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2015 (7) TMI 338 - AT - Companies LawPenalty u/s 15A(b) of the SEBI Act, 1992 - Non-disclosure of acquisition and/or sale of shares - Violation of Regulation 13(4) read with 13(5) of SEBI (PIT) Regulations, 1992 - Violation of Regulations 7(1) and 7(2) of SAST Regulations, 1997 - Held that:- Penalty cannot be considered unreasonable in the facts and circumstances of the present case. The principle of proportionality would come to the rescue of an appellant only when the penalty sought to be imposed by SEBI is highly, and rather shockingly, disproportionate to the gravity, nature and extent of the violation involved in a given case, including any illegal profits which might have been earned by a person as a result of such violation or any loss which might have been caused to the innocent investors directly due to such violation. Similarly, penalty of ₹ 5 lac each on the 5 promoters is justified and not unreasonable considering the nature of violation and maximum penalty of ₹ 1 crore imposable under law on each of them. Appellants in Appeal No. 167 of 2014, and Appeal No. 170 of 2014, namely, Mr. P V Ravi Kumar and P Leela Madhuri Devi are husband and wife and they undertook sale and purchase of 4,51,750 shares between themselves. None of them made any disclosure as required by Regulation 13(1) read with 13(5) of PIT Regulations as also under Regulation 7(1) and 7(2) of SAST Regulations, 1997 in as much it led to change in their shareholding pattern by 2%. Even in case of appellant in Appeal No. 174 of 2014, namely, Mr. P Suresh Gandhi, he did not make any disclosure in respect of sale of 2,83,500 shares of the company in violation of PIT Regulations in question. He being a public investor, the learned AO has imposed a penalty of ₹ 3 lac only as against ₹ 1 crore imposable under law. Therefore, the imposition of above said penalties can neither to be termed as discriminatory nor disproportionate to the admitted violation, particularly in the facts and circumstances of the case as enumerated above. - Decided against the appellants.
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