TMI Blog2022 (1) TMI 1389X X X X Extracts X X X X X X X X Extracts X X X X ..... are of the view, when a question of delay has been raised, it is imperative for the AO to deal with the issue. In the instant case, we find that there is an inordinate delay in the issuance of the show cause notice. No explanation whatsoever has been given by the respondent as to why the show cause notice could not be issued earlier. In the absence of any justification, we are of the view that the show cause notice was not issued within a reasonable time and, in fact there has been an inordinate delay in the issuance of the show cause notice. We are further of the opinion, that old and stale disputes should not be raised. Thus the impugned order cannot be sustained and is quashed. The appeal is allowed with costs. - Misc. Application No. 593 of 2020 And Appeal No. 559 of 2020 - - - Dated:- 4-1-2022 - JUSTICE TARUN AGARWALA, PRESIDING OFFICER AND JUSTICE M. T. JOSHI, JUDICIAL MEMBER For the Appellant : Mr. Mohammed Ashraf, Advocate with Mr. Deepakar Livingston and Mr. R.P Shirole, Advocates For the Respondent : Mr. Suraj Chaudhary, Advocate with Ms. Nidhi Singh, Ms. Deepti Mohan, Ms. Binjal Samani, Ms. Aditi Palnitkar and Ms. Moksha Kothari, Advocates i/b Vidhii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed a penalty of Rs. 10 lakhs under Section 23H of Securities Contracts (Regulation) Act, 1956 ( SCRA for convenience) and 15HB and 15C of the SEBI Act, 1992. 5. We have heard Shri Mohammed Ashraf, the learned counsel for the appellant and Shri Suraj Chaudhary, the learned counsel for the respondent. 6. Admittedly, the inspection was conducted in January / February 2012. Inspection was submitted on May 07, 2012 and a reply was given on June 14, 2012. Thereafter, nothing was done and the show cause notice was eventually issued on December 12, 2019 after 7 years. There has been an inordinate delay in the issuance of the show cause notice. A specific plea has been raised by the appellant on the issue of delay. We find that without adverting to the contention raised by the appellant and inspite of noting that many of the discrepancies noticed in the inspection has been rectified by the appellant, the AO has skirted the issue on the ground that since the appellant did not act with skill, care and diligence, it proceeded to hold that the appellant cannot be absolved for the lapses incurred by him and accordingly imposed a penalty. 7. In our view, the view taken by the AO is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Punjab vs. Bhatinda District Coop. Milk P. Union Ltd (2007) Vol.11 SCC 363 and Joint Collector Ranga Reddy Dist. Anr. vs. D. Narsing Rao Ors. (2015) Vol. 3 SCC 695. The Supreme Court recently in the case of Adjudicating Officer, SEBI vs. Bhavesh Pabari (2019) SCC Online SC 294 held: There are judgments which hold that when the period of limitation is not prescribed, such power must be exercised within a reasonable time. What would be reasonable time, would depend upon the facts and circumstances of the case, nature of the default/statute, prejudice caused, whether the third-party rights had been created etc. 13. Similar view was again relied in Ashok Shivlal Rupani Ors. vs. SEBI (Appeal No. 417 of 2018 along with other connected appeals decided on August 22, 2019) and again in Sanjay Jethalal Soni Ors. vs SEBI in Appeal No. 102 of 2019 and other connected appeals decided on November 14 2019. 14. We also find that in the case of Ashok Shivlal Rupani (supra) the period of investigation was January 4, 2010 to January 10, 2011 in the scrip of M/s. Oregon Commercial Ltd. and the show cause notice issued on November 20, 2017 which this Tribunal held that there was an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent in initiating proceedings against the appellants for alleged violations. Much water has flown since the alleged violations and at this belated stage the appellants cannot be penalized. It is alleged that disclosure under PIT Regulations was not made but similar disclosure was made by the appellant under SAST Regulations. Therefore, information was available on the Stock Exchange and therefore it cannot be said that the respondents were unaware of the alleged violations. Further, the purpose of disclosure was to make the market aware of the change of shareholding of the shareholders. When a disclosure was made by the company under SAST Regulations the investors became aware of the change in the shareholding. The non-compliance of Regulation 13 if any becomes technical in nature. 7. In Mr. Rakesh Kathotia Ors. vs. SEBI (Appeal No. 07 of 2016 decided by this Tribunal on 27.05.2019) proceedings were quashed on account of inordinate delay. The said decision is squarely applicable to the instant case. For facility, the relevant paragraph of the order is extracted hereunder: 23. It is no doubt true that no period of limitation is prescribed in the Act or the Regulations for i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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