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2015 (4) TMI 558 - AT - Companies LawPenalty for violation of regulation 29(1),29(2) & 29(3) of the SEBI SAST (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 - Violation of regulation 13(1),13(3) read with regulation 13(5) of the SEBI PIT (Prevention of Insider Trading) Regulations, 1992 - Delay in disclosures - Held that:- In the present case, appellant holding 4.71% shares of SRS received additional shares of SRS on account of amalgamation and it is not in dispute that on receiving those shares, the holding of appellant SRS exceeded the limit prescribed under SAST Regulations, 2011 and PIT Regulations, 1992. Admittedly, disclosures made to the Stock Exchange under regulation 29(1) and regulation 29(2) of SAST Regulations, 2011 were delayed by 120 and 128 days respectively. As noted earlier, penalty for violating regulation 29(1) at the rate of ₹ 1 lac per day would be more than ₹ 1 crore. Similarly, penalty for violating regulation 29(2) at the rate of ₹ 1 lac per day would be more than ₹ 1 crore. As against the above, after considering all mitigating factors, AO has imposed composite penalty of ₹ 4.5 lac which cannot be said to be excessive or unreasonable. Argument of appellant that the delay was unintentional and that the appellant has not gained from such delay and therefore penalty ought not to have been imposed is without any merit, because, firstly, penal liability arises as soon as provisions under the regulations are violated and that penal liability is neither dependent upon intention of parties nor gains accrued from such delay. Secondly, taking above factors as mitigating factors, AO has imposed penalty of ₹ 4.5 lac as against the liability of ₹ 1 crore each imposable for violations committed under regulation 29(1) and 29(2) of SAST Regulations 2011. Similarly, fact that additional shares were not received on account of any positive act on part of appellant is also untenable, because, liability to make disclosure arises once the shareholding of a person exceeds the limits prescribed under SAST Regulations, 2011 and PIT Regulations, 1992, irrespective of the mode and the manner of acquiring those shares. - Decided against the appellant.
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