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2017 (2) TMI 288 - AT - Companies LawPenalty under Section 15A(b) of SEBI Act - appellant acquired and sold shares of Target Company in excess of the limits prescribed under regulation 7(1) read with regulation 7(2) of the SAST Regulations, 1997/ regulation 13(1) of PIT Regulations - Held that:- Admittedly, the appellant has failed to make disclosures as stipulated under those provisions. It is also admitted that the appellant has failed to make disclosures as contemplated under regulation 13(3) read with regulation 13(5) of the PIT Regulations. Where a person violates the provisions contained in the Regulations framed by SEBI then that person is inter-alia liable for monetary penalty as stipulated under SEBI Act. Argument of the appellant that inspite of the violations committed by the appellant, no penalty could be imposed on the appellant, because the proceedings have been initiated after several years from the date on which violations took place is without any merit. Neither the SEBI Act nor the Regulations framed thereunder stipulate that proceedings for imposing penalty must be initiated within a specified time from the date on which violations are committed. Argument advanced on behalf of the appellant that substantial shares of the Target Company were acquired by the appellant under a pledge and disclosure provisions would not apply to the pledged shares is equally without any merit. Once the shares are transferred to the demat account of the appellant, the appellant becomes absolute owner of the said shares with all the benefits attached to those shares. In such a case, appellant is bound and liable to make disclosures especially when such acquisitions are in excess of the limits prescribed under the respective regulations. Since the appellant has failed to make disclosures, appellant cannot escape penal liability. Argument of the appellant that the penalty imposed against the appellant is exorbitant and excessively high and that the said penalty has been imposed without considering the mitigating factors set out under Section 15J of the SEBI Act is also without any merit. The disclosures were not made the penalty imposable for violating regulation 7(1) read with 7(2) of the SAST Regulations, 1997/ regulation 13(1) of the PIT Regulations would be ₹ 1 crore and for violating regulation 13(3) read with regulation 13(5) of the PIT Regulations the penalty imposable would be ₹ 1 crore. Thus, as against the penalty of ₹ 2 crore imposable against the appellant, the AO of SEBI after taking into consideration all mitigating factors has imposed penalty of ₹ 13 lac which cannot be said to be excessively high or exorbitant.
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