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ORDER
����������� UNDER
RULE 5 OF SEBI (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES BY
ADJUDICATING OFFICER) RULES, 1995 READ WITH SECTION 15I OF SECURITIES AND
EXCHANGE BOARD OF INDIA ACT, 1992. In the matter
of� TYPHOON HOLDINGS Ltd.
Against ����
��Shri
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|
Sl. No. |
Regulation / Sub Regulation |
Due date for compliance as given in the Regulations |
Actual Date of Compliance |
Delay, if any (in no. of days) |
|
1
|
2
|
3
|
4
|
5
|
|
1
|
6(1) |
20.04.1997 |
- |
Not complied with |
|
2
|
6(3) |
20.04.1997 |
- |
Not complied with |
|
3
|
8(1) |
21.04.1998 |
- |
Not complied with |
|
4
|
8(2) |
21.04.1998 |
- |
Not complied with |
|
5
|
8(1) |
21.04.1999 |
- |
Not complied with |
|
6
|
8(2) |
21.04.1999 |
- |
Not complied with |
|
7
|
8(1) |
21.04.2000 |
- |
Not complied with |
|
8
|
8(2) |
21.04.2000 |
- |
Not complied with |
|
9
|
8(1) |
21.04.2001 |
- |
Not complied with |
|
10
|
8(2) |
21.04.2001 |
- |
Not complied with |
|
11
|
8(1) |
21.04.2002 |
- |
Not complied with |
|
12
|
8(2) |
21.04.2002 |
- |
Not complied with |
|
13
|
8(1) |
21.04.2003 |
20.04.2003 |
N.A. |
|
14
|
8(2) |
21.04.2003 |
20.04.2003 |
N.A. |
|
15
|
8(1) |
21.04.2004 |
20.04.2004 |
N.A. |
|
16
|
8(2) |
21.04.2004 |
20.04.2004 |
N.A. |
|
17
|
8(1) |
21.04.2005 |
20.04.2005 |
N.A. |
|
18
|
8(2) |
21.04.2005 |
20.04.2005 |
N.A. |
|
19
|
7(1) & (2) |
|
N.A. |
N.A. |
|
20
|
7(1A) & (2) |
|
N.A. |
N.A. |
1.6������ The aforementioned non disclosures / violations by the noticee
are liable to be penalized under section 15A (b) of the Securities and Exchange
Board of India Act, 1992 (hereinafter referred to as �SEBI Act�). In
view of the above, the undersigned has been appointed as Adjudicating Officer
vide SEBI order dated January 31, 2006 to enquire into and adjudge under
Section 15 I of the SEBI Act read with SEBI (Procedure for Holding Inquiry and
Imposing Penalties by Adjudicating Officer) Rules, 1995 for the alleged
violation by the aforesaid noticee being a past promoter of THL.
2.0������ Notice
/ Reply / Personal Hearing
2.1������ Accordingly, I issued a show cause notice dated September 26,
2006 to ��������Shri Ravi Kumar Ghosh under
rule 4 of SEBI (Procedure for Holding Enquiry and Imposing Penalty by the
Adjudicating Officer) Rules, 1995 to show cause as to why an inquiry should not
be initiated against him and penalty be not imposed on him for violation of
regulations 6(1) and 6(3) of the SAST Regulations and failure to make yearly
disclosure to the company in accordance with regulation 8(1) and 8(2) of the SAST
Regulations for the financial years 1997-1998, 1998-1999, 1999-2000 and 2000-2001.
A copy of the letter of offer dated
2.2������ The show cause notice (SCN) sent through registered post acknowledgement
due on
3.0������ Consideration
of issues and findings:
3.1������ I now propose to discuss in detail the charges that have been
leveled against the noticee for being adjudicated in the present proceedings, the
documents available on record and my findings on the same.
3.2������ Para 4.4 of the Letter of Offer dated
�The Target Company and the sellers have not
been complying with the applicable provisions of Chapter II of SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997 as amended
till date.� The declarations / filings
under Regulations 6 & 8 have not been done by the sellers (the promoters)
and the Target Company.� SEBI may take
appropriate actions in respect of non-compliances with Chapter II of the SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations.�
3.3������ It has
been alleged that the noticee failed to make disclosures under regulations 6(1)
and 6(3) of the SAST Regulations to THL in the year 1997 and is hence liable
for penalty under Section 15 A (b) of the SEBI Act. The noticee has been also
charged with failure to make yearly disclosures to THL in accordance with
regulation 8(1) and 8(2) of SAST Regulations for the financial years 1997-1998,
1998-1999, 1999-2000 and 2000-2001 and is hence liable for penalty under
Section 15 A(b) of the SEBI Act. The provisions of the SAST Regulations which
have been alleged to have been violated are mentioned below:-
�Transitional Provision
6(1) Any person, who holds more than five percent
shares or voting rights in any company, shall within two months of notification
of these regulations disclose his aggregate shareholding in that company to the
company.
(2)�
(3) A promoter or any person having control over a
company shall within two months of notification of these regulations disclose
the number and percentage of shares or voting rights held by him and by persons
acting in concert with him in that company to the company.�
(4)��
�Continual Disclosures
8(1) Every person, including a person mentioned in
regulation 6 who holds more than ten per cent shares or voting rights in any
company, shall, within 21 days from the financial year ending March 31, make
yearly disclosure to the company, in respect of his holdings as on 31st
March.
(2) A promoter or every person having control over
a company shall, within 21 days from the financial year ending March 31, as
well as the record date of the company for the purposes of declaration of
dividend, disclose the number and percentage of shares or voting rights held by
him and by persons acting in concert with him, in that company to the company.
(3)�
(4)��
{Note: As per SEBI (Substantial Acquisition of Shares
and Takeovers) (Amendment) Regulations, 1998 dated
3.4������ A
reading of the aforesaid provisions makes it clear that a person who was holding
more than 5% shares in any company was required to disclose his aggregate
shareholding in that company to the company within two months of coming into
force of the SAST Regulations. A promoter or any person having control over a
company had to disclose the number and percentage of shares held by him and by
persons acting in concert with him in that company to the company within two
months of coming into force of SAST Regulations. These are transitional
provisions which required one time compliance.
Regulation 8 (1) however, stipulates that every person including those referred
to in regulation 6 who holds more than 10 % ( 15 % after October 28, 1998 ) shares
in any company is required to make yearly disclosures to the company in respect
of his holdings as on March 31.� This
disclosure is required to be made within 21 days from the end of the financial
year.� Further as per regulation 8(2), a
promoter or a person having control over the company is to disclose the number
and percentage of shares held by him and by persons acting in concert with him
in that company to the company.� This disclosure
is also to be made within 21 days from the end of the financial year on March
31.
3.5������ The
SAST Regulations came into force on
3.6������ There
is no material/ information available on record to show that the noticee was
holding more than five per cent shares or voting rights in THL at the relevant
time. Therefore, I am of the opinion that benefit of doubt may be given to the noticee
as regards violation of regulation 6(1) of� SAST Regulations.
3.7������ However,
there is no� minimum percentage holding
requirement with regard to regulation 6(3) of SAST Regulations and the noticee,
being erstwhile promoter of THL,� should
have made disclosures about the number and percentage of shares or voting
rights held by him and by persons acting in concert with him in the company THL
to THL. As he did not make this disclosure, I hold that he has violated
regulation 6(3) of SAST Regulations.
3.8������ As already mentioned above, there is no material / information available on record to prove the
percentage holding of noticee in THL.� In absence of any evidence, it is not possible to
ascertain that the noticee was holding more than 10 % ( 15
% after October, 28, 1998 ) shares or voting rights in THL at the relevant
time. Therefore, I am of the opinion that benefit of doubt may be given to the
noticee as regards violation of regulation 8 (1) of SAST Regulations.
3.9������ As per para 4.1.7 of Letter of Offer dated
����������� As per statement available on record, the noticee failed
to make annual disclosures about the number and percentage of shares or voting
rights held by him and by persons acting in concert with him within 21 days
from the financial year ending March 31 and has thus violated regulation 8(2)
of the SAST Regulations for the financial years 1997-1998, 1998-1999, 1999-2000
and 2000-2001. The above findings are summarized in table below :
|
SAST Regulations |
For the year |
Whether violation
established |
|
6(1) |
1997 |
No |
|
6 (3) |
1997 |
Yes |
|
8 (1) |
1997-1998 |
No |
|
8 (2) |
1997-1998 |
Yes |
|
8 (1) |
1998-1999 |
No |
|
8 (2) |
1998-1999 |
Yes |
|
8 (1) |
1999-2000 |
No |
|
8 (2) |
1999-2000 |
Yes |
|
8 (1) |
2000-2001 |
No |
|
8 (2) |
2000-2001 |
Yes |
3.10��� In view of above, I am of the opinion that
the noticee has violated
regulation 6(3) of SAST Regulations in
the year 1997 and has failed to make yearly disclosures to THL in accordance
with regulation 8(2) of the SAST Regulations for the financial years 1997-1998,
1998-1999, 1999-2000 and 2000-2001. The noticee, Shri Ravi Kumar Ghosh is
therefore liable for penalty under Section 15A (b) of the SEBI Act, 1992 which
states as under:
�Penalty for failure to
furnish information, return, etc.
15A. If any
person who is required under this Act or any rules or regulation made thereunder,-
(a)��
(b)� �to
file any return or furnish any information, books or other documents within the
time specified therefore in the regulations fails to file return or furnish the
same within the time specified therefore in the regulations, he shall be liable
to a penalty not exceeding five thousand rupees for every day during which such
failure continues;
(c) �....�
3.11��� While imposing penalty it is important to consider
the factors stipulated in section 15J of SEBI Act, 1992 which states as under:
�15J ��Factors
to be taken into account by the adjudicating officer
While adjudging quantum of penalty
under section 15-I, the adjudicating officer shall have due regard to the
following factors, namely:-
(a)
the amount of disproportionate gain or unfair
advantage, wherever quantifiable, made as a result of the default;
(b)
the amount of loss caused to an investor or
group of investors as a result of the default;
����������� (c)
the repetitive nature of the default.�
3.12��� Section
11(2) (h) of SEBI Act, 1992 empowers SEBI to regulate substantial acquisition
of shares and takeover of companies. This was done with the specific objective
of protecting the interest of the investors, especially the small investors.
Small investors are typically scattered, do not have a unified common voice to
protect their interest, especially when there is a change in control or
management etc. With this objective in mind, SEBI (Substantial Acquisition of
Shares and Takeovers) Regulations, 1994 were promulgated which were
subsequently replaced by the present SEBI (Substantial Acquisition of Shares
and Takeovers) Regulations, 1997.� The
purpose of these regulations is to ensure transparency of information and equal
& fair treatment to all shareholders.
3.13 �The shareholding of the promoters / persons in
control of a listed company is an important indicator to the general investors.
A high level of shareholding and / or accretion of shares by the promoters /
persons in control indicate their confidence in the company�s future prospects
and vice-versa. The promoters / persons in control are required to make
disclosures to the company which in turn reports the same to the stock
exchanges. The stock exchanges, on receipt of this information, disseminate it
to the members of public thus enabling them to take informed decisions.
3.14��� Therefore, disclosure under regulations 8(1)
and 8(2) of SAST Regulations is an important disclosure which has a bearing on
the investment or disinvestment decisions of the investing public. Regulation
6(1) and 6(3) of the SAST Regulations contains transitional provisions which
enable SEBI and the general investors to use that information as a reference
point for subsequent compliances. The default by the noticee in not complying
with aforesaid regulations has to be considered with respect to its impact as
discussed above.
3.15��� From the documents on record, it is not
possible to ascertain the disproportionate gain or advantage to the noticee
which may have accrued to him on this account. It is also not possible to
ascertain the loss to the investors in monetary terms.� However, the investors were definitely
deprived of the information on time and were thus impaired from taking informed
investment decisions due to these lapses of the noticee. Further, the default in
disclosure to the company by the noticee was repetitive in nature as the
disclosures were not made consecutively for several years.�
3.16��� As the violation of statutory obligations
has been established, TCOL is liable for penalty. Hon�ble Supreme Court of
India in its order dated
3.17��� As per statement regarding status of
compliance with various regulations under chapter II of the SAST Regulations by
the promoters of THL / THL submitted by FSL with the letter of offer there was
already a delay of 2996 days in compliance with disclosure under regulation 6
(3) of SAST Regulations. Similarly, for the year 1997-1998 there was a delay of
2631 days in compliance with disclosure under regulation 8 (2) of SAST
Regulations and so on for the other years. There is no proof of compliance even
after that date. Even if I consider the delay in filing for under regulation 6
(3) as 2996 days and compute the penalty by multiplying the delay period with
maximum leviable penalty i.e. Rs 5000 per day, the amount comes to Rs
1,49,80,000/-. Similarly for the failure in submission of information under
regulation 8(2) of SAST Regulations due on 21.04.1998, the maximum penalty
imposable would also be quite large. The penalty for the other violations can
also be computed on similar basis which would aggregate to a sizable amount.
3.18��� The noticee did not avail the benefit of the
SEBI Regularization Scheme, 2002 to regularize non-compliance with SAST
Regulations. I understand that, under the SEBI consent order scheme, a penalty
at the rate of Rs. 25,000/- per disclosure violation had been proposed.� In the circumstances, in my opinion a penalty
of twice this amount would be appropriate in the instant case i.e. a penalty of
Rs. 50,000/- for each violation.
4.0������ Penalty
4.1������ In the absence of any convincing explanation for the non-compliance
in making disclosures under regulation 6(3) of the SAST Regulations in the year
1997 and failure to make yearly disclosure to THL in accordance with regulation
8(2) of the SAST Regulations for the financial years 1997-1998, 1998-1999,
1999-2000 and 2000-2001 and considering the material available on record, and
upon a judicious exercise of powers conferred upon me under Rule 5 of SEBI
(Procedure for Holding Enquiry and Imposing Penalties by the Adjudicating
Officer) Rules 1995, read with Section 15 I of the SEBI Act, I impose a penalty
of Rs. 2,50,000/- (Rupees two lakh fifty thousand only)
on Shri Ravi Kumar Ghosh, S/o Shri Raj Kumar Ghosh, 23-A, N. S. Road, Kolkata � 700 001 under section 15 A(b) of SEBI Act, 1992. I think
this amount would be appropriate in view of the facts of the case.
4.2������ The penalty amount shall be paid within a
period of 45 days from the date of receipt of this order through a crossed
demand draft drawn in favour of �SEBI- Penalties remittable to the Government
of India� and payable at Mumbai which may be sent to Mrs. Soma Majumder, Deputy
General Manager, SEBI, C � 4 A, �G� Block, Bandra Kurla Complex, Bandra (E),
Mumbai � 400 051.
PLACE: MUMBAI��������������������������������������������������� PIYOOSH GUPTA
DATE: 27 JUNE �2007 ������������������������������ ADJUDICATING
OFFICER
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