TMI Blog2015 (6) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... It is only after appellant agreed to advance loan, ACL transferred shares to the demat account of appellant. Unless appellant had furnished her demat account number, ACL could not have transferred shares. Assuming that shares were erroneously transferred no explanation is given as to how the shares remained in the demat account of the appellant for 43 days. Argument that no investor has suffered on account of non disclosure and that the AO has not considered the mitigating factors set out under Section 15J of SEBI Act, 1992 is without any merit because firstly penalty for non compliance of SAST Regulations, 1997 and PIT Regulations, 1992 is not dependent upon the investors actually suffering on account of such non disclosure. Secondly, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lations, 1997 ( SAST Regulations, 1997 for short) and regulation 13(1) and regulation 13(3) read with regulation 13(5) of SEBI (Prohibition of Insider Trading) Regulations, 1992 ( PIT Regulations, 1992 for short) is the question raised in this appeal. 3. Appellant is a house wife. Appellant is a post graduate in commerce and is also engaged in carrying on the profession of consultancy. In addition to consultancy profession, appellant has been advancing short term loan to various companies with a view to earn interest income. 4. Sometime in August 2010 appellant had agreed to advance loan to Gujarat Metallic Coal Coke Ltd. formerly known as Arvind Chemicals Ltd., ( ACL for short) by creating lien on 3,75,000 shares of Arvind Inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h regulation 13(5) of the PIT Regulations, 1992. Challenging aforesaid order, present appeal is filed. 7. Counsel appearing on behalf of appellant submitted that in anticipation of receiving loan from appellant, ACL instead of creating a lien on the shares of Arvind International, erroneously and without the knowledge of appellant, transferred 3,75,000 shares of Arvind International Ltd. to the demat account of appellant. However, since appellant did not get back her money which was advanced to another borrower, appellant could not advance loan to ACL. Accordingly 3,75,000 shares were transferred back by appellant to the demat account of ACL. Since erroneous transfer of shares was without consideration title in those shares did not pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the appellant. 9. We find it difficult to accept the aforesaid arguments advanced by counsel for appellant. 10. Under regulation 7(1) and regulation 7(2) of SAST Regulations, 1997 any acquirer who acquires shares which (taken together with shares if any held by him) would entitle him to more than five percent or ten percent or fourteen percent or fifty four percent or seventy four percent shares in a company shall disclose at every stage the aggregate of his shareholding in that company to the company and to the stock exchanges where shares of the target company are listed within two days of acquisition of shares or voting rights as the case may be. Similarly, regulation 13(1) and regulation 13(3) read with regulation 13(5) of PI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares were erroneously transferred no explanation is given as to how the shares remained in the demat account of the appellant for 43 days. 12. Argument that no investor has suffered on account of non disclosure and that the AO has not considered the mitigating factors set out under Section 15J of SEBI Act, 1992 is without any merit because firstly penalty for non compliance of SAST Regulations, 1997 and PIT Regulations, 1992 is not dependent upon the investors actually suffering on account of such non disclosure. Secondly, penalty under Section 15A(b) for non compliance of the regulation framed by SEBI is ₹ 1 lac for each day during which such failure continues or 1 crore rupees whichever is less. Admittedly, 3,75,000 shares of Arv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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