Protfolio Investment Scheme (PIS) is operated.
Global Trust Bank Ltd (GTB) is a public limited company registered in India. Its shares are listed on some of the stock exchanges in India including Bombay Stock Exchange and National Stock Exchange. On 13.2.2001, Appellant No. 1 (Far East) acquired 10 lacs shares, out of the total of 12,13,59,000 equity shares comprising the paid up capital of GTB. This resulted in Far East's holding in GTB increasing to 5.11%. Far East was already holding 52,00,000 shares in GTB on 13.2.2001. Appellant No. 2 (European Investments) was holding 52,30,000 shares representing 4.30% of the paid up capital of GTB on 13.2.2001. The combined holding of these two companies on 13.2.2001 was 1,14,30,000 shares, which accounted for 9.42% of the paid up capital of GTB. Respondent No. 1 viewed that the Appellants were acting in concert. In that view of the matter the Respondent felt that the Appellants were required to comply with the disclosure requirements as per regulation 7. Regulation 7 of the Takeover Regulations requires the acquirer acquiring more than five percent shares in a listed company to disclose the aggregate of his holding to the concerned company within four working days of the acquisition.
(3.) IN the said context Respondent No. 1 decided to refer the matter for adjudication and for the purpose appointed Respondent No. 2 as the adjudicating officer. The adjudicating officer issued notice to the Appellants asking them to show cause as to why monetary penalty as provided in section 15A (b) of the Securities and Exchange Board of INdia Act, 1992 (the Act) should not be imposed on them. The Appellants responded to the notice by submitting written replies. They also made oral submissions. According to them that they had not violated the provisions of the Regulations/the Act. But the adjudicating officer viewed differently. He held the Appellants guilty of violating the provisions of regulation 7 and imposed one lakh fifty thousand rupees as monetary penalty as provided in section 15A(b) of the Act, vide his order dated 24..5.2002. The challenge in the present appeal is to the adjudicating officer's said order imposing monetary penalty.;
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