|
Advanced Search Options
SEBI - Case Laws
Showing 1 to 20 of 641 Records
-
2025 (3) TMI 1404
Setting aside of the cancellation of sale of landed properties in pursuance of e-auction initiated by SEBI upon acceptance of the remaining consideration money and/or appropriate writ for refund of earnest money was dismissed
HELD THAT:- Proceeding whereby e-auction of the properties, confirmation and cancellation of the auction sale was taken in accordance with relevant provisions of the Rules contained in the Second Schedule of Income Tax Act with necessary modifications.
Rule 58 of the Second Schedule of Income Tax Act and the provision contained in Order XXI Rule 86 of the Civil Procedure Code has extended a discretion upon the tax recovery officer/authorities to decide whether to forfeit the EMD or not and if so to what extent.
The facts and circumstances obtaining in the case at hand, no such discretion was exercised by the respondent and the respondent proceeded to forfeit the entire deposit amount in a manner as if it was automatic. Needless to say, no opportunity of hearing was afforded to the appellants. The entire EMD was directed to be forfeited without taking into consideration the loss and damage suffered by the respondent owing to the default on the part of the appellants in making the payment of balance consideration money.
In course of hearing of the instant appeal, the appellants never endeavored to challenge the finding of learned Single Judge whereby learned Single Judge disbelieved the case of the appellant to the effect that he was prevented by the intervention of COVID-19 in making payment of the balance consideration money within time specified in the contract. We, therefore, have no justification to interfere with such finding of learned Single Judge. Accordingly, we uphold the same.
Set aside the impugned judgment and order so far as it relates to the rejection of the prayer of the appellant for return of EMD. The respondent shall proceed to determine the nature and extent of forfeiture of the EMD amount afresh. In doing so, the respondent shall provide sufficient opportunity of being heard to the appellant. The respondent is at liberty to hear any other parties and consult any document as it deems necessary. The respondent shall take a decision in this regard within 8 weeks from date and communicate its decision to the party it heard forthwith thereafter.
-
2025 (3) TMI 1256
Penalty u/s 15A(c) - Failure to sign and date the research reports and to maintain records of research recommendations and rationale for arriving at research recommendations - HELD THAT:- To define as a proper “research report” or a “research recommendation” the document ought to have been duly signed and dated. The allegation by the appellant that at the time of inspection, the inspecting team refused to see the rationale is unsubstantiated and vague. On the other hand, the evidence on record being the core finding on inspection clearly shows that the appellant’s claim is untenable and the appellant’s reliance only on pre-inspection questionnaire is wholly unsustainable. We therefore, don’t find merit in the submission of the appellant.
Not maintaining records of ‘Public Appearances’ - No merit in appellant’s contention that publishing the research report on Whatsapp/Telegraph channels does not amount to “Public appearance”. In our considered view, the definition of the term “Public appearance” under Regulation 2(1)(q) of the RA Regulation includes making recommendations/rendering advice relating to securities, on Whatsapp/Telegram channels, in respect of which the appellant is required to make applicable disclosures. We note that the appellant does not maintain any records, whatsoever, in respect of the publication on Whatsapp/Telegram groups, of the research reports/ recommendations.
Thus, we uphold the order of the AO of imposing of penalty under Section 15A(c).
Penalty u/s 15EB - Material change in ‘internal policy’ which was not communicated to SEBI - Appellant is clearly required to have appropriate mechanisms to ensure independence of his research activities. Undisputedly, he is carrying on other business activities in his individual capacity. The same was required to be reported to the respondent at the time of registration and if there was any change, the same affects the independence of his ‘research analyst’ function qua his other businesses, which may create conflict situations, as seen in the case of the appellant. Therefore, failure to report change in Internal policy has rightly been held as violation of the relevant regulation by the respondent.
In view of the same, the appellant’s submission is untenable and it is rejected.
Failure to ensure independence of its research activities from its other activities - It is undisputed that the appellant is an individual and a registered Research Analyst. He also carries on independent business activities in his proprietary capacity, inter alia, a Chartered Accountancy Division, a Spiritual/Vipassana Teaching Division and Manish Goel News Broadcast Division (MGNBD), in which he claims to be only an employee. Though no fee is received by him for making research recommendations in the self-manned RA division, admittedly, he earns fee in the other 3 divisions, including the MGNBD, in which he earns fee by broadcasting the research recommendations (which are made available free by RA division).
Thus, services in all these verticals are singularly provided by the appellant only.
By no stretch of imagination, an arm’s length relationship can be construed within the same ‘individual’. Hence, we uphold the finding of the respondent that the appellant failed to make arm’s length between his RA functions and other functions. Secondly, the argument that the SEBI has given the investment advisory certificate and RA certificate both to the appellant is also incorrect on facts, since the investment advisory certificate was issued to an entity titled MSRAPL (a Company) whilst the RA Certificate was granted to the appellant in his proprietary capacity as an ‘individual’. Moreover, it was the duty of the appellant to have made due disclosure in this regard while making the applications for registration as RA and for investment advisory functions of MGRAPL.
Appellant has carried out his independent business of Chartered Accountancy Division through which he used to solicit the business and admittedly no mechanism was put in place to dealing with a conflict situation between the RA division and that division. In view of this, the appellant’s claim is devoid of merit and is rejected.
Trading in stocks recommended by the appellant during the restricted period - An independent research analyst to do only business activity of ‘research analysis or preparation and/ or publication of research report’, whereas, it is evident that the appellant has been carrying on several business activities in his individual capacity, which shall have a bearing on his independent functioning as an independent research analyst.
Undisputedly, the appellant is a Research Analyst, registered with the SEBI. Since the appellant is not employed as a Research Analyst by any research entity, by implication his case falls under the other alternative category of ‘independent research analyst’ under Regulation 16(2). Therefore, appellant’s contention that prescribed period applies to independent research analyst is baseless and rejected.
Failure to make necessary disclosure in the research report/ recommendations - As we find that no explanation was given by the appellant as to how the research report of ‘Investment Trust of India’ prepared by the appellant reached the client and why the same was not duly disclosed by him. The fact remains that the report has reached the client. Under the circumstances, we find his explanation with respect to violation of disclosure requirement under Regulation 19 as unsatisfactory.
Regarding the second allegation, we find that in terms of the RA Regulations 21(1), the appellant was required to make disclosure in respect of his registration status and details of financial interest in the Company. The screenshots of Telegram Channels provided by the respondent show that no such disclosure was made by the appellant regarding his RA number or financial interest in securities in respect of which recommendations were made. The appellant questioned the authenticity of such screenshots. This contention is wholly untenable because screenshots are from appellant’s phone.
Failure to maintain any record of rationales - There is no evidence on record to prove that the appellant was asked through the PIQ to furnish the rationale of the research recommendations. The respondent has not denied that the rationale were provided through the SCN. There is no conclusive evidence to hold that the appellant was asked but did not provide the rationale during the inspection and that the appellant has been providing recommendations without any underlying research, as undisputedly, considering the client base of the appellant, there have not been statistically significant number of complaints against the appellant, which is not possible if his recommendations were random guesses without supported by research. Therefore, in our view, SEBI’s findings on this aspect are unsustainable.
Non-compliance with the KYC procedure - Relying upon the decision in the case of K. Premchand [1953 (10) TMI 5 - SUPREME COURT] we have already held that it is not possible to construe the possibility of having arm’s length relationship within the appellant’s own various income earning activities in individual proprietary capacity qua his Research Analyst activities. Hence, in our considered view, the fiction of arm’s length does not exist between appellant’s fee-yielding business activities qua the Research Analyst division, which too was a proprietary in his individual capacity only.
Non-disclosure of the term ‘Research Analyst’ in recommendations / respect of 9 stocks on Whatsapp/ Telegram chats - Evidently, the respondent has downloaded the Whatsapp chats in respect of appellant from his specific authorised telephone number. The respondent at every stage and even at the appellate stage asked the appellant to furnish details of the telephone number and the appellant has not denied the contents of the Whatsapp chat, which admittedly contains specific recommendations made by him with respect to the recommendations for 9 stocks. Further, the appellant failed to submit any proper documentary evidence to show that he had complied with the aforesaid regulatory requirements. In view of this we find no merit in the plea of the appellant, in respect of this violation.
Keeping in view the fact that the defaults made by the appellant of the RA Regulations are multiple and repetitive and lack any credible explanation, we hold that the quantum of penalty levied by the AO is justified in view of the provisions of Section 15J of the SEBI Act.
Penalty u/s 15HA - We find that the appellant has not denied violation in respect of one scrip i.e. Swasti Vinayak Synthetics Ltd. in respect of which the recommendation through Whatsapp message of assured high returns was made with the offer of one free service. The same undisputedly, falls within the scope of Regulation 4(2)(k) of the PFUTP Regulations, amounting to furnishing of misleading information. Keeping in view the above, we uphold the action of the AO imposing a penalty of Rs. 15 lakhs under Section 15HA.
-
2025 (3) TMI 1145
Penalty u/s 15HB of the SEBI Act - delay in commencing the adjudication proceedings against the appellant - HELD THAT:- A common SCN was issued on September 28, 2021. Since all these complaints are with regard to investment advices given by the appellant, we do not find any error in issuing a common show cause notice, which reduces multiplicity of proceedings. It is settled that where no limitation is prescribed, proceedings have to initiated in a reasonable period. Further, as rightly urged by Mr. Sancheti, appellants have failed to demonstrate any prejudice caused due to the delay. Considering the avowed object of IA Regulations, we find no merit in ground of delay taken by the appellant.
Double jeopardy, SEBI is right in contending that the proceedings before WTM and the AO are completely different under different provisions of the SEBI Act. Therefore, is no merit in this ground.
Denial of natural justice in rejecting the settlement application, as rightly contended by Mr. Sancheti, an appeal against rejection of application for settlement is barred under Section 15JB(4) of the SEBI Act. Hence this ground is also untenable.
Notice for inspection was served on the day of the inspection -We note that the impugned proceedings were started following several complaints received against the appellants. The appellant being a registered Investment advisory firm, was required to abide by the IA Regulations but on inspection in 2015 and later in 2017, it was found to be lacking on several counts. We are persuaded to accept SEBI’s contention that Appellants have not demonstrated any prejudice caused to them. Moreover, during proceedings, appellants were given opportunity to defend their cause. Hence, this ground is also baseless.
Violation-1 - Whether appellant has violated Regulation 15(8) of the IA Regulations (KYC Procedure)? - We are of the vies that the appellant has not complied with the conditions laid down by the SEBI while granting ‘Certificate of Registration’ as an investment adviser conveyed vide letter dated May 19, 2014. Further, even prior to coming into operation of the IA Regulation 2013, appellant was covered by the SEBI circular dated December 23, 2011, which was addressed to SEBI registered intermediaries, even though the same did not specifically use the nomenclature ‘investment adviser’. Further, SEBI’s Circular (dated December 23, 2011) contains guidelines in pursuance of the SEBI KYC Registration Agency (KRA) Regulations, 2011 which required the appellant to upload the KYC data in conformity with details sought in the uniform KYC Form prescribed in the SEBI Circular dated October 5, 2011. It is clear that the appellant has failed to comply with the same.
Appellant vide letter dated July 7, 2015 has admitted that prior to April 1, 2015, it was not downloading KYC Forms from KRA. Therefore, we find no merit in appellant’s ground and hold this point in the affirmative.
Violation-2 - Whether appellant failed to carry out Risk profiling (RP) and violated Regulation 16? - We note that at the time of inspection, the SEBI found the appellant lacking in carrying out complete risk profiling. While some fields were found to be empty in the questionnaire to its clients, important details such as investment objectives were not even captured. The appellant shared details of one party but the SEBI’s findings are based on the evidence recorded at the time of inspection, which remained uncontested. In view of this, we don’t find no merit in appellant’s contention and this point is also held in the affirmative.
Violation-3 - Whether appellant has violated Regulation 17 requiring Suitability assessment to be made for the client before advising any product? - Appellant’s contention that product details were available on the website is not refuted by the SEBI. However, appellant did not carry out specific Suitability Assessment for individual clients before advising any product. This could have exposed the clients to serious risk. Moreover, admittedly the complete product details were not disclosed by the appellant until a client made a specific request for the same, which is a clear violation of Regulation 17 of IA Regulations. Hence we hold this point also in the affirmative.
Violation-4 - Whether appellant has violated Regulation 18 read with clause 5 of Code Of Conduct under Schedule III of IA Regulations, 2013? - On careful consideration, we find that the appellant did not make full disclosure in respect of all material information about all terms and conditions on which services are offered. We find that the appellant’s explanation with regard to the finding of the inspection that the method of calculation used by the appellant for assessing performance track record did not take into account advices provided on all the calls, but covered only such calls which were profit-making is not satisfactory as it does not give correct picture to the clients about the products offered. Therefore, we find no merit in appellant’s contention and hold this point also in the affirmative.
Violation-5 - Whether appellant has violated Regulation 22 of IA Regulations? - We find that the appellant is not a broker and hence execution activities cannot be carried out by it. The appellant has provided execution services to brokers of some of their clients and it was brokers who used to provide execution services and not the appellant. The appellant’s claim that it has not charged any fee for such execution business for client through the brokers, has not been rebutted. Hence, appellant is right in its contention. Accordingly, we hold this point in the negative.
Violation-6 - Whether appellant has violated Regulations 15(1) and 15(9) of IA Regulations read with clauses 2 and 4 of Code of conduct? - Admittedly, Appellant has not contested the complaint and refunded made by the refund only after complaint was filed. We are unable to persuade ourselves to accept appellant’s contention that appellants ‘non-contest’ and refund of money should not be construed as admission of violation. Such violations cause serious prejudice and loss to the clients in Securities market. Hence, in view of appellant’s such conduct, we hold this point also in the affirmative.
Violation-7 - Whether appellant has violated Regulation 19? -Though the Investment advisor Regulations were notified in 2014, ‘Investment advisors’ are certainly ‘Intermediaries’ to covered within the broad definition of ‘Intermediaries’ even prior to issuance of Regulations. Accordingly, this point is also held in the affirmative.
Violation-8 - Whether appellant has violated clause 2 of Code Of Conduct with respect to the complaint of Mr. Mahadeo Sadafule? - We also find that no evidence has been brought on record by the SEBI to corroborate that services were offered without risk profiling. No evidences is placed before us also to demonstrate that assured returns were offered by the appellants and it also not specific case of the complainant. Therefore, we find force in appellant’s argument and find no material in support of SEBI’s allegation that appellant had failed to act with due skill, care and diligence in the best interest of its clients. Accordingly, we hold this point in the negative.
Violation-9 - Whether appellant has charged excess fee in violation of Clause 6 of Code Of Conduct, under Schedule III of IA Regulations, 2013? - Risk Profile document shows that Mr. Sadafule wanted to invest Rs. 6-10 lakhs, but he was charged Rs. 25 lakh as advisory fee, which is unreasonably high even if it is for a period of two and half years as claimed by the appellant. No prudent client would make an advance payment for two and half year, which is much more than the amount of investment made. The appellant’s contention that Mr. Sadafule actually wanted to invest more than Rs. 6-10 lakhs, is not supported by any evidence.
Appellant was bound by the Clause 6 of the COC of the IA Regulations to charge fair and reasonable fee from its client. In view of undisputed fact that appellant has charged Rs. 25 Lakhs as fee and seeks to justify without any material that it was for two and half years, we hold this appoint also in the affirmative.
Violation-10 - Whether appellant is guilty of soliciting of clients through different websites, in violation of Clause 5 of COC under Schedule III of IA Regulations? - Records do not disclose any evidence to substantiate the allegation that the appellant was using various websites to solicit clients. We find merit in appellant’s contention that various websites, some of which had the domain name capitalvia.com, were for lead generation and no business is done through them and these are only landing pages. These websites were used to track any prospective client. Hence, in our view, in the absence of any material against the appellant, the allegation is baseless. Accordingly, we answer this point in the negative.
Violation-11- Whether appellant has violated Regulation 7(2) of IA Regulations relating to Qualification of IA? - We find that no findings were recorded by the SEBI with regard to dates of joining of individual employees, in order to prove the charge. Further, appellant’s submission that the notification dated June 19, 2013 and January 27, 2014 have to be read with Regulation 3(1) and 3(2) of the SEBI (Certification of Associated Persons in the Securities Market) Regulations, 2007 is not refuted. Therefore, in our view, this allegation is not substantiated. Accordingly, we hold this point in the negative.
Violation-12 - Whether appellant has violated Regulation 13(c)? - As submitted that the compliance of the regulation post- inspection will not absolve the appellants for the violation committed during the inspection period. Our attention was drawn to the decision of Chairman, SEBI vs. Shriram Mutual Fund [2006 (5) TMI 191 - SUPREME COURT] in which it was held that penalty is attracted as soon as the contravention of the statutory obligation as contemplated by the Act and Regulation is established.
Appellant’s contention that the words were added after inspection do not merit any consideration in the light of settled position of law laid down in Shriram Mutual Fund (supra). Accordingly, we answer this point in the affirmative.
Violation-13 - Whether appellant has failed to make disclosure in terms of Clause 1 of COC? - We note that the appellant has admitted that it had construed all the staff as under the category of ‘Investment Advisor’. Incorrect disclosure on the website is misleading to any one and particularly the potential clients. We find no substance in appellant’s contention and accordingly hold this point in the affirmative.
Determination of quantum of the penalty - We note that there were repeated violations of multiple nature. Further, large number of complaints were received by the respondent against the appellant investment advisory firm which could have had serious impact on the integrity of the securities market and adversely affected the interest of the investors. In view of this, keeping in view the criteria indicated in Section 15-J, levy of penalty is justified.
However, since we found merit in the plea of the appellant on some of the grounds, and we have answered 4 out of 13 violations in the negative. Therefore, levying maximum amount of penalty of Rs. 1 Crore is unsustainable. In our view, ends of justice would be met by reducing the penalty to Rs. 70 lakhs.
-
2025 (3) TMI 1072
Operating schemes/plans in the nature of Collective Investment Scheme (“CIS”) without obtaining prior registration from SEBI - attachment orders - existence of an alternate statutory remedy under the SEBI Act - HELD THAT:- In the opinion of the Court, all the grounds urged in the present petition can be urged before the Appellate Authority under the SEBI Act. Thus, in view of the of the fact that an alternate statutory remedy is available to Petitioner, the Court is not inclined to entertain the present writ petition under Article 226 of the Constitution.
At this juncture, it is noted that there is a limitation period to challenge the impugned orders, which has lapsed. However, considering the peculiar facts of this case, in case the Petitioner would prefer an appeal against the impugned orders within thirty days from today, the said appeal shall not be rejected on the ground of limitation.
-
2025 (3) TMI 1071
Cancellation of IPO - misstatement in the prospectus regarding the procurement of software from a vendor with questionable credentials - Refund the subscription amounts to the successful investors and to cancel shares allotted to them pursuant to the Initial Public Offer (IPO) of the company - HELD THAT:- In our considered view, safeguarding the interests of the public shareholders particularly the retailers, is of paramount importance for all stakeholders of the capital market in a large country like India with significant asymmetry in capital and financial literacy. In view of this, adequacy and correctness of disclosure in Public Offers cannot be compromised. The appellant Company while going for Initial Public Offer for inviting subscription from public at large, was duty bound to obtain quotation from a genuine software provider entity for the purpose of vendor selection for an important software, which in their scheme of things, was going to be integral object of the Issue.
Despite being in the ITS sector, the company did not make desired professional efforts to evaluate whether the quotation by OCPL was genuine or not. We find that the quotation was received on May 16, 2024 and within two days on May 18, 2024, the Board of directors of the Company “noted and approved” procurement of ICCC software from the said vendor, even though in the DRHP dated May 30, 2024, in the notes to the ‘Deployment of proceeds’ segment, it has been qualified that no definitive agreement was signed with the said vendor and the Company may change vendor or quotation per se.
We also note that the decision of the Board of directors of the Company in ‘approving’ the purchase of software without due verification of credentials of the vendor and in utter disregard to its own purchase policy, which provides for taking at least three quotes for such an indent, did not the desired corporate governance norms. Surprisingly the purchase committee of the company, which ought to have examined the credentials of the vendor in details and assessed whether the vendor had deserved capability to provide ICCC software in the given time-frame, cleared the quote merely on the basis of GST returns filed for last two months, which obviously are of no technical assistance for deciding purchase of software. The committee also ignored that there was no business of OCPL during the FY 2020 and FY 2021 for which financials were available and turned blind eye on the absence of financials for the last 2 financial years i.e. FY2022 and FY 2023. We find that even the merchant banker has not done proper due diligence and has merely gone by the decision of the Board of directors for carrying out due diligence with regard to the Oasis.
If an established software player follows such a methodology to reach out to an entity with doubtful credentials, with an offer of commission of Rs. 50 lakhs for procuring quote from a Third Party, in our considered view, it cannot be treated as ‘genuine’ quotation and therefore we are not persuaded to accept the argument that the Company had made the disclaimer that such a quote was for budgetary estimate only. Therefore, we hold that the company’s claim with regard to its adequacy and correctness of disclosure in the prospectus was not bonafide and satisfactory.
In the disclaimer section of the prospectus, it is stated that the ‘Company is responsible for adequacy, correctness and accuracy of the facts disclosed’. Considering the above, we of the view that the respondent is right in holding that the said disclosure in respect of quotation from an entity such as OCPL, was a mis-statement. A listed entity has additional responsibility to its shareholders and when it comes with an Issue for public at large, it is required to ensure that the disclosures made in the prospectus are not only adequate and correct but genuine. The appellant Company has failed to meet the said requirements.
Therefore, we do not find merit in the alternative plea that the IPO may be allowed to proceed further subject to monitoring of the deployment of proceeds by an agency to be appointed by SEBI/ BSE.
-
2025 (3) TMI 854
Service of the order upon the counsel of the appellant - Tribunal had refused to condone the delay of 188 days in filing the appeal for the reason that the impugned order i.e. the order passed by the learned Adjudicating Authority had been duly served upon the appellant through his counsel, on his email - whether the service upon the counsel can be said to be a valid service in the eyes of law or not?
HELD THAT:- Assuming for a moment that the present writ is maintainable, this Court is fully cognizant of the limited scope of appreciation in a writ of present nature. While entertaining any such writ, this Court cannot sit as an ‘Appellate Court’ and can evaluate the correctness of the abovesaid order.
The aspect related to condonation of delay has direct correlation with existence of sufficiency of cause. The Tribunal has refused to condone the delay and exercise of such discretionary power does not indicate any illegality or perversity either. Supervisory court, in such a situation, need not interfere where there is mere exercise of discretionary power, without there being any perversity.
Nothing to indicate or suggest violation of principles of natural justice or non-compliance of statutory requirements in any manner.
The reliance upon statutory provisions of CPC, in the present context, seems completely misplaced.
SEBI relies upon Glaxo Smith Kline Consumer Health Care Limited Case [2020 (5) TMI 149 - SUPREME COURT] and argues that High Court ought not entertain a challenge under Article 226 when the aggrieved person can avail an effective alternate remedy in the manner prescribed by law.
Undeniably, remedy of appeal is creature of statute.
Ideally, the petitioner should have filed an appeal under Section 15Z of SEBI Act, 1992, particularly, when even as per him, a question of law is, evidently, involved.
This Court has already noted above the limited scope of appreciation it possesses, while considering any such petition filed under Article 226 and Article 227 of the Constitution of India and, therefore, the irresistible conclusion is that the present petition lacks any substance or merit.
-
2025 (3) TMI 340
Funds withheld by the Bombay Stock Exchange (BSE) due to an alleged fraudulent transaction involving shares - actual ownership of the Shares/amount - whether Petitioner was involved in the alleged fraud?
HELD THAT:- Petitioner had genuinely put its Shares in market for sale through Respondent No. 2. The alleged fraud has been played at the end of Respondent No. 2, by one Amit Jain from Royal International Shares Pvt. Ltd. and allegedly with some involvement of Ashish Aggarwal Jain, who is an employee of the Respondent No. 2 Company.
There may have been a fraudulent call received by Respondent No. 2 placing an Order for purchase of the Shares of M/s Ashutosh Paper Mills Ltd. and consequently the Shares got purchased, but in this entire alleged fraud, the role of the Petitioner as being a party to this fraud cannot be deciphered.
Petitioner being the owners of the Shares, had made them available for sale. Therefore, for the alleged fraud committed on the Complainant, the Petitioners whose value of shares of Rs.15.90 lakhs got sold in the market, cannot be denied to him.
It is pertinent to observe that the Shares are not in the possession of the Petitioner, but have been handed over to the concerned Agency/SEBI for being sold in the market. On a query, it has been explained that these Shares do not have any market value as on date, for which reason the Respondent No. 2 is not inclined to take responsibility of these Shares which he had admittedly purchased for and on behalf of Brij Mohan Gagrani.
There may have been some fraud committed at the level of Respondent No. 2, since allegedly, no Shares were directed to be purchased by Brij Mohan Gagrani and Respondent No. 2 may have suffered some financial loss on account of some fraud committed at its end, but that cannot be foisted on the Petitioner who in no way is a party to the alleged fraud.
There has been some argument raised that in the Statement of the Petitioner recorded during the further investigations as directed by the learned M.M, he has not been consistent about the number of Shares. Petitioner has explained that inadvertently the correct number of Shares has not been mentioned, though the entire transaction has been truthfully stated by Shri Rajneesh Kumar, Director of the Petitioner Company.
There being no denial of the Shares originally belonged to Petitioner which he had put in the market for sale and which also got sold, the Petitioner is entitled to release of Rs.15.90 lakhs realized on sale of the Shares in the market.
It is, therefore, directed that without prejudice to the merits of the case, it is hereby directed that this amount of Rs.15.90 lakhs be released to the Petitioner on Superdari subject to him furnishing a Guarantee of the same amount, before the learned M.M. It is hereby clarified that there is no finding on the actual ownership of the Shares/amount which is subject to adjudication on the merits of the case.
-
2025 (3) TMI 274
Insider trading - use of Unpublished Price Sensitive Information - ‘connected persons’ - restraining the appellants from dealing in the securities market and directing to disgorge an amount and to pay penalties mentioned in the order.
Whether the noticees are ‘insiders’ in terms of Regulation 2(1)(g) of the PIT Regulations, being ‘connected persons’? - HELD THAT:- Undisputedly, the appellant No. 1 was in close association with KMP of Biocon and Mr. Arun Chandawarkar, CEO and joint MD of Biocon and CFO of Biocon Mr. Sidharth Mittal both were directly involved in the negotiations on the Biocon-Sandoz deal as also in CIMAB licensing deal. Appellant No. 1 was undoubtedly in frequent and regular communication with senior managerial persons of Biocon, who had direct knowledge of UPSI.
Keeping the twin sensitive assignment being handled by the appellant No. 1 – (a) advising on CIMAB licensing deal, which allowed him frequent access to CEO and CFO during the year long deal period while these KMPs were also negotiating the Sandoz deal; and (b) handling trading accounts of the CMD and Joint CMD of the company, we hold that the preponderance of probabilities test was correctly applied by the learned WTM.
The appellant nos. 1 is a ‘connected person’ in terms of Regulation 2(1)(g)(i) of the PIT Regulations by having access to UPSI, and the appellant No. 2 is a ‘connected person’ in terms of Regulation 2(1)(d)(i) of the PIT Regulations.
Possession of Unpublished Price Sensitive Information (UPSI) - Whether the trading behavior of the appellant’s shows that they were in possession of UPSI? - Considering the fact that there was a spike in the trading of Biocon within four days of the said UPSI period suggests that such trades were made based on the knowledge of the UPSI. No error in the finding recorded by the learned WTM that there was a strong ‘preponderance of probability’ that the trades executed by the appellants in Biocon during the UPSI period, were guided by UPSI on account of appellants being ‘insiders’.
We are also in agreement with the finding of the learned WTM of holding the appellants as ‘connected persons’ within the meaning of Regulation 2(1)(d)(i) of the PIT Regulations and not on the basis of ‘possession of UPSI’ under the Regulation 2(1)(g)(ii) of the PIT Regulation, which distinguishes ruling in case of Balram Garg [2022 (4) TMI 945 - SUPREME COURT]
In our considered view, in case of ‘insider trading’, the evidence cannot be direct but circumstantial, since evidence with respect to communication channel may not be on record. Often such sensitive information in case of ‘connected persons’ falling under 2(1)(d)(i), need not be necessarily through an email or a letter because, in the instant case, appellant was admittedly working closely with joint CMD & CEO and CFO on cross-border licensing deal and was in frequent communication with them for a long period of time, while they were simultaneously working on another cross- border deal (Sandoz-Biocon deal).
Appeal dismissed.
-
2025 (3) TMI 204
Public offer date - Determination of date on which a public announcement of an open offer, in terms of clause (1) to Regulation 20, has been made - It is the case of the appellants that the date on which the public announcement was made would be 18.01.2025 - case of the private respondents that the public offer date must be taken as 03.10.2023 and, therefore, the application filed by the appellants is belated and beyond time.
HELD THAT:- Clause (9) of Regulation 20 states that, upon the public announcement of a competing offer, an acquirer who had made the preceding offer shall be entitled to revise the terms of his open offer provided the revised terms are more favourable to the shareholders of the target company.
The acquirers making the competing offers shall be entitled to make upward revisions of the offer price at any time up to one working day prior to the commencement of the tendering period.
The tendering period, we are informed, has come to an end today, that is, on 07.02.2025. During the course of arguments, it was noted that there have been several attempts to stall the public offer, but without success.
We have noted the said aspect, but at the same time, we have also taken into account the fact that the application filed by the appellants is still pending consideration by the SEBI and has not been disposed of. SEBI would be more concerned about public investors and their rights and interests.
The main question that arises and has to be decided by the SEBI relates to the date of public announcement of the open offer, as contemplated in Regulation 20(1) of the 2011 SEBI Regulations. The second question would be whether or not to grant exemption, if the situation requires it. Third issue relates to the public offer price.
It is pointed out by the private respondents that they deposited a sum of ₹330 crores way back on 26.09.2023 in an escrow account.
Keeping all the aforesaid facts in mind, we are inclined to pass the following order: -
1. The appellant, Digvijay Laxhamsinh Gaekwad (Danny Gaekwad) or their nominee/applicant before SEBI, as suggested by his counsel, shall deposit a sum of ₹600 crores in terms of the 2011 SEBI Regulations, in the form of cash and/or bank guarantee, on or before 12.02.2025. In case the amount is not deposited by the said date, the directions in the present order shall be automatically vacated without further reference to the Court.
2. The public offer, which is to close today, will be continued till 12.02.2025. In case the appellant, Digvijay Laxhamsinh Gaekwad (Danny Gaekwad) or their nominee/applicant before SEBI, deposits ₹600 crores in terms of the 2011 SEBI Regulations, the offer will continue till the end of third day post the date of the order to be passed by SEBI on the application of the appellants.
3. A party aggrieved by the order passed by SEBI would be entitled to take recourse to an appropriate remedy.
Present directions are in the nature of an interim order.
-
2025 (2) TMI 750
Allegations of violations by a SEBI registered stockbroker - violations have been alleged by the SEBI against the noticees for Misuse of clients’ funds, Funding the clients beyond T+2+5 days and Not issuing the contract notes.
HELD THAT:- As recorded in the impugned order that during the inspection, it was noted that funds of credit balance clients were being utilized for settlement obligation of debit balance clients. In all 41 instances were checked and in 31 instances misutilization was observed ranging between Rs. 88,000 to Rs. 2.48 crores. Some of the instances have been tabulated and reproduced in paragraph No.21 of the impugned order. It is also recorded in paragraph No.22 that Noticee No.1 has brought in Rs. 1 crore into the system in October, 2020. Though a sum of Rs. 1 crore was infused in October, 2020 the G value was still negative for March, 2021 ranging between Rs. 66.35 Lakhs to Rs. 88,000. It is not denied by the appellant that the G value was negative as recorded in the tabular column in paragraph No.21 of the impugned order.
Second charge is providing exposure beyond T+2+5 days. This charge is also not denied but an explanation is sought to be urged that appellant was unable to detect the over exposure because of a bug in the computer system. It is also not denied that the over exposure was about Rs. 39.13 Lakhs as described in the table in paragraph No.46.
Third charge is non-issuance of contract notes. Appellant has furnished an excel sheet containing a column with regard to the status of delivery of the contract notes. As urged by the learned Advocate for the appellant that there is no specific provision to convey the proof of delivery of contract notes to the respondent. To a pointed query as to whether there exists any provision requiring the stock broker to furnish the proof of delivery of contract notes on a regular basis, on instruction it was submitted by Shri Kanade that no such provisions exists. Therefore, in our considered view, the third charge is untenable.
We may hasten to record that SEBI as a Regulator must treat all brokers with even hand. It is not disputed that in the case of Angel Broking where the misutilization of funds was to the extent of Rs. 32.97 crores, the penalty imposed is Rs. 10 Lakhs. In the instant case, as noted in paragraph No.25 of the impugned order, misutilization is in the range of Rs. 42.47 Lakhs to Rs. 2.08 crores (Rs.99 Lakhs).
Quantum of exposure beyond T+2+5 days(charge No.2) is also Rs. 39.13 Lakhs. Therefore, having regard to the undisputed facts, in our view, appellant’s case merits consideration only with regard to the doctrine of proportionality. Considering the quantum of penalty imposed in the case of Angel Broking Ltd., and also keeping in view that noticee No.1 is a ‘repeat offender’, ends of justice would be met by reducing the penalty to Rs. 15 Lakhs.
-
2025 (2) TMI 524
Steps to be taken for listing the shares on the nationwide stock exchange - de-recognition of MSE - whether the Company has to be granted a reasonable extension to get itself listed with the 5th respondent? - HELD THAT:- It is trite, even in cases governed by statutes where specified periods are fixed, the courts should adopt a liberal and pragmatic approach in considering requests for extension of time or to condone the delay, rather than a hyper-technical or pedantic approach.
The underlying principle of the various circulars issued by SEBI to the ELCs, is to get listed on a nationwide stock exchange or provide an exit option to the shareholders, with the intention to protect the interests of the shareholders.
There is no material on record that shows that the Company’s shareholders have any grievance or have raised any complaint against the Company. True, there has been some delay on the part of the Company, for which they have given a reasonable explanation, which has been accepted by SEBI and NSE atleast till 30.09.2023.
After considering the facts, the materials on record, and the rival submissions made across the Bar, Company can be granted one last opportunity to get listed with the fifth respondent. In the aforesaid circumstances, notwithstanding Exts.P26 and P34 orders passed by SEBI, in the exercise of the extra-ordinary jurisdiction of this Court under Article 226 of the Constitution of India, extend the time period fixed in Ext.P22 by a further period of 90 days from the date of this judgment, to enable the Company to get itself listed with the 5th respondent. If the Company fails to adhere to the above time frame, Exts.P26 and P34 will stand confirmed.
-
2025 (2) TMI 426
Validity of Circular dated 02.09.2022 advising the trading member to refund the penalty levied on account of short/non-collection of upfront margin to clients, if the same has been passed on to the clients after 11.10.2021 - HELD THAT:- In the present case, it is the selection of the date, that is, 11.10.2021, that is the subject matter of challenge, and I am unable to find any support from the material on record as to the reason or basis for such selection. Apart from the offending date itself, there are other conditions that would have to be satisfied, for the refund of the penalty.
A perusal of GRC proceedings dated 31.03.2023 would reveal that the only reason why a portion of the relief sought for has been denied is the stipulation of the date as 11.10.2021 in Circular Ref.No.60/2022 dated 02.09.2022.
The circumstance set out under question and answer 15 in Circular No.48/2021 dated 12.10.2021 is thus, inapplicable to the present case. Such a conclusion emanates from a reading of the order of the GRC where the TM is not seen to have argued that there were failure/default on the part of the petitioners to justify passing on of the penalty.
Having considered the matter carefully, selection/stipulation of the date as 11.10.2021 has no basis whatsoever. Such a stipulation had led to discrimination between two groups of investors, those who have been passed on the burden of penalty prior to 11.10.2021 and those who have suffered the burden post 11.10.2021. Thus, those investors who satisfy all the conditions under the Circulars but have suffered the passing on the penalty prior to 11.10.2021 have been left remediless.
The passing of the penalty for short-levy by the TM to the investor has been consistently decried by SEBI. In such circumstances imposition of a date after which only the penalty would be refunded has no justification whatsoever. This is contrary to Article 14 of the Constitution of India, affecting adversely one group out of two equally placed groups of investors.
The investor has no control over the date on which penalty is levied. Hence, there is serious prejudice caused by virtue of a fact that is outside the control of an investor, in respect of financial transactions that are identical to transactions by other investors, though of an anterior date.
In the present case, the satisfaction of the petitioner of the other conditions for refund constitute questions of fact and I extract below the findings of the GRC which are relevant and set the context for the grievance of the petitioner. To be noted that the GRC has passed the order after hearing both the petitioner and HDFC/TM.
The GRC has made it clear that the petitioner is, in fact, entitled to the refund and has ordered refund to the extent to which the Circular does not stand in the way. The decision adverse to the petitioner relates to that part of the penalty on upfront margin relatable to the period prior to 11.10.2021 only.
The stipulation relating to the date under Circular Ref.No.60/2022 dated 02.09.2022, is found to be arbitrary and is quashed. As a consequence, the prayer of the petitioner stands moulded to a challenge encompassing order passed by the GRC dated 31.03.2023 and such challenge is allowed and order dated 31.03.2023 set aside. The petitioner's application before the GRC restored to its file. The GRC shall issue notice to both the Petitioner as well as the TM/HDFC, hear them and decide the matter de novo. In doing so, the GRC shall not be circumscribed by the reference to the date '11.10.2021', in Circular No.60/22 dated 02.09.2022.
-
2025 (1) TMI 1454
SEBI orders against non-executive Chairman and Managing Director & Chief Executive Officer - Appellant as the Non-Executive Chairman failed in his duties by not acceding to the requests of Independent Directors for legal advice and not providing necessary documentation regarding the appointment of Mr. Ratnesh -
Non acceding to request for legal advice in relation to appointment of Mr. Ratnesh etc. - HELD THAT:- Appellant was appointed as the Non-Executive Chairman of PFC on November 8, 2021. The allegation is, not acceding to the request made by the independent directors for obtaining external legal advice and not providing information about appointment and joining of Mr. Ratnesh, which was the most contentious issue leading to differences between the Management and the independent directors. The first email from the independent directors to the Noticee No. 1 seeking independent legal advice from a lawyer of their choice is dated December 7, 2021. The appellant had informed the Independent Directors that the management was in the process of submitting a comprehensive report and therefore a separate legal consultation was pre-mature. On December 15, 2021 the independent directors conveyed to Noticee No. 1 that they were going ahead with the appointment of an Advocate and did so. The expenses incurred in that behalf were also informed to Noticee No. 1 on April 5, 2022.
With regard to not calling meeting of NRC, it was urged that the Appellant was not a member of NRC and had no role to play. The RoC had addressed this issue and did not hold the Appellant responsible. It was also urged that the Management attempted to reconstitute the NRC through a resolution dated December 31, 2021, however the independent directors did not approve the same.
It is relevant to record that firstly the independent directors had made their request to the Noticee No. 1 and not to the Appellant. Secondly, the independent directors went ahead and decided to appoint an Advocate themselves and obtain legal advice. The gap between their initial request and their decision to appoint an Advocate is about 8 days which cannot be considered as undue delay. Thirdly, the appellant had instructed the HR department of PTC to give the information sought by the independent directors. Fourthly, Ms. Renu Narang was withdrawn by NTPC. Fifthly, RoC had addressed the issue with regard to conducting meeting of NRC and not held the appellant responsible. In view of the undisputed facts recorded hereinabove, we find that the above three charges in Issue No.1 made against the Appellant are not substantiated.
Providing no information or limited / incomplete information to the Board - Appellant submitted that the WTM has noted in the impugned order that Mr. Ratnesh had rejoined NTPC on December 6, 2021. Therefore, he could not have been invited for the Board meeting scheduled on January 22, 2022. He is right in his contention. Therefore, the allegation of not inviting Mr. Ratnesh and the meeting becoming invalid is untenable
It is the duty of the Company Secretary to provide guidance with regard to proper conduct of meetings. Independent Directors while raising certain issues in their emails sent during 2021 never sought for those issues to be discussed in the board meetings. Thus, there is no doubt that there was lack of clear communication between the Independent Directors and the management, however, we may note that the Independent Directors themselves had graded the flow of information between the management and the board as excellent in the meeting held on October 5, 2021. No substance in the allegation contained in Issue No. 2.
Reconstitution of Audit Committee prior to submission of FAR 2022 - As noted in the Impugned Order, Section 177 of the Companies Act, 2013 provides that the Audit Committee shall be constituted by the Board. The Board had constituted the Audit Committee. SEBI’s direction was not to change the composition of the Board. Therefore, SEBI contention that SEBI’s instructions also included not making any change in the audit committee also, is without any merit and liable to be rejected. Hence, we hold that the charge in Issue No.3 is also baseless.
Functioning of the Audit Committee - It is true that the Chairman of the Audit Committee had flagged the issues in functioning of the Audit Committee with respect to Noticee No. 1. The Respondent’s charge is not that the Appellant was responsible but that he was aware of the shortcomings pointed out and yet, did not take remedial steps. In our view, once the respondent holds that appellant is not responsible, nothing further survives for consideration. Hence charge in issue No.4 is also baseless.
On a careful perusal of the allegations leveled against the appellant and the contentions urged on both sides, for reasons recorded hereinabove, we are of the view that all the allegations against the appellant in Issues Nos. 1 to 4 are baseless. Therefore, the directions contained in paragraph No: 253 of the impugned order qua the appellant are unsustainable and liable to be quashed. The appellant, has suffered the order for about 6 months for no fault.
Appeal allowed. Orde passed by the WTM, SEBI qua the appellant is quashed.
-
2025 (1) TMI 1155
Validity of Circular mandating payout of securities directly to clients’ demat account by clearing corporations and directed the stock exchanges and clearing corporations to implement the same - Petitioners have challenged the impugned circulars wherein Petitioner is required to obtain and hold a Depository Participant license (“DP Licence”) in order to continue with its business and Each of the Petitioners’ clients will be required to hold demat accounts in their respective names and the Petitioner is required to provide details of the same to Respondent Nos. 2 to 4.
HELD THAT:- Petitioner has not interpreted the impugned circulars correctly. Since the Petitioner is a Trading Member (and not a depository participant), the Petitioner does not need a DP license. The impugned circulars do not mandate the holding of a DP licence by a broker engaged solely in broking activity and not engaged in the activity of a DP. Hence, no grievance survives as far as this issue is concerned.
Holding demat accounts in their respective names - Respondent No. 1 has, by an email addressed to the stock exchanges, clarified that clients dealing exclusively in index derivatives and providing their margins through cash only are not required to hold demat accounts in the equity derivative segment. The concerned broker is, however, required to ensure that a client dealing in index derivatives does not deal in any other product which requires physical delivery and that he pays his margin only in the form of cash.
Petitioner agrees that in view of the above, none of the grievances raised in the Petition survive and that the Petition may be disposed of in the above terms. The same is accordingly so noted and ordered. It is however made clear that in respect of trades apart from the ones pertaining to the index derivative product of the equity derivative segment as clarified above, the Impugned Circulars shall apply.
Petition stands disposed of in the above terms.
-
2025 (1) TMI 853
Compounding of offences - Order passed by Additional Sessions Judge dismissing an application filed by the Petitioner under Section 91 Cr.P.C - Petitioner had filed the said application seeking directions to SEBI to place on record all the statements/findings/documents considered by the High Powered Advisory Committee (hereinafter “HPAC”) and the panel of Whole Time Members (WTC) while rejecting the request of the Petitioner herein for compounding the offence alleged in the complaint against the Petitioner herein - HELD THAT:- Regulation 29(1) of the Settlement Regulation provides that these documents cannot be given to public if the same prejudices the Board and/or the applicant. Regulation 29 (2) of the Settlement Regulation provides that these documents cannot be used as evidence before any court or Tribunal.
In the opinion of this Court, these Regulations cannot prohibit any Court to look into the material which was placed before the HPAC or the SEBI Board before it comes to the conclusion, to agree for compounding or not to agree for compounding of the offence.
Under Regulation 29 of the Settlement Regulation, the decision taken by the Board is not binding on the Court even if HPAC recommends for compounding of the offence. The Court can take a different view and reject the compounding if they do not meet the guidelines as laid down by the Apex Court as laid down in Prakash Gupta [2021 (7) TMI 971 - SUPREME COURT]
The materials sought by the Petitioner become exceedingly important for the Court to take a decision as to allow or not allow the compounding application of the Petitioner.
This Court is inclined to set aside the Order passed by the Ld. Additional Sessions Judge, Tiz Hazari, dismissing an application filed by the Petitioner under Section 91 Cr.P.C. The SEBI is directed to produce all the documents before the Court. These documents can be given in a sealed cover and it is for the Court to take a decision as to whether these documents should be supplied to the Petitioner or not.
-
2025 (1) TMI 17
Persons/entities traded in the scrip of IAL while in possession of Unpublished Price Sensitive Information (‘UPSI’) - higher price rise seen - contravention of provisions of Section 12A of the SEBI Act and PIT Regulations, 2015 - information of a stock split considered as Unpublished Price Sensitive Information (UPSI) or not? - - HELD THAT:- Splitting of stock per se is a Price sensitive information, since splitting of stock is an important decision for a company, (requiring approval of general body of shareholders under Section 61 of the companies Act, 2013), which is intended to improve the liquidity of stock and its affordability, which is likely to make an impact on price. In our considered view, splitting of shares results in shares of smaller face value, which makes the shares affordable, and thereby allows new sets of shareholders to come into picture with the resulting impact on demand and liquidity, that is likely to influence the price trends. Instances of three cases of stock split brought out by the respondent show that it resulted in price rise on the day of split, compared to the previous day.
In our view the appellant’s argument that there was insignificant price rise of 1.46% on BSE and of 1.25% on NSE on June 27, 2016 upon disclosure of the information compared to the previous trading day, is not relevant as it is the likelihood of materially affecting the price of the securities, which is the main factor to determine price sensitivity of information and not actual price rise.
Lastly, in appellant’s own admission, the information regarding stock split was UPSI, which in their view, came into existence on June 26, 2017 and was hence disclosed on the same date. If it were not a price sensitive information, there was no need to close the trading window.
On which day UPSI commenced ? - It is evident that in the meeting held on November 22, 2016, the discussion was in the nature of a general briefing on the concept of stock split, without any specific reference to securities of IAL. Hence it cannot be held that the UPSI period started from November 22, 2016. Nevertheless, in subsequent ‘one to one’ meeting between the MD and CFO held March 20, 2017, the discussion specifically included ‘analysis of budget for next fiscal, along with sensitivity analysis to many scenarios including but not limited to impact of demonetization, GST, share split, dividends, etc.’. Since this discussion was specifically with regard to the stock split for company IAL, it may be construed that the UPSI period started from March 20, 2017.
Whether the appellants can be held as ‘insiders’ within the meaning of PIT regulations? - None of the reasonings, directly or indirectly, suggest that appellants were in possession of or had access to the aforesaid UPSI at the time of trading in IAL scrip. With regard to the first reasoning relating to the pre-IPO allocation of preferential shares of IAL in 2014 for Rs. 49.99 crores, the Ld. Senior advocate for the appellants furnished a list of all such allottees, which was filed in compliance of the Companies (Share capital and debenture) Rules, 2014. The list shows that apart from the Appellant No. 2 and her husband, there were more than 80 such allottees, who had subscribed to the preferential allotment. The last column of the prescribed form makes disclosure of such allottees as ‘Unrelated party’ or ‘promoter / promoter group’. Majority of such preferential allottees including appellant No. 2 and her husband were shown as ‘unrelated party’. Therefore, in our view, in contrast with the ‘promoters’, such unrelated parties cannot be held as ‘connected persons’, unless otherwise provided in the regulation.
It is generally seen that prior to listing, subscription to its capital comes through reaching out to potential investors, directly or indirectly, since till the company remains unlisted, the benefit of the faceless digital platform of Stock exchange is not available to it. The assumption that in that process relationship is built among the investors, which may make them insiders is only an assumption and lacks credence.
We have already held that there is no evidence suggesting that the appellants had access to or mere in possession of UPSI. Therefore, it cannot be held that trades made by the appellants during the alleged UPSI period were motivated by knowledge of UPSI.
Thus, there is no evidence or inkling of communication of UPSI by insiders of IAL to the appellants. In view of this, there is no merit in the allegations that appellants traded in IAL based on knowledge of UPSI in their possession. Appeal allowed.
-
2025 (1) TMI 16
Applicability of corporate governance provisions - applicability of Regulation 23 of SEBI (LODR) Regulations Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 to appellant Company - Appellant’s solitary contention is that the paid-up share capital is less than Rs.10 crores, thus entitled for exemption from compliance with the corporate governance provisions - HELD THAT:- It is settled that words of a statute are understood in their natural and ordinary sense; and sentences are construed according to their grammatical meaning. It is also settled that if the enacting portion of a Section is not clear, a proviso appended to it may give an indication as to its true meaning.
Contention of the appellant is that in order to get the exemption from compliance with corporate governance provisions, the entity has to satisfy both conditions, namely, that the equity share capital should not exceed Rs.10 crores and net worth not exceed Rs.25 crores. We see force in this argument because a plain reading of the proviso makes it clear that the exemption shall continue to remain applicable till the equity share capital or the net worth of the entity reduces below the specified threshold.
Therefore, we are of the considered view that since the paid-up equity share capital is less than Rs.10 crores, the corporate governance provisions do not apply to the appellant entity.
Appeal allowed holding that the corporate governance provisions are not applicable to the appellant as the paid-up equity capital is less than Rs.10 Crores - As the penalty is unsustainable with a further direction to refund the same with interest at 8% p.a. within a period of 8 weeks from the date of this order.
-
2025 (1) TMI 15
Validity of SEBI's interim directions - lack of an opportunity for the appellant to be heard provided as alleged - appellant has executed Related Party Transactions without obtaining prior approval from the shareholders in terms of Regulation 23(4) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 - As argued there have been series of correspondence between the appellant and the SEBI but the impugned order interim ex-parte order has been passed without any tenable reasons - HELD THAT:- We are of the opinion that prima facie, is indubitable that appellant and SEBI were in exchange of correspondence since 2020, although it was vehemently contended by Shri. Kapadia that the relevant date to be reckoned is September 2023. In any event, it cannot be gainsaid that appellants have been called upon to file their reply within 21 days from the date of the impugned order. As recorded hereinabove, Shri Kapadia has submitted that SEBI shall pass orders within 30 days from the date of conclusion of hearing. The Learned Senior Advocate for the appellant is also in agreement with the proposed course of action.
Thus, it would not be just and appropriate to continue the impugned interim ex-parte order any further keeping in view that:-
The appellant has been directed to file reply within 21 days; and
SEBI has made a statement before us to pass orders within 30 days from the date of conclusion of hearing and in the event of any adverse order, SEBI is enjoined with all powers to pass appropriate directions including an order of disgorgement.
-
2024 (12) TMI 1465
Unlawful gains by fraudulent and manipulative strategy made by Reliance Company - responsibility of noticee no. 2 i.e. the Managing Director - violating Section 12A of the SEBI Act r/w Regulations 3 and 4 of the SEBI PFUTP Regulations - vicarious liability on both criminal and civil liability for contravention of the SEBI Act, Rules and Regulations - Liability against violations committed by the company
As decided in RELIANCE INDUSTRIES LIMITED, MR. MUKESH D. AMBANI, NAVI MUMBAI SEZ PVT. LTD., MUMBAI SEZ LTD. VERSUS SECURITIES AND EXCHANGE BOARD OF INDIA, [2023 (12) TMI 260 - SECURITIES APPELLATE TRIBUNAL MUMBAI] the word “complicit” means involvement with others in an activity which is unlawful. On the other hand, the word “implicit” is suggestive though not directly expressed.Thus, in the absence of any specific finding by the AO on noticee no. 2 complicit involvement in the execution of the implementation plan or in the execution of the trades, the AO cannot dwell into surmises and conjectures and base its findings on presumption to hold that the noticee no. 2 was implicitly involved in the transactions on the ground of being a Managing Director and which implies a high level of accountability of knowledge of overall functioning of the Company.
The burden under Section 27 was discharged by noticee no. 2 and the AO has miserably failed to prove that noticee no. 2 was involved in the execution of the trades carried out by two senior executives.
HELD THAT:- As no question of law involved in these Appeals warranting our interference in exercise of our jurisdiction under Section 15Z of the Securities and Exchange Board of India Act, 1992.
Appeals are accordingly dismissed.
-
2024 (12) TMI 1464
Interest levied by the SEBI on the appellant - SEBI discretion to decide interest charged on outstanding registration fees - expert committee was constituted under Shri R. S. Bhatt (Bhatt Committee) recommended “turnover” as a fair basis of determination of the registration fee and recommended differential rates of fee for different types of transactions.
HELD THAT:- It cannot be held that this Tribunal had given any discretion to the SEBI for calculating interest deviating from the existing Regulations, which provides for mandatory charging of interest
Respondent is right in his submission that in the given set of facts of this case, the word ‘shall’ cannot be interpreted as ‘may’ as held in the case of Anjum M. H. Ghaswala & ORs [2001 (10) TMI 4 - SUPREME COURT] We find that the Regulation 5 of the Schedule-III of the Stockbroker’s regulations mandatorily provide for charging of interest at the rate of 15%.
There exists no discretion in the hands of the SEBI in the matter. Further, charging of interest is in the nature of compensation for accretion to capital and cannot be compared with penalty which involves discretion based on facts and circumstances and underlying intention.
Respondent should have given credit for the interest accrued from the date of this Tribunal’s order dated December 6, 2006 till the order of the Hon’ble Supreme Court’s order dated November 24, 2015 - We find that vide the aforesaid order, the Hon’ble Supreme Court has upheld the calculation of ‘annual turnover fee’ made by the SEBI, which is in accordance with the applicable Stockbrokers Regulations, 2002. In view thereof, interest is rightly charged on the appellant on the outstanding dues of ‘annual turnover fee’. There is no merit in the claim of interest thereon, since the appellant has already got the credit for interest on the principal amount of Rs. 2.92 Crore for the entire period from 2006 till 2019, since no interest has been charged thereon.
A brief period of September 6, 2003 till October 1, 2003, the appellant was having a credit balance of Rs. 74,55,793/-. No interest has been credited to the appellant for this period. In our view, appellant is entitled for the credit of 15% interest p. a. (simple) for the period from September 6, 2003 to October 1, 2003 on this amount lying in appellant’s credit.
........
|
9911796707
