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TMI Blog2016 (10) TMI 1305X X X X Extracts X X X X X X X X Extracts X X X X ..... and underlying philosophy of Regulation 11(1). Participants in the securities market are allowed to actively indulge in trading and other related activities because SEBI as the market regulator is given assurances by these market players that they understand the law and regulations as laid down by the Legislature and SEBI respectively. If the Legislature and SEBI, acting on such assurances, give companies and other market participants the right to execute their business decisions in the manner these entities deem fit, it goes without saying that there is a corresponding duty placed on the market participants to ensure that such mistakes as acquiring more than the creeping acquisition limit of 5% without making the necessary public announcement are not made. There is no provision in the SEBI Act, which may have the effect of prohibiting SEBI from taking action beyond a particular period of time in a given case. However, it goes without saying that the regulator should always make an endeavor to take prompt action against the defaulting companies to render speedy and timely justice. In the present case, however, action was taken immediately after SEBI came to know about the violat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. 6 appeals in all. It involves 25 entities and the acquisition period in all appeals is 2000-2001. Regulation 11(1) of the SAST Regulations lays down that any person who already owns 15% or more shareholding in a company, but less than 75%, must make a public announcement if it intends to purchase new shares amounting to more than 5% shareholding in a particular year. Impugned order dated September 30, 2014 bearing Adjudication order No. CFD/APIL/AO/DRK-AKS/EAD3- 605-618/149-162/2014 imposing penalty of ₹ 15 lac under Section 15H(ii) of SEBI Act, 1992 for failure to comply with Regulations 11(2) read with Regulation 14(1) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. It covers appeal Nos. 472 and 476 of 2015 i.e. 2 appeals. It involves 14 entities and they acquired shares on September 15, 2005. Regulation 11(2) of the SAST Regulations lays down that any person who already owns 55% or more shareholding in a company, but less than 75%, must make a public announcement if it intends to purchase new shares amounting to more than 5% shareholding in a particular year. Impugned order dated October 1, 2014 bearing Adjudication Order No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to acquire shares or voting rights exceeding the respective percentage specified therein: 5. Show Cause Notice dated June 26, 2014 ( SCN ) was issued by the Respondent - Securities and Exchange Board of India ( SEBI ) to the Appellants asking them to show cause as to why action should not be taken against them for the violation of Regulation 11(1) read with Regulation 14(1) of the SAST Regulations. Opportunity of personal hearing was granted and availed of by the Appellants on September 4, 2014. Reply to the SCN was filed by the Appellants on September 15, 2014. After considering all the material on record, SEBI issued impugned order dated September 30, 2014 levying a penalty of ₹ 15 lac on the Appellants for violating Regulation 11(1) read with Regulation 14(1) of the SAST Regulations. 6. The case of the Appellants is that the SCN at the outset failed to establish any misconduct on the Appellants part. Specifically, it failed to establish that the promoters who purchased shares of APIL were persons acting in concert. The Appellants submit that the concept of persons acting in concert has been misapplied in the instant matter. Nothing in the impugned order indicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Respondent, it is submitted before this Tribunal that Regulation 11(1) read with Regulation 14(1) of the SAST Regulations makes it abundantly clear that in case of an acquirer who already owns 15% shareholding or more of the target company, but less than 75% shareholding of the same, such an acquirer on purchase of additional shareholding amounting to more than 5% in a period of 12 months, must make a public announcement within four days of such acquisition. 11. In the present case, the Respondent submits that it has been accepted by the Appellants at the stage of the personal hearing in response to the SCN itself that the Appellants had in fact acquired 5.0346% additional shareholding in the year 2000-2001. Even I this submission of the Appellants is accepted, the fact remains that 0.0346% shareholding in excess of the prescribed limit was in fact made without making the necessary public announcement. It is therefore submitted by the Respondent that considering the fact that the SAST Regulations were in fact violated, the penalty of ₹ 15,00,000 is just and acceptable. 12. We have heard the learned counsel for both parties at length and perused the Appeal and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision in the SEBI Act, which may have the effect of prohibiting SEBI from taking action beyond a particular period of time in a given case. However, it goes without saying that the regulator should always make an endeavor to take prompt action against the defaulting companies to render speedy and timely justice. In the present case, however, action was taken immediately after SEBI came to know about the violations. Therefore, delay, in itself, cannot defeat the ends of justice in the facts and circumstances of the case in hand. Moreover, there is nothing on record to suggest that the admission made by the appellants before the A.O. that the acquisition made by them exceeded the prescribed limit was erroneous. In these circumstances, no fault can be found with decision of the A.O. in holding that the appellants are guilty of violating the Takeover Regulations and, accordingly, imposing penalty on the appellants. 18. However, it has been rightly brought to our notice by the Appellants that at the time the misconduct was committed and the shares acquired by the Appellants, the maximum penalty for the default of acquiring more than the prescribed limit of shareholding without mak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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