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2023 (9) TMI 574 - SECURITIES APPELLATE TRIBUNAL MUMBAIFraudulent issuance of GDRs by the Company - Company had misled the investors in believing that the GDR issue was successful whereas there was only one subscriber - penalty of Rs. 1 crore for violation of Section 12A of SEBI on ex-managing director of the company as filled this appeal - HELD THAT:- We find that the proceeds of the GDR issue were received by the Company belatedly and was utilized for the purpose for which the GDR was issued. There is no diversion of funds and no wrongful dealings in securities other than the fact that amount was received belatedly. The AO has himself given a finding that no disproportionate gain is attributed to the appellants nor any finding that any loss was caused to the shareholders or investors. Whether the penalty imposed by the AO was harsh and excessive? - As the appellant had resigned on January 14, 2008. The money raised through GDRs has been received by the Company and has not been misappropriated. The same has been utilitised for the purpose for which the GDR was issued which fact has not been disputed. Thus, it is not a case of defalcation of the funds. Thus, the imposition of penalty upon the appellant after 12 years from date of resigning is excessive. In a large number of cases we have reduced the penalty to Rs. 10 lakh. While affirming the order of the AO for the violations committed by the Company we reduce the penalty from Rs. 1 crore to Rs. 10 lacs. The appeal is partly allowed. In the circumstances of the case, parties shall bear their own costs.
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