BEFORE THE SECURITIES APPELLATE TRIBUNAL, MUMBAI
Appeal No.143/04
Date of Hearing : 26.4.05
Date of Decision : 29.4.05
In the matter of:
Appellant : Devaki Hospital Ltd., Chennai
Respondent : Securities and Exchange Board of India, Mumbai.
Appellant by : Shri A.K. Mylsamy, Advocate
Respondent by : Shri Vivek Menon, Advocate
Coram:
Justice Kumar Rajaratnam, Presiding Officer
Per: Justice Kumar Rajaratnam, Presiding Officer
The appeal is taken up with consent of parties.
2. The appellant-hospital is a corporate and is a listed company. It challenges in this appeal the order passed by the respondent dated 11.6.2004.
3. By the impugned order, the respondent has imposed a penalty of Rs.4,00,000/- on the appellant for being in violation of regulation 6(2), 6(4), 7(3) and 8(3) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997 (hereinafter referred to as “1997 Regulations”).
4. Mr. Mylsamy, the learned Senior Counsel for the appellant, did not deny the fact that there was violation of the Regulations but vehemently submitted that the appellant did not have sufficient funds at that time to engage a counsel to appear before the Adjudicating Officer and one of the staff of the appellant appeared and requested that a lenient view may be taken in respect of non-compliance of Regulations. It was submitted that non-compliance with the Regulations was neither intentional nor in defiance of the Regulations. The non-compliance was due to various reasons of internecine difference between Dr. Chockalingam and his wife. It is only now all systems have been put in place. It was submitted that the hospital is doing immense charitable work and is treating poor patients at reasonable rate and any erosion of the capital will only diminish the functioning of the hospital.
5. There is no doubt, in my mind, that there is a clear violation of the Regulations as fairly admitted by the learned counsel for the appellant.
6. Mr. Mylsamy, the learned counsel for the appellant, vehemently submitted that the appellant applied for regularization under the SEBI Regularisation Scheme, 2002 and the fees were also sent to the Stock Exchange. However, there was a delay of two days and therefore the papers were sent back to the company since the scheme had come to an end and that there was no power for SEBI to condone the delay. It was also strenuously submitted that the company under the new management has been complying with all the Regulations.
7. It is not necessary to go into the facts of the case as violation in respect of all the regulations has been admitted by the appellant.
8. I have perused the application made by the appellant under SEBI Regularisation Scheme, 2002. It is common ground that there was a delay of two days in submitting application under the regularization scheme.
9. The learned counsel for the respondent submitted that if the application for regularization was accepted in all, the appellant would be liable to pay 80,000 Rupees. The regularization graph reads as under:
|
Regulation/Sub-Regulation
|
Non compliance by
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Due date for compliance in terms of Regulations
|
Amount payable in (Rupees)
|
|
6(1)-transitional provision
|
Persons holding 5% or more
|
April 20, 1997
|
10,000
|
|
6(2)-transitional provision
|
Company
|
May 20, 1997
|
10,000
|
|
6(3)-transitional provision
|
Promoters and persons in control
|
April 20, 1997
|
10,000
|
|
6(4)-transitional provision
|
Company
|
May 20, 1997
|
10,000
|
|
8(1)-annual disclosures
|
Persons holding 15% or more
|
April 21 of each Financial year
|
10,000 for each year
|
|
8(2)-annual disclosures
|
Promoters or persons in control
|
April 21 of each Financial year
|
10,000 for each year
|
|
8(2)-annual disclosures
|
Promoters or persons in control
|
21 days from the record date for dividend declaration
|
10,000 for each record date
|
|
8(3)-annual disclosures
|
Company
|
April 30 of each Financial year
|
10,000 for each year
|
|
8(3)-annual disclosures
|
Company
|
30 days from the record date for dividend declaration
|
10,000 for each record date
|
10. Regulation 7(3) does not come under regularization scheme.
11. Taking all these facts into account, I feel it appropriate that the appellant, in view of the peculiar facts and circumstances of the case, be penalized to pay a sum of Rs.1,00,000/- in all for all the violations. This would put an end to this litigation. This order is passed in view of the fact that all disclosures have subsequently been made in accordance with the regulations.
12. The order passed by the respondent is confirmed in so far as the violations are concerned and the quantum of penalty is modified from Rs.4 lakhs to a consolidated penalty for all the violations to Rs.1,00,000/-. The appellant has already deposited a sum of Rs.50,000/- in response to an interim order dated 2.9.2004. Balance amount of Rs.50,000/- shall be deposited within three weeks from the date of receipt of this order.
13. The appeal is disposed of accordingly.
14. No order as to costs.
Sd/-
Justice Kumar Rajaratnam
Presiding Officer
Place: Mumbai
Date: 29th April 2005
Avm