Decided on January 01,2003



C.Achuthan, - (1.) THE respondent's order dated 19-8-2002 holding the Appellant guilty of not complying with the reporting requirements under certain provisions of chapter II of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the 1997 Regulations) and the consequential imposition of monetary penalty is under challenge in the present appeal.
(2.) The Securities and Exchange Board of India, (SEBI) on noticing that the Appellant had failed to comply with the reporting requirements under Regulations 6(2), 6(4) and 8(3) of the 1997 Regulations decided to refer the matter for adjudication and for the purpose an Adjudicating Officer was appointed vide order dated 17-6-2002. The said Adjudicating Officer issued show cause notice to the Appellant and carried out necessary enquiries and concluded that the Appellant had failed to comply with the requirements of Regulations 6(2), 6(4) and 8(3) and in that context imposed a penalty of five lakh rupees on the Appellant. Shri R. Sethuraman, authorized Representative of the Appellant submitted that the Appellant had not intentionally suppressed any material information, which was to be disclosed under the regulations that the Appellant on its own had disclosed the belated reporting in the letter of offer issued by it in the context of the public offer made by it relating to the acquisition of shares in ETC Networks Ltd., that a copy of the same was filed with SEBI and it was on the basis of the self disclosure made therein by the Appellant adjudication was ordered by the respondent. He submitted that the fact that the Appellant itself had disclosed voluntarily the default, goes to prove the bona fides of the Appellant, that if it had not so disclosed, perhaps SEBI would have never noticed the failure and proceeded against for such failure. Shri Sethuraman submitted that the delay in reporting was because of the reason that the 1997 Regulations was new and that it took some time for the Appellant to set up the system to regularize and ensure filing of the return within the time specified and that it was not a wilful default. He submitted that the failure to comply with the reporting requirement was common and the respondent also knew about the magnitude of such failures and that is why it took a pragmatic view and offered a regularization scheme to enable the defaulting entities to make good the defaults by filing the reports by paying a nominal amount of ten thousand rupees that the Appellant is also entitled to the said relief.
(3.) LEARNED Representative read out extensively from the text of the "SEBI Regularization Scheme, 2002" (the Scheme) permitting the entities who had not made disclosures or had made belated disclosures enabling them to make disclosures/get the delay condoned by paying the lump-sum amount specified in the Scheme, that the amount specified is Rs. 10,000 per each failure irrespective of the extent of the delay involved. He submitted that the Scheme provides benefit to those who failed to report in terms of Regulations 6(2), 6(4) and 8(3) though for which penalty has been provided under Section 15A(b) of the Securities and Exchange Board of India Act, 1992 (SEBI Act).;

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