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2015 (7) TMI 377 - SECURITIES APPELLATE TRIBUNAL MUMBAIPenalty u/s 15HA of SEBI Act, 1992 read with Section 23A and 23E of SCR Act, 1956 - Incorrect reporting of promoter's shareholding to stock exchanges - Wrongly and illegally projected their shareholdings far in excess of their real shareholding by taking into consideration shareholdings of third parties - Violation of Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(f) of PFUTP Regulations, 2003, read with Sections 12A(a), (b) and (c) of SEBI Act, 1992 - Violation of Regulations 13(3) and 13(5) of the SEBI PIT Regulations, 1992 - Validity of legal opinions - Non reporting of purchase or sale of shares to the stock exchanges. Held that:- Incorrect reporting of promoter's shareholding to stock exchanges - In the case in hand, the appellants claim that they had included shares of third parties in their shareholdings on the basis of certain arrangements between the third parties and the appellants and some of the said parties (only 2 or 3 in number) had denied such arrangements. It has been categorically held that the appellants could not have included the shares of third parties into their shareholdings as per the law and hence have been rightly held guilty of violating the provisions of law by SEBI in the impugned order. This finding of SEBI is being upheld by this Tribunal in light of the discussion made hereinabove. Therefore, even if an opportunity to cross examine those 2 or 3 third parties was granted to the appellants, it would not have served any purpose and would also not have made any difference in the findings reached by SEBI. Hence such an opportunity would have been superfluous and a mere formality. Moreover, no prejudice shown to have been caused to the appellants by not granting the cross-examination of those 2-3 witnesses. There is sufficient material on record to prove the violations in question by the appellants which indeed formed the basis of the impugned order. Validity of legal opinions - It is settled law that legal opinions are only advisory in nature and not binding on anyone. Therefore, no legal infirmity can be attributed to the impugned order which holds all the appellants guilty of violating the PFUTP Regulations, 2003 and imposes monetary penalties on them. Non reporting of purchase or sale of shares to the stock exchanges - Four ingredients must be satisfied before attracting the provisions of Regulation 7(1A). A person may be acquirer under SAST Regulations but may not acquire shares as a “person acting in concert” with other and as such he shall not be obliged to make disclosures under Regulation 7(1A) of the SAST Regulations unless he individually crosses the threshold of 2%. In the case in hand the learned adjudicating officer has not recorded any specific finding that there was an understanding or agreement, direct or indirect, among the 10 appellants. In the absence of any such finding or evidence on record, none of the 10 appellants can be held guilty of violating Regulation 7(1A) of the SAST Regulations, 1997. Violation of Regulations 13(3) and 13(5) of the SEBI PIT Regulations, 1992 - If we simply read Regulations 13(3) and 13(5) of the PIT Regulations, we note that a person or promoter is required to make a disclosure to the stock exchange if his shareholding undergoes 2% alongwith his aggregate shareholding. Thus, this provision is almost pari-materia with the provisions of Regulation 7(1A) of the SAST Regulations, 1997. Violation of Regulation 7(1A) of SAST Regulations, 1997, if any, would automatically trigger violation of Regulations 13(3) and 13(5) of the PIT Regulations, 1992. Since we have already held that the charge of violation of Regulation 7(1A) of SAST Regulations, 1997 has not been proved against the ten promoters, including Carissa which is one of the ten promoters, the charge of violation of Regulations 13(3) and 13(5) of PIT Regulations, 1992 qua Carissa must also fail. - In totality appeal nos. 6, 7 and 8 of 2014 are dismissed and appeal nos. 9 to 18 of 2014 are partly allowed in terms of abovesaid.
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