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TMI Blog2021 (5) TMI 1071X X X X Extracts X X X X X X X X Extracts X X X X ..... ment is to enable the shareholders and the public to appraise position of the Company and enable investors to take an informed decision. In our view the cancellation / truncation of the contracts has a material impact which warrants a disclosure on an immediate basis. The responsibility was on the appellant no. 1 which it failed to do so. It is duty of the Compliance Officer to ensure that the Company complies with all the legal obligations. In the instant case as we have held the cancellation / truncation of the orders had a material impact and was price sensitive information which could have an impact on the financials of the Company. Thus, Clause 3.2 of the Code of Conduct was violated. Since there is no separate provision for imposition of penalty the provisions of Section 15HB of the SEBI Act was invoked and the penalty was rightly imposed. We do not find any error on this aspect. Penalty for failure to comply with provision of listing conditions or delisting conditions or grounds - sum of Rs. 1 crore has been imposed for violation of Section 23E of the SCRA - Section 23E has nothing to do with the violation of the provisions of the Listing Agreement especially Claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hort) upon the appellant no. 1 and further a sum of Rs. 1 crore was imposed upon the appellant no. 1 under Section 23E of SCRA and a sum of Rs. 5 lakh was imposed upon the appellant nos. 1 and 2 under Section 15HB of the Securities and Exchange Board of Act, 1992 ( SEBI Act for short). 2. The facts leading to the filing of the present appeal is, that the appellant is a Company and provides end solutions in wind energy generation. The said Company has a presence in various countries. The Company from time to time receives orders for manufacture and installation of wind turbines which are normally disclosed to the stock exchange under Clause 36 of the Listing Agreement. 3. On October 12, 2015 a show cause notice was issued in respect of certain orders which were cancelled in the year 2007-08, the valuation of the contract was worth Rs. 1506 crore. The show cause notice alleged that corporate announcement of the cancellation / truncation of the orders was not made known to the stock exchange and that in respect of certain orders so received no announcement whatsoever was made to the stock exchange. The show cause notice, therefore, alleged violation of Clause 36 of the Listing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, closure on account of power cuts, etc. and all events which will have a bearing on the performance / operations of the company as well as price sensitive information both at the time of occurrence of the event and subsequently after the cessation of the event in order to enable the security holders and the public to appraise the position of the Issuer and to avoid the establishment of a false market in its securities. In addition, the Issuer will furnish to stock exchange(s) on request such information concerning the Issuer as the stock exchange(s) may reasonably require. The material events may be events such as:- (a) Change in the general character or nature of business. (b) Disruption of operations due to natural calamity. (c) Commencement of Commercial Production / Commercial Operations. (d) Developments with respect to pricing / realisation arising out of change in the regulatory framework. (e) Litigation / dispute with a material impact The Company will promptly after the event inform the Exchange of the developments with respect to any dispute in conciliation proceedings, litigation, assessment, adjudication or arbitration to which it is a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material impact on present or future operations or profitability or financials of the company is required to be reported promptly and immediately should be made public. 20. Clause 36 of the Listing Agreement read with the Guidance Note make it apparently clear that the company is required to intimate the Stock Exchange with regard to the material events immediately, which information is required to be made to the public immediately. The word immediately has to be construed accordingly. It was urged that the word immediately should be construed liberally and not literally and, thus, contended that a reasonable time has to be given to make appropriate disclosure under Clause 36 of the Listing Agreement. In support of the submissions, the learned counsel has placed reliance upon a decision in Rosali V. vs. Taico Bank and Ors. (2009) 17 SCC 690 where the Supreme Court held that the word immediately should mean within a reasonable time and further held that is a well-settled principle of interpretation of a statute that where literal meaning leads to anomaly and absurdity, it should be avoided. 21. As per Black s Law Dictionary-eighth edition, the word immediate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gatory. The word immediately therefore, connotes proximity in time to comply and proximity in taking steps to resell on failure to comply with the requirement of deposit as first condition that is to take place within relatively short interval of time and without any other intervening recurrence. The meaning of the word forthwith is synonymous with the word immediately which means with all reasonable quickness and within a reasonably prompt time. 26. In the light of the aforesaid and considering the importance of disclosure under Clause 36 of the Listing Agreement, in our opinion, information was required to be given to the Stock Exchange at the earliest without any undue delay. 11. In ICICI Bank Limited vs Securities and Exchange Board of India (Appeal No. 583 of 2019 decided on July 8, 2020) this Tribunal while considering Clause 36 of the Listing Agreement held:- 18 . Clause 36 is sweeping in nature as it mandates all disclosures to enable the shareholders and the public to appraise the position of the Company and to avoid the establishment of a false market in its securities. It also mandates that the Company will also immediately inform the Exchan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han one lakh rupees but which may extend to one lakh rupees for each day during which such failure continues subject to a maximum of one crore rupees] for each such failure; 14. The appellant nos. 1 and 2 have also been penalized under Section 15HB of SEBI Act for violation of Clause 3.2 of the Code of Conduct under the PIT Regulations of 1992. For facility, Clause 3.2 of the Code of Conduct is extracted here under:- 3.2 This official shall be responsible for ensuring that the company complies with continuous disclosure requirements. Overseeing and co-ordinating disclosure of price sensitive information to stock exchanges, analysts, shareholders and media and educating staff on disclosure policies and procedure. 15. A perusal of the aforesaid indicates that it is duty of the Compliance Officer to ensure that the Company complies with all the legal obligations. In the instant case as we have held the cancellation / truncation of the orders had a material impact and was price sensitive information which could have an impact on the financials of the Company. Thus, Clause 3.2 of the Code of Conduct was violated. Since there is no separate provision for imposition of pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 23A(a) of the SCRA and will not attract Section 23E. The AO has made an error. 19. In view of the aforesaid, the penalty of Rs. 1 crore under Section 23E is patently erroneous and cannot be imposed and the order to that extent cannot be sustained. 20. While confirming the order of the AO with regard to violation of Clause 36 of the Listing Agreement and Clause 3.2 of the Code of Conduct to the PIT Regulations of 1992 we affirm the penalty imposed upon appellant no. 1 under Section 23A(a) to the extent of Rs. 5 lakh and also affirm the order of the AO to the extent of imposition of Rs. 5 lakh on appellant nos. 1 and 2 under Section 15HB of the SEBI Act. The imposition of penalty of Rs. 1 crore under Section 23E of the SCRA is set aside. 21. In the light of the aforesaid, appeal is partly allowed. In the circumstances of the case, parties shall bear their own costs. 22. The present matter was heard through video conference due to Covid-19 pandemic. At this stage it is not possible to sign a copy of this order nor a certified copy of this order could be issued by the registry. In these circumstances, this order will be digitally signed by the Private Secretary on b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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