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2015 (10) TMI 267 - SECURITIES APPELLATE TRIBUNAL MUMBAI

2015 (10) TMI 267 - SECURITIES APPELLATE TRIBUNAL MUMBAI - TMI - Validity of penalty imposed under Section 15A(b) and 15HB of Securities Exchange Board of India Act – Appellant contends that there wasn’t any intention on his part to suppress purchase and sale of shares – Appellant holds that failure to make disclosure has not resulted in any profit for him or loss to the investors and was simply an inadvertent error with no malafide intention -– Appellant further contends that violation is not r .....

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er Section 15A(b) and Section 15HB instead of ₹ 1crore which cannot be said to be excessively harsh or unreasonable – Penalty is imposable irrespective of the fact that the company/promoter-director have been incurring losses or not - Omission on the part of the appellant was detrimental to the interest of the investors and hence no fault can be found with the decision of SEBI – Decided in favour of the Respondent. - Appeal No. 434 of 2014 - Dated:- 4-8-2015 - J.P. Devadhar and Jog Sin .....

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ia Act, 1992 (SEBI Act for short) for violating the provisions of Regulation 13(4) and 13(4A) read with Regulation 13(5) of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 (PIT Regulations for short) and penalty of ₹ 2 lac under section 15HB of SEBI Act is imposed for violating clause 4.2 of the Model Code of Conduct for Prevention of Insider Trading for Listed Companies set out in part A, Schedule I of PIT Regulations ( Model Code of Conduct for s .....

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Regulations 13(4) and 13(4A) read with Regulation 13(5) of the PIT Regulations it was obligatory on part of the appellant to make disclosure to the company and to the stock exchange in respect of the purchases made on 9th January, 2013 and 29th January, 2013 within two working days from the date of purchase. As the appellant failed to make above disclosures to the stock exchange in which the shares of the company were listed, there was violation of Regulation 13(4) and 13(4A) of the PIT Regulat .....

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appellant to make disclosures within the time stipulated under Regulation 13(4) and 13(4A) of the PIT Regulations submitted that the penalty imposed under section 15A(b) is excessively harsh and deserves to be set aside and in any event deserves to be reduced substantially for the following reasons: a) there is nothing in the impugned order to suggest that there was any intention on part of the appellant to suppress purchase and sale of shares of the company in which the appellant was promoter/d .....

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ffect that there is any disproportionate gain or unfair advantage to the appellant as a result of the default and since loss caused to the investors due to the default could not be ascertained, the adjudicating officer is not justified in imposing the penalty of ₹ 5 lac under section 15A(b) of SEBI Act. 5. As regards the penalty of ₹ 2 lac imposed under section 15HB of SEBI Act for violating clause 4.2 of the Model Code of Conduct, Mr. Chaterji submitted that the opposite transaction .....

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1.9.2012) Mr. Chatterji submitted that in the facts of the present case imposing penalty under section 15A(b) and section 15HB of the SEBI Act is unjustified and hence deserves to be set aside and in the alternative deserves to be reduced substantially. 7. We see no merit in the above contentions. 8. It is not in dispute that the appellant has violated Regulations 13(4) and 13(4A) of the PIT Regulations which are mandatory in nature. Failure to make disclosures within time stipulated under Regul .....

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ore. However, after taking into consideration all mitigating factors as contemplated under section 15J of the SEBI Act, the adjudicating officer has imposed penalty of ₹ 5 lac as against the imposable penalty of ₹ 1 crore, which cannot be said to be excessively harsh or unreasonable. Various mitigating factors canvassed before us were in fact canvassed before the Adjudicating Officer and it is only after recording those mitigating factors penalty of ₹ 5 lac is imposed as agains .....

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onduct. Penalty imposable for such violations under section 15HB of the SEBI Act is up to ₹ 1 crore. However, after considering all mitigating factors pointed out by the appellant, the adjudicating officer has imposed penalty of ₹ 2 lac as against the penalty of ₹ 1crore imposable under section 15HB of the SEBI Act which cannot be said to be unreasonable or excessively harsh. 10. Reliance placed by counsel for the appellant on the decision of this Tribunal in case of NSDL (supr .....

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g the course of inspection, whereas, in the present case, appellant is guilty of not complying with the mandatory requirement of making disclosures under Regulation 13 of PIT Regulations and is held guilty of entering into opposite transactions in violation of the Model Code of Conduct. Thus both decisions relied upon by the counsel for the appellant are wholly distinguishable and have no relevance to the facts of the present case. 11. Mr. Chatterji learned senior counsel appearing on behalf of .....

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