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2019 (5) TMI 1762 - AT - SEBIViolation of Takeover Regulations - sale of the shares of the target Company exceeded two percent of the share capital of the target Company and target Company failed to make the disclosure to the stock exchange as contemplated under Regulation 7(1A) of the Takeover Regulations - inter-se transfer of shares from Appellant no.6 for violating Regulation 3(3) read with Regulation 3(4) - HELD THAT:- Sale made by the appellants which aggregated two percent or more of the share capital of the target Company was required to be disclosed by the acquirer/appellants of the target Company within two days under Regulation 7(1A). Thus, for non-disclosure of the sale of shares the appellants have violated the provisions of Regulation 7(1A). Appellants cannot be faulted and penalised on this score at this stage. They have a decision in their favour in the case of Ravi Mohan [2016 (3) TMI 93 - SECURITIES APPELLATE TRIBUNAL MUMBAI]which is still valid till date and has not been set aside by a superior forum. Further, the respondent SEBI has accepted the decision of this Tribunal in the case of Ravi Mohan (supra) which can be seen from the fact that a similar provision, namely, Regulation 29 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 was amended after Ravi Mohan’s decision was given by this Tribunal in 2015. Even though we do not agree with the ratio of the decision in Ravi Mohan’s case, nonetheless, the said decision having been accepted by SEBI, the appellant in the instant case cannot be penalized for violation of Regulation 7(1A) read with Regulation 7(2). The imposition of penalty by the Adjudicating Officer on this score cannot be sustained. Even though there is no increase in the percentage of shares or voting power amongst the promoter groups, nonetheless, the percentage of shareholding of individual shareholder is required to be intimated under Regulations 3(3) and 3(4). Not intimating the authorities under Regulations 3(3) and 3(4) leads to a violation of the said provisions. Thus, the imposition of penalty by the Adjudicating Officer on this score needs no interference. In the light of the aforesaid, since Appellant no.6 also failed to disclose the sale of its shares to Appellant no.7, the imposition of penalty is justified and needs no interference. A sum of ₹ 2 lakhs was imposed upon the Appellant no.8 for failure to disclose the promoters holding in the annual return for the financial year 2010-11 for apparent violation of Regulation 8(3) - every Company is required to make yearly disclosures in respect of the promoters holding of the Company. The said disclosure is required to be made within thirty days from the financial year ending 31st March. In the instant case, there was a delay of 11 days and, on account of the delay, a penalty of ₹ 2 lakhs has been imposed. The contention of the appellant that they had furnished the disclosure before 31st March but since the information furnished was incorrect the rectified information was submitted within 11 days thereafter and, therefore, there was no concealment of furnishing of information. The contention of the appellant cannot be accepted in as much as the penalty has been imposed not for furnishing incorrect information but the penalty has been imposed for the delay in furnishing the information. Consequently, we do not find any error in the imposition of penalty upon Appellant no.8 for violation of Regulation 8(3). Appeal is partly allowed. The imposition of penalty of ₹ 15 lakhs for violation of Regulation 7(1) and 7(2) is quashed. The imposition of penalty of ₹ 3 lakhs upon Appellant no.1, ₹ 2 lakhs upon the Appellant no.2 and ₹ 6 lakhs on Appellant no.6 and ₹ 8 lakhs upon Appellant no.1, 5 and 7 for violation of Regulation 7(1A) read with Regulation 7(2) are also quashed. The imposition of penalty of ₹ 7 lakhs for violation of Regulation 3(3) read with Regulation 3(4) upon Appellant no.7, the imposition of penalty of ₹ 2 lakhs for violation of Regulation 7(3) upon Appellant no.8 and imposition of penalty of ₹ 2 lakhs for violation of Reg.8(3) upon Appellant no.8 is affirmed. The said amount shall be deposited by the appellants jointly and severally within six weeks from today.
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