IN THE SECURITIES APPELLATE TRIBUNAL

MUMBAI

Appeal No.  46/2005

           

Date of Hearing	20.6.2005
Date of Decision	28.06.2005

 

In the matter of:

 

Padmini Technologies Ltd.	Appellant – Represented by
	Mr. Vinay Chauhan, Advocate
Versus
Securities & Exchange Board	Respondent –Represented by
of India	Mr.V.N. Shingnapurkar, Advocate

 

Coram:

            Justice Kumar Rajaratnam, Presiding Officer

            C. Bhattacharya, Member

            R. N. Bhardwaj, Member

 

Per:  Justice Kumar Rajaratnam, Presiding Officer

 

   1.            Appeal is taken up with consent of parties.

   2.            The appellant, Padmini Technologies Ltd., challenges the order passed by the adjudicating officer wherein the adjudicating officer has imposed a penalty of Rs. 5 lakhs for failure to furnish timely information sought by the adjudicating officer, which according to the respondent, had issued irregular preferential allotment of shares made by the appellant and had violated the provisions of Section 15A of the SEBI Act.

   3.            The investigating officer sought information with respect to bank accounts and monies received from the allotees.  The learned counsel for the appellant raises a lot of technical objections and submitted that the summons issued under Section 11(3) was not available to the respondent and further submitted that 11(2)(ia) cannot  be applied retrospectively since 11(2)(ia) came into force on 29.10.2002.

   4.            A further argument was also made that 11C(6) cannot be applied retrospectively.  The adjudicating officer rightly rejected all the contentions and held that Section 15A takes care of penalty for failure to furnish information.

   5.            When a serious case of alleged fraud with respect to allotment of preferential shares has taken place, it is the duty of the respondent to get to the information that is necessary and the appellant did not cooperate with the respondent by not responding to the show cause notice primarily.

   6.            Legal semantics  cannot be an answer for genuine investigation with respect to alleged fraud since the preamble of the SEBI Act clearly states that the primary duty of SEBI is to protect the interest of investor in securities and to regulate the securities market and for matter connected with or incidental thereto.

   7.            The adjudicating officer was fully justified in holding that the appellant did not cooperate with the adjudicating officer in furnishing information.  It appears to us that the appellant took an intransigent attitude in the matter of furnishing information and the non-compliance of the appellant to the summons issued to him is far violation of Section 15A of the SEBI Act.

   8.            In these circumstances, we have no hesitation in confirming the order passed by the adjudicating officer. 

   9.            There is a bare mention of Section 15J in the impugned order without dealing with it adequately.  Section 15J of the SEBI Act reads as follows:

“15-J  Factors to be taken into account by the adjudicating officer

While adjudging the quantum of penalty under Section 15-I, the adjudicating officer shall have due regard to the following factors namely:-

1. the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default;

2. the amount of loss caused to an investor or group of investors as a result of the default;

3. the repetitive nature of the default”

1. While dealing with the quantum of penalty, it would not be out of place to mention that we have already imposed a penalty of Rs. 1.5 lakhs in appeal 45/2005.  In both these cases Padmini Technologies is the appellant and penalties arise under similar circumstances, although under different provisions of law (one is for not furnishing timely information and other for non-redressal of investor grievance). The Company has already been imposed a penalty of Rs. 1.5 lakhs in appeal 45/05 for more or less the same allegations with regard to the same cause of action.
2. Taking all these factors into account, the ends of justice will be met if in all the three appeals, (appeal 46/05, 66/05 & 45/05) Rs. 1.5 lakhs is imposed on each of the appellants.
3. We dismiss the appeal, except in so far as modification of the penalty is concerned.  The appellant is directed to deposit a sum of Rs. 1.5 lakhs within 4 weeks from the date of receipt of this order.
4. No order as to costs.