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2019 (9) TMI 228 - HC - SEBIApplication for settlement rejected on the ground of delay which is not condoned - eligible reasons for delay - Contravention of non-disclosure of tax demand - violation of certain provisions of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 alleging certain non-disclosures - HELD THAT:- Sufficient grounds were made out for condonation of delay. It may be that from the date of second show-cause notice, the period of delay was substantial. Mere number of days of delay would not decide the sufficiency of cause made out by the applicant for condonation of delay. In the present case, it was pointed out that there was legal doubt whether once the company has been visited with penalty, subsequently show-cause notice can be issued against the directors of the company. Keeping the said legal dispute aside, it was decided to offer the settlement which would bring an early end to the dispute. The decision to offer settlement was, therefore, taken for saving time, cost and to bring early end to the litigation. The Board summarily rejected the said application by recording one line reason that the panel of whole time members did not find the reasons sufficient. So is the case with the second application for condonation of delay dated 16.8.2017. In this application, the petitioner had made out further elaborate grounds. It was pointed out that upon receipt of the show-cause notice alleging certain non-disclosures, the petitioner began to verify whether all disclosures were duly made or not. These non-disclosures pertained to December, 2007, April, 2008, March, 2010 and March, 2011. Since the records were old, verification exercise took considerable time. Attempt was made to trace out documents of disclosure and despatch made to NSE and BSE. This caused further delay. It was further stated that even at present, the petitioner was not fully confident whether all disclosures were duly made or not. It is possible that though disclosures may have been made, documents are not immediately traceable since various officers in charge have changed from time to time. The petitioner was also additionally seeking legal advice on various aspects. Considering such facts and also looking to the fact that the adjudication proceedings have not commenced, the petitioner had in order to save time, cost and to curtail litigation, decided to apply for settlement. The grounds made out for condonation of delay were elaborate and sufficient. Such grounds were rejected with one sentence that they were not found sufficient. In this case also, in our opinion, the Board has committed a serious error. In both the cases, it was specifically stated by the petitioner and not refuted by the Board that at the time of making the settlement application, adjudication proceedings (of second and third show-cause notices) had not yet commenced. No progress at all in the show-cause notices had, therefore, been made. The petitioner had not benefited out of delay. The applications for condonation of delay at exhibit M and exhibit P stand allowed.
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