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In the matter of D-Link Holding Mauritius

Nov 01, 2004
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Orders : Orders of SAT

IN THE SECURITIES APPELLATE TRIBUNAL

MUMBAI

 

 

Appeal No: 70 of 2004

  

Date of Hearing

  

01/11/2004

  

Date of Decision

  

01/11/2004

  

 

In the matter of

  

     

Appellant – Represented by: 

  

D-Link Holding Mauritius

  

Mr. K.G. Prabhu, Advocate

  
 

Versus 

  

 

  

Securities & Exchange Board of India

    

Respondent- Represented by 

  
   

Ms. Mayura Raut, Advocate

  

 

CORAM

 

Justice Kumar Rajaratnam, Presiding Officer

N.L. Lakhanpal, Member

 

 

Per: N.L. Lakhanpal, Member

  

 

  1. The appeal is taken up for final disposal with the consent of both parties. The appeal is against the order dated 22/01/2004 passed by the Adjudicating and Enquiry Officer, Securities and Exchange Board of India (SEBI), imposing a penalty of Rs. 4 lakhs on the appellant M/s. D-Link Holding Mauritius Inc., for violation of Regulation 3(3) of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. 

    2.  

  2. The appellant, D-Link Holding Mauritius Inc., is a wholly owned subsidiary of D-Link Corporation, Taiwan, which along with its subsidiaries held 1,03,56,100 shares in D-Link (India) Limited. As part of internal restructuring within the D-Link Corporation group, 67,11,140 shares were transferred to D-Link Holdings Mauritius which thus came to acquire 22.37% stake in D-Link Holdings (India) Limited on 30/09/2002. The appellant acquirer was required to intimate the Stock Exchanges of Mumbai, Bangalore and NSE about the proposed acquisition 4 days in advance under Regulation 3(3) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. Since the appellant failed to do that, the matter was referred for adjudication and the impugned order came to be passed under Section 15A(b) of SEBI Act, 1992. 

    3.  

  3. There is no dispute about the facts of the case as narrated above. The appellant fairly admits the lapse. The explanation given by the appellant to the Adjudication Officer was that this was the first acquisition by the group and that it was only a technical acquisition because the whole thing arose out of the need for internal restructuring of the group. There is nothing in the impugned order to show that this contention was disbelieved. Even in appeal the appellant has accepted the lapse and has only argued that the penalty leviable for this lapse at the time the default of non-reporting took place was a maximum of Rs. 5,000/- per day while the impugned order saddles him with the penalty calculated @ Rs. 1 lakh per day. It was common ground during the hearing that while the Regulation was amended only on 29/10/2002 enhancing the penalty leviable to a maximum of Rs. 1 lakh per day, the date of acquisition was 30/09/2002. The learned counsel for the respondent tried to argue that the enhanced penalty was leviable because at the time of passing of the impugned order on 22/01/2004 the amendment to the SEBI Act, 1992 enhancing the penalties had already come into existence. The amendment to SEBI Act, 1992 did not contemplate that the enhanced penalties to be retrospective in effect. The plain reading of the amendment would indicate that the amendment was to come into effect prospectively and not retrospectively. It is quite possible in some legislation that amendment are made with retrospective effect. But we do not find any such intention on the legislature from the perusal of the amendment. The Hon’ble Supreme Court in the case of Govinddas and Others Vs. Income-Tax Officer and Another (1976) 103 ITR 123 has held as follows:  

    4. "It is a well-settled rule of interpretation that unless the terms of statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. If the enactment is expressly in language which is fairly capable of either interpretation, it ought to be considered as prospective only." 

  4. Accordingly the impugned order is modified and the penalty stands reduced from Rs. 4 lakhs to Rs. 20,000/- only. The amount to be paid within 3 weeks from the receipt of this order. The appeal is disposed of accordingly. No order as to costs.

    5.  

(Pronounced in Court)

       
 

(N.L. Lakhanpal)

Member

    

(Justice Kumar Rajaratnam)

Presiding Officer

  

 

Place: Mumbai

Date: 01/11/2004

*/as