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2019 (6) TMI 640

e disclosures - as contented the physical share certificates had been lost or misplaced and were not traceable - penalty imposed - HELD THAT:- We find that the consistent stand of the appellant was that he had never sold the shares and that the physical shares were misplaced or lost and were not traceable. In order to verify this aspect the Registrar Transfer Agent was called who produced the share transfer forms as well as the original certificates which showed the signatures of the appellant. The signatures of the appellant matched with the specimen signatures kept with the Company. The contention of the appellant that the expert opinion provided by the appellant with regard to his signatures was not taken into consideration is patently misconceived. AO considered the expert opinion and found that it was not necessary as there were ample evidence to show that the signatures on the share transfer forms were that of the appellant. We are further of the opinion that no attempt was made by the appellant to get the signatures appended in the share transfer form compared with the specimen signatures kept with Company. Verifying and comparing the signatures of the appellant on the share .....

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uantum of penalty, in the light of the observations made above after giving an opportunity of hearing to the appellant. - Appeal No. 68 of 2016 - 10-6-2019 - Mr Tarun Agarwala, Presiding Officer, Dr. C. K. G. Nair, Member And Mr M. T. Joshi, Judicial Member For The Appellant : Mr. Kunal Katariya, Advocate with Mr. Neerav B. Merchant, Mr. Bharat Merchant, Mr. Kunal Kothary, Advocates i/b Thakordas & Madgavkar For The Respondent : Mr. Kumar Desai, Advocate with Mr. Chirag Bhavsar, Advocate i/b MDP & Partners JUGDMENT Per : Justice Tarun Agarwala, Presiding Officer 1. The appellant has filed the present appeal against the order dated December 30, 2015 passed by the Adjudicating Officer (hereinafter referred to as, AO ) of Securities and Exchange Board of India (hereinafter referred to as, SEBI ) imposing a penalty of ₹ 4 crores for failure to make disclosures under Regulations 13(3), 13(4A) read with 13(5) of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 (hereinafter referred to as, PIT Regulations ) and Regulations 29(2), 29(3), 30(2) and 30(3) of the Securities and Exchange Board of India (Substantial Acquisition of Shares an .....

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mpany. The appellant thereafter filed written submissions contending for the first time that the signatures on the share transfer forms were forged. In support of this contention, the appellant subsequently, filed an opinion of an expert showing that the signatures on the share transfer forms are not his. 6. The AO after considering all aspects of the matter did not accept the contention raised by the appellant and found that the signatures in the share transfer forms were those of the appellant. Since, the sale of shares made by the appellant had exceeded the benchmark limit as prescribed under the PIT Regulations, the penalty of ₹ 4 crores was imposed. 7. We have heard Mr. Kunal Katariya, the learned counsel for the appellant alongwith Mr. Neerav Merchant, Mr. Bharat Merchant, Mr. Kunal Kothary and Mr. Kumar Desai, the learned counsel for the respondent. Before us, the learned counsel for the appellant made the following submissions :- a. The share transfer form was for transfer of the ₹ 10 share certificate which could not be transferred as in the meanwhile, the shares were split from ₹ 10 to Re. 1/- per share and, consequently, the appellant was entitled to re .....

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fer forms as well as the original certificates which showed the signatures of the appellant. It was found that the signatures of the appellant matched with the specimen signatures kept with the Company. The contention of the appellant that the expert opinion provided by the appellant with regard to his signatures was not taken into consideration is patently misconceived. The AO considered the expert opinion and found that it was not necessary as there were ample evidence to show that the signatures on the share transfer forms were that of the appellant. We are further of the opinion that no attempt was made by the appellant to get the signatures appended in the share transfer form compared with the specimen signatures kept with Company. Verifying and comparing the signatures of the appellant on the share transfer forms with the signatures of the appellant on other documents like PAN Card, Passport, Bank signatures are immaterial when specimen signatures of the appellant are kept with the Company. The primary evidence for comparing the signatures is the specimen signatures kept with the Company. If for some reason, the specimen signatures was not available with the Company then only .....

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nt had sold 52,30,000 shares, it exceeded the benchmark limit as prescribed under Regulation 13(4A) of the PIT Regulations. The appellant was required to disclose change in the shareholding within two days from the date of sale which apparently was not done. Under Regulations 29(2) and 29(3) of the SAST Regulation, 2011, the acquirer was required to disclose the disposal of shares representing 2% or more within two days of the sale. The sale made by the appellant resulted in the decrease in his shareholding which exceeded the benchmark limit as prescribed under Regulation 29(2) of the SAST Regulations. Such disclosures were required to be made which was not done. Thus, the appellant had violated the aforesaid Regulations. 14. A penalty of ₹ 4 crore has been imposed under Section 15A of the SEBI Act. The AO while imposing the maximum penalty took into consideration the judgment of the Hon ble Supreme Court in the matter of SEBI vs Roofit Industries Ltd. [(2016) 12 SCC 125] in which it was held that the factors contemplated under Section 15J cannot be taken into consideration once a violation of the Regulations were found. 15. In our opinion, the imposition of a penalty of S .....

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