TMI Blog2023 (9) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... sidiary which was also violative of the LODR Regulations - penalty of Rs. 25 lakhs under Section 23E of the SCRA against the Company and Rs. 10 lakh each on the two Independent Directors and Rs. 4 lakhs on the Company Secretary - HELD THAT:- Company and the Company Secretary failed to disclose this event under Regulation 30 of the LODR Regulations. Under Regulation 6, the Compliance Officer is responsible for ensuring conformity with the regulatory provisions applicable to a listed company and, therefore, the Company Secretary failed to discharge his duties. We find that the appellants had committed violations of various provisions of the LODR Regulations. The said violations are however not that serious warranting imposition of high pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company Secretary a penalty of Rs. 4 lakhs has been imposed for violation of Regulation 6(2)(a) i.e. for not disclosing the appointment of the forensic auditor. As the Company and its directors have been penalized the imposition of penalty against the Company Secretary should be the minimum penalty. We, consequently reduce the penalty of Rs. 4 lakhs to Rs. 1 lakh. - JUSTICE TARUN AGARWALA, PRESIDING OFFICER AND MS. MEERA SWARUP, TECHNICAL MEMBER For the Appellant : Ms. Shruti Rajan, Advocate with Mr. Anubhav Ghosh and Mr. Vivek Shah, Advocates i/b Trilegal. For the Respondent : Mr. Pradeep Sancheti, Senior Advocate with Mr. Mihir Mody, Mr. Arnav Misra and Mr. Harshvardhan Melanta, Advocates i/b K. Ashar Co. PER: J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing due process of approval of related party transactions. b) Independence of Independent Directors. c) Non-disclosure of the forensic audit being initiated against the Company which is a material event under Regulation 30 of the LODR Regulations requiring disclosure which the Company and Company Secretary failed to do so. 4. The AO after considering the replies and the material evidence on record found the appellants guilty of the aforesaid charges and accordingly imposed a penalty of Rs. 25 lakhs under Section 23E of the SCRA against the Company and Rs. 10 lakh each on the two Independent Directors and Rs. 4 lakhs on the Company Secretary. 5. We have heard Ms. Shruti Rajan, the learned counsel, Shri Anubhav Ghosh, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the listed entity or its holding, subsidiary or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed; Regulation 4(2)(f) Responsibilities of the board of directors: The board of directors of the listed entity shall have the following responsibilities (iii) Other responsibilities: .. (6) The board of directors shall maintain high ethical standards and shall take into account the interests of stakeholders. 9. The aforesaid provision places a bar on appointment of a relative of an independent director in the Company. In the instant case, at the time when the independent directors were appointed no such relative of the independe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid, we find that the Company and the Company Secretary failed to disclose this event under Regulation 30 of the LODR Regulations. Under Regulation 6, the Compliance Officer is responsible for ensuring conformity with the regulatory provisions applicable to a listed company and, therefore, the Company Secretary failed to discharge his duties. 12. In view of the aforesaid, we find that the appellants had committed violations of various provisions of the LODR Regulations. The said violations are however not that serious warranting imposition of high penalties. In the instant case, the Company has been penalized under Section 23E of the SCRA. In Suzlon Energy Ltd. Anr. vs. SEBI Appeal No. 201 of 2018 decided on May 3, 2021 this Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Secretary a penalty of Rs. 4 lakhs has been imposed for violation of Regulation 6(2)(a) i.e. for not disclosing the appointment of the forensic auditor. Considering the facts and circumstances that the Company and its directors have been penalized the imposition of penalty against the Company Secretary should be the minimum penalty. We, consequently reduce the penalty of Rs. 4 lakhs to Rs. 1 lakh. 17. Considering the aforesaid, the appeals are partly allowed and the impugned order is modified accordingly. 18. This order will be digitally signed by the Private Secretary on behalf of the bench and all concerned parties are directed to act on the digitally signed copy of this order. Certified copy of this order is also available from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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