Decided on January 01,2003



C.Achuthan, - (1.) UNDER challenge in these three appeals are two separate orders passed by the adjudicating officer appointed by the Respondent. Order dated 26-8-2002 imposing a monetary penalty of Rs. 2 lakhs on the Appellant is challenged in appeal No. 81/2002. In appeal Nos. 82/2002 and 83/2002, the common order dated 27-8-2002 imposing Rs. 1,50,000 on Total Network Solutions Ltd.,(Appellant in appeal No. 83 of 2002) and a consolidated penalty of Rs. 50,000 on the five Appellants (in appeal No. 82 of 2002) has been challenged separately. Taking into consideration the nature of the charge the factual matrix, the nature of the penalty imposed and the reasoning given by the adjudicating officer, and also that the adjudicating officer was common in both the adjudications, it was felt that all these three appeals be heard together and disposed of by a common order as consented by the representatives of the parties. The Appellants in the three appeals are represented by Shri J. M. Thakur and the Respondent by Shri Ananta Barua. The specific facts in respect of each of the appeals as could be gathered from the material available on record are as follows: JUDGEMENT_368_TLSB0_20030.htm Extent of delay involved : JUDGEMENT_368_TLSB0_20031.htm
(2.) Shri Jayant M. Thakur, learned Representative of the Appellants explained the background of the case. He submitted that the Appellant in Appeal No. 81/2002 is a listed company, that the Appellant had substantially complied with the requisite reporting under Regulations 6(2), 6(4) and 8(3) of the Securities and Exchange Board of India ((Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the 1997 Regulations), that it had no intention to suppress any information from the Respondent. He submitted that the information of holding of the promoters and other shareholders was already with the public and with the stock exchanges as early as 1996 and no change has taken place thereafter, that a public issue was made in 1999 and once again the relevant information was made public through various public documents including the prospectus, that the promoters and directors have remained same during this period and there was no change in the information, that these factors were not given due weight and penalty was levied arbitrarily as a matter of course. He submitted that the Appellants in Appeal Nos. 82/2002 and 83/2002 are promoters of the Appellant in appeal No. 81/2002 that these promoters had also voluntarily furnished the requisite information as required under Regulations 6(1), 6(3) and 8(1) and 8(2). Learned representative submitted that it is settled law that penalty cannot be levied as a matter of course and judicial view should be taken of the facts of the case and also the mitigating factors, that penalty should not be levied where the default was bona fide. Learned Representative submitted that the penalty has been imposed by the adjudicating officer ignoring the factors to be taken into consideration as provided in Section 15J of the SEBI Act. He submitted that the adjudicating officer imposed the penalty simply for the reason that there was delay in filing the reports, that he has ignored the relevant factors placed before him for consideration. In this context he cited the principles laid down by the Hon'ble Supreme Court in Hindustan Steels Ltd. v. State of Orissa AIR 1970 SC 253 that "penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation". He also cited this Tribunal's decision in Escort Mutual Fund v. Sri Sat Ram (2002) 1 CLJ 330 in support of his contention that penalty is not leviable per se violation. He submitted that belated filing of the reports was unintentional and with no mala fides and hence the adjudicating officer should have taken a lenient view, the fact that there was no allegation of mala fides against the Appellants has been admitted by the adjudicating officer and recorded in the order.
(3.) SHRI Thakur referred to the SEBI Regularization Scheme, 2002 (the Scheme) and submitted that under the said Scheme, the Respondent has permitted the defaulters to pay a nominal fee of ten thousand rupees for violation of the provisions of Regulations 6 and 8 irrespective of the fact that the non compliance was intentional or not and also not taking into consideration the number of delays involved. He submitted that in view of the policy adopted by the Respondent to take on record the delayed returns on payment of just ten thousand rupees there is no justification for imposing such a huge penalty on the Appellants and that if for any reason the Tribunal comes to a conclusion that penalty is leviable, the amount of penalty so leviable may be restricted to the quantum prescribed in the Scheme. SHRI Thakur submitted that the observation made by the Hon'blc Supreme Court in R. S. Joshi's (1977) 4 SCC 98 has no application to the facts of the case.;

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