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TMI Blog2023 (2) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... ate a compliance officer and an investors service centre. The purpose of the nomination is twofold, namely (i) to ensure compliance with the buyback Regulations; and (ii) to redress the grievances of investors. There is a patent error on the part of the Tribunal in interpreting the Regulations. The Tribunal held that the role of the respondent, who was a Company Secretary, compliance officer, was limited to redressing the grievances of investors. In arriving at the finding, the Tribunal has relied upon the latter part of Regulation 19(3) which deals with redressal of the grievances of investors. The crucial point which has been missed by the Tribunal is that the compliance officer is also required to ensure compliance with the buyback r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowing the appeal by the respondent, set aside an order dated 22 March 2022 of the Whole Time Member [ WTM ] under Section 15HA of the SEBI Act by which a penalty of Rs Ten lakhs was imposed on the respondent for violating of Sections 68 and 77A of the Companies Act 1956 and Regulations 3(a), (b), (c), (d), 4(1), 4(2)(f), (k) and (r) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations 2003 [ PFUTP Regulations ] read with Sections 12A (a), (b) and (c) of the SEBI Act. 4. The respondent was a Company Secretary of Deccan Chronicle Holdings Limited6 for two years, 2009-10 and 2010-11. 5. On 3 August 2017, a notice to show cause was issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at by the Tribunal are encapsulated in paragraphs 14 and 15 of the impugned order. The Tribunal has, during the course of its decision held that once the offer and the balance sheet were approved by the Board of Directors, the duty of the Company Secretary was only to authenticate the contents indicated in the balance sheet and in the offer document . In other words, according to the Tribunal, the respondent was not required to enquire into the veracity of the buyback offer documents. In coming to the conclusion that the obligation to comply was essentially placed on the Board of Directors and not on the respondent as Company Secretary, the Tribunal has relied on the provisions of Regulation 19(3) of the SEBI (Buyback of Securities) Reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Secretary, it was his duty to duly certify statutory compliances; (vi) The Tribunal was not justified in absolving him on the ground that it was for the Board of Directors to ensure compliance; and (vii) The observation in paragraph 18 of the impugned order to the effect that the role of the Company Secretary is only confined to redressing the grievance of investors is plainly contrary to Regulation 19(3). 10. On the other hand, Mr. Somasekhar Sundaresan, counsel appearing on behalf of the respondent submitted that : (i) The primary finding that has been arrived at is in regard to the failure of the Board of Directors to ensure statutory compliance; (ii) The respondent was acting as a Company Secretary and cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced above on the provisions of Regulation 19(3). 12. Mr Arvind Datar, senior counsel, has placed reliance on the prior decisions of the Tribunal in Mr Bhuwaneshwar Mishra Vs SEBI (decided on 31 July 2014 in Appeal No 7 of 2014) and Brooks Laboratories Limited Ors Vs SEBI (decided on 21 March 2018 in Appeal No 266 of 2016). Mr Somasekhar Sundaresan, counsel appearing on behalf of the respondent has urged that these decisions are distinguishable. Since we are remitting the proceedings back for a fresh consideration, we keep the rights and contentions of the parties including on the prior decisions which have been relied upon in the present appeal open to be urged before the Tribunal on remand. 13. For the above reasons, the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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