BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Appeal No. 44 of 2007
Date of decision: 25.2.2008
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M/s Haryana Fibres Limited
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….. Appellant
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Versus
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Securities and Exchange Board of India
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…… Respondent
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Ms. Deepika Vijay Advocate for the Appellant.
None present for the Respondent.
CORAM : Justice N.K. Sodhi, Presiding Officer
Arun Bhargava, Member
Utpal Bhattacharya, Member
Per : Justice N.K. Sodhi, Presiding Officer (Oral)
Haryana Fibres Limited (for short, the company) a company incorporated under the Companies Act, 1956 is the appellant before us whose shares are listed on the Bombay Stock Exchange, Delhi Stock Exchange and Jaipur Stock Exchange. In August 2001 this company was acquired by Rajendra Seclease Limited acting in concert with one Sarika Rastogi. The acquirers came out with a public offer as required by the Securities and Exchange Board of India(Substantial Acquisitions of Shares and Takeovers) Regulations, 1997 (hereinafter called the regulations).
One of the disclosures made in the public offer was to the effect that the company and its promoters had not made any disclosures in terms of Regulations 6 & 8 of the regulations. Regulations 6 and 8 are transitional provisions and Regulation 6(2) requires every company whose shares are held by persons holding more than 5 % shares or voting rights in the company to declare within three months from the date of notification of the regulations to all the stock exchanges where its shares are listed, the aggregate number of shares held by every such person. Similarly, Regulation 8 (3) required the company to make disclosures on a continual basis within 30 days from the financial year ending March 31 each year. It is not in dispute that the company failed to make the necessary disclosures under Regulations 6(2) and 6(4) and that it also failed to make disclosures under Regulation 8(3) for the years ending March 31, 1998 to March 31, 2001. It is on account of these failures of the company that the adjudicating officer has by his order dated December 29, 2006 levied a penalty of Rs. 3 lacs on the company. It is against this order that the present appeal has been filed under section 15T of the Securities and Exchange Board of India Act, 1992.
We have heard the learned counsel for the appellant. Despite service of notice, the respondent Board has not put in appearance. The fact that the company violated Regulations 6 and 8 of the regulations is admitted. What is contended by the learned counsel for the appellant is that the non-disclosure did not affect adversely the interest of other shareholders/investors and that there was no change in the shareholding of the company till the time it was taken over by the acquirers. She also contended that the company is in the red and has suffered huge losses in the past and after the acquirers have taken over the company, they are trying to restruct the same and that it is still in loss. In this background, she urges that the penalty amount should be reduced. We have considered the arguments of the learned counsel for the appellant and find that there is nothing on the record to show that the non-disclosure on the part of the company affected adversely the interest of any shareholder or investor and even though the shareholding did not change, the company violated the regulations. This violation is a technical one committed during the transitional period when the regulations had just come into force. Since the violation has not affected the interests of other shareholders/investors, we are inclined to agree with the learned counsel for the appellant and reduce the quantum of penalty. In the facts and circumstances of the case we reduce the same to Rs. 50,000/-. The impugned order will stand modified accordingly.
The appeal stands disposed of as above. There is no order as to costs.
Sd/-
Justice N.K.Sodhi.
Presiding Officer
Sd/-
Arun Bhargava
Member
Sd/-
Utpal Bhattacharya
Member
25.2.2008
sl