In the matter of:

Escorts Mutual Fund                                                    Appellant

Vs.

P.Sri Sai Ram, Adjudicating Officer,
Securities & Exchange Board of India                      Respondent
 
 

APPEARANCE:

Ms. Ramya Mohan
Advocate
I/b. Dave & Girish & Co.,

Mr. P.K.Mathur
Asstt. Vice President,
Escorts Mutual Fund                                                    for Appellant
 

Mr. S. V. Krishna Mohan
Division Chief, SEBI

Ms Anita Anoop
Legal Officer, SEBI                                                    for Respondent
 

(Appeal arising out of the order dated 25.6.2001 made by the Adjudicating Officer, Securities and Exchange Board of India)

The Appellant is a mutual fund registered with the Securities and Exchange Board of India (SEBI) amenable to the regulatory measures provided in the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 (the Regulations). In terms of section 11 of the Securities & Exchange Board of India Act, 1992 (the Act), registering and regulating the working of mutual funds, is one of the functions assigned to SEBI. SEBI is a statutory Board established under the Act to protect the interest of investors in securities and to promote the development of and to regulate the Securities market. The Regulations notified by SEBI provides for registering and regulating the activities of mutual funds. In terms of section 15I of the Act, SEBI is empowered to appoint Adjudicating Officer for holding inquiry for the purpose of adjudging under certain sections in the Act including section 15A. The Adjudicating Officer is empowered to impose monetary penalty upto the limit prescribed in the concerned sections, on being satisfied after inquiry that the person concerned has failed to comply with the provisions of the sections specified. The Chairman, SEBI based on the information that the Appellant had failed to comply with certain requirements of the Regulations, vide order dated 22.11.2000, appointed the Respondent as Adjudicating Officer to inquire into the alleged violations. The order, which is self-explanatory, reads as follows:

Ms Ramya Mohan, learned Counsel appearing for the Appellant submitted that the imposition of penalty is untenable in the facts and circumstances of the case, as accepted by the Adjudicating Officer himself. Ms. Mohan stated that the Appellant is in business since 1996 and has an impeccable record of complying with the statutory requirements and that it also enjoys a good reputation with reference to the performance of its various mutual fund schemes. Learned Counsel submitted that during the course of the annual audit of the funds� accounts some time in mid September 2000, the Appellant was faced with certain difficulties with regard to the supplementary audit required by its statutory auditors. She submitted that although the unaudited accounts for the half year ending 30.9.1999 and 31.3.2000 were duly published on 1.11.1999 and 31.3.2001 the audited annual accounts could not be forwarded to SEBI within 6 months as stipulated in the regulation as the audited report was not available in time because of the supplementary audit required in the mid September by the auditors, that this was brought to the notice of SEBI by the Appellant on 29.9.2001 and extension of time for complying with the requirements of regulations 56 and 57 was also sought, but SEBI did not respond to the said request.

Ms Mohan stated that the responsibility cast under regulation 56 is on publication of the scheme-wise annual report of a mutual fund or an abridged version of the same through an advertisement within 6 months from the date of closure of the annual account, with the specified details. Regulation 57 requires every mutual fund to forward a copy of the annual report and other specified information to SEBI within 6 months of the annual account closing date. In terms of regulation 55 the annual statement of accounts of every mutual fund is required to be audited by an auditor appointed by the Trustees of the mutual fund. She further submitted that the last minute requirement of supplementary audit was unexpected and also being unusual, the Appellant�s time schedule to forward the annual report was unsettled resulting in short delay of just 26 days. Referring to Respondent�s suggestion that the Appellant could have finalised the accounts stating that it is subject to the outcome of the supplementary audit ordered by the auditors, she stated that such a course of action would not have served any purpose except creating problems in as much as such a statement could have considered as a qualified auditors report to the discomfort of all concerned. Ms Mohan submitted that the Appellant was hopefully trying to comply with the requirement with in the time limit and only when it was certain that it would not be possible, it sought short extension of time which the authorities could have administratively granted in the genuine facts and circumstances of the case.

Learned Counsel submitted that there was no denial of information to the unit holders in as much as the unaudited accounts for the relevant period were published within the prescribed time limit and a copy of the same was sent to SEBI, that the audited accounts were only confirmatory in nature. She stated that the unaudited accounts for the half year ended on 30.9.1999 and 31.3.2000 were published in the news papers on 1.11.1999 and 31.5.2000, respectively within the prescribed time limit, that similarly the portfolio of the scheme as of 31.3.2000 was mailed to the unit holders and there by fulfilled the substantial requirement of disclosure.

Ms Mohan referred to the letter dated 16.1.2001 sent in reply to the Respondent�s Show Cause Notice placed at Annexure V to the appeal, and stated that the Appellant had clearly stated therein the factual position with reference to the short delay involved in complying with the requirements of the regulations, that SEBI was informed on 5^th July 2000, of the fact that during June, 2000, the computer system of the mutual fund crashed and as a result the data on the hard disk was lost, that despite the same complete data was retrieved / reconstructed later on and the accounts were prepared and annual accounts were presented to the auditors well in time. As the auditors were aware of the system crash, they wanted to go for a thorough check of all records, that at the stage of finalisation of audit in the mid September, 2000 the auditors came up with unforeseen and unplanned supplementary audit requirements, which were never raised by the previous auditors. Learned Counsel stated that the Appellant was not ready to take any reservation or qualification on the quality of its accounting work, which was very transparent and the accounting policies adopted were in tune with the Regulations and as such it was left with no option but to go for supplementary audit, as required by the statutory auditors.

Learned Counsel submitted that the Respondent having accepted the Appellant�s explanation on the delay involved in finalising and submitting annual report and having held that the delay in compliance of the requirements of regulations 56 and 57 was not intentional, the Respondent should not have imposed penalty. In this context she cited para 3.6 of the impugned order wherein the Adjudicating Officer had accepted that the delay occurred due to supplementary audit requirements. Learned Counsel submitted that no penalty could have been imposed in the light of the finding that there has been no intentional or willful failure on the part of the Appellant to comply with the provisions. In this context she cited the decisions of the Hon�ble Supreme Court in the Hindustan Steels Ltd. Vs. State of Orissa (1969) 2 SCC 627 and Hindustan Lever Ltd. V. Director General (Investigation & Registration), (2001) 2 SCC 474.

Learned Counsel submitted that no penalty can be imposed on the basis of any extraneous circumstances like the one stated in the order that non imposition of penalty would send wrong signals to other Mutual Funds. She submitted that in the light of the principle laid down by the Hon�ble Supreme Court in Hindustan Steels� case, penalty for failure to carry out any statutory obligation, cannot be imposed if the concerned person has acted bonafide and honestly, and that since the Respondent having accepted the fact that the short delay was caused as a result of the supplementary audit requirements, and not willfully by the Appellant, there was no justification in imposing the penalty.

Learned Counsel referred to section 15J of the Act and submitted that none of the parameters provided therein applied to the Appellant�s case and as such even on that ground also penalty should not have been levied.

Shri Krishna Mohan, learned Representative of the Respondent submitted that the Appellant is under statutory obligation to comply with the requirements of regulation 56 and 57 well within the time as any information furnished belatedly would not serve the very purpose for which the disclosure is prescribed. Learned Representative submitted that the Annual Report of a mutual fund is one of the important documents which is made available to the unit holders, so as to enable them to take informed decisions regarding their investments in the units. To highlight the importance of the annual report he referred to Schedule XI of the Regulations and explained the material information required to be furnished in the annual report. According to the learned Representative disclosures in the annual report are meant to help the unit holders in making appropriate investment decisions, that violation of disclosure standards is a breach of the unit holders right to accurate information to enable them to take suitable decision, that most of the schemes of the mutual funds including the Appellant are open ended offering units for sale without specifying any duration for redemption, and as such periodic and timely disclosure requirements are vital.

Shri Krishna Mohan stated that since regulations 56(1) and 57 require the mutual funds to publish / mail / submit the annual report not later than six months from the date of closure of the relevant accounting year, the Appellant was bound to submit a copy of the annual report and other information for the accounting year ended on 31.3.2000 to SEBI latest by 30.9.2000, but the Appellant failed to finalise its accounts for publishing and dispatching to the unit holders within the stipulated time and were able to finalise the annual report only by 21.10.2000, published on 26.10.2000 and forwarded to SEBI on 27.10.2000. According to Shri Krishna Mohan, in the case of mutual funds strict action should follow for not making timely disclosures, that taking lenient view in any particular case would send wrong signals and in that event even those rule abiding mutual funds would be tempted to take things easy to the detriment of the investors, that strict observance of the regulations are essential for safeguarding the interest of the investors and the market, that any omission cannot be overlooked in view of the larger public interest. According to him violation of regulation by the Appellant is indicative of its lack of due diligence warranting action and that it is not necessary to take into consideration the factors provided in section 15J in each and every case deserving imposition of monetary penalty.

With reference to the contention that the Appellant had sought extension of time from SEBI for publication of annual report, learned Representative stated that there is no provision in the Regulations for granting such extensions and as per regulation 56 the annual report has to be published "as soon as possible" on completion of the relevant accounting year and in any case with in the outer time limit of six months from the date of closure of the relevant accounting year as prescribed in the regulations. Shri Krishna Mohan also cited Hindustan Steels case and stated that the Hon�ble Supreme Court had held that "whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on consideration of all the relevant circumstances", that the Respondent has considered the relevant circumstances and taken the decision judicially. Shri Krishna Mohan countering the Appellant�s contention that the case does not attract any of the factors provided in section 15J and as such imposition of penalty is not tenable, referred to the observation of this Tribunal in Can Bank Investment Management Services Ltd. v. P.Sri Sai Ram ([2001] 31 SCL 42; [2001] 42 CLA 241), that "it is difficult to agree with Appellant�s view point that in the light of the Adjudicating Officer�s observation that none of the factors mentioned in section 15J is applicable to the case, the Adjudicating Officer should not have imposed the penalty. Section 15J does not state that penalty should not be imposed in the case of a proven failure. In terms of section 15I it is for the Adjudicating Officer to decide as to whether a particular failure deserve to be punished by imposing monetary penalty. He has to take into consideration all the relevant factors and decide judicially. However, with a view to curtail arbitrary imposition of the maximum penalty provided for each of the failures covered under section 15I, legislature has provided guidelines in section 15J."

Shri Kishna Mohan cited Hon�ble Supreme Court�s decision in Disciplinary Authority cum Regional Manager and others v. Nikunja Bihari Patnaik (1996) 9 SCC 69 and stated that in the said case the apex court had held that proof of any loss is not necessary to punish a person for acting in violation of any statutory provisions. Learned Representative also cited another Supreme Court decision in Director of Enforcement v. MCTM Corporation P. Ltd. (1996) 2 SCC 471 to support the view that for the breach of a civil obligation which attracts penalty as a result of adjudication, no proof of the existence of mens rea is required, that only "blame worthy conduct" is required to be established. Learned Representative also submitted that non submission of Report to SEBI under regulation 57 is an offence covered under section 15 A (a) of the Act, and that in support of the said submission cited this Tribunal�s decision in Housing Development Finance Corporation Ltd., v. Securities and Exchange Board of India ([2000] 28 SCL 289: [2000] 39 CLA 229).

Shri Krishna Mohan re-iterated the version of the Adjudicating Officer�s conclusion and the decision based on the same and stated that the impugned order deserves to be sustained.

I have very carefully considered the rival contentions. Since there is no dispute about the factual position that the requirements of regulations 56 and 57 were not complied with in the time frame, the only question that is required to be decided is as to whether the Respondent�s order imposing monetary penalty is justified in the attendant facts and circumstances of the case.

As stated earlier, the Appellant is a mutual fund registered with Respondent. The Appellant�s activities as a mutual fund are governed by the statutory regime in position, and in particular by the Regulations notified by the Respondent.

It is seen from the SEBI�s order appointing the Adjudicating Officer, that the allegation against the Respondent was that it has violated the provisions of regulation 56(1) and 57 of the Regulations and penalty, if considered necessary, was to be imposed in terms of sections 15A (a) and (b) and section 15D(b) of the Act.

The statutory provisions referred to in the order are extracted below. Since regulation 55 is also relevant it is also extracted.

Regulation 55- Auditor's Report:

(1) Every mutual fund shall have the annual statement of accounts audited by an auditor who is not in any way associated with the auditor of the asset Management Company

Explanation: For the purpose of this sub-regulation and regulation 66 "auditor" means a person who is qualified to audit the accounts of a company under section 224 of the Companies Act, 1956 (1 of 1956)

(2) An Auditor shall be appointed by the trustees.

(3) The auditor shall forward his report to the trustees and such report shall form part of the Annual Report of the mutual fund

(4) The auditor�s report shall comprise of the following:

 
(a) a certificate to the effect that:-
  (i) he has obtained all information and explanation which, to the best of his knowledge and belief, were necessary for the purpose of the audit;

(ii) the balance sheet and the revenue account give a fair and true view of the scheme, state of affairs and surplus or deficit in the Fund (iii) for the accounting period to which the Balance Sheet, or as the case may be the Revenue Account relates;

(iii) the statement of account has been prepared in accordance with accounting policies and standards as specified in the Ninth Schedule.

(1) The scheme-wise Annual Report of a mutual fund or an abridged summary thereof shall be published through an advertisement and an abridged scheme-wise annual report shall be mailed to all unit holders as soon as may be but not later than six months from the date of closure of the relevant accounts year.

(2) The Annual Report and abridged summary thereof shall contain details as specified in the Eleventh Schedule and such other details as are necessary for the purpose of providing a true and fair view of the operations of the mutual fund:
Provided that the abridged schemwise annual report mailed to unit holders need not contain full portfolio disclosure but must contain details on group company investments such as the name of the company, the amount of investment made in each company of the group companies of the sponsor;

Provided further that full portfolio disclosure is not required if the full accounts are published in newspapers.

(3) The report if published in summary form shall carry a note that for unit holders of a scheme full Annual Report shall be available for inspection at the Head Office of the mutual fund and a copy thereof shall be made available to the unit holder on payment of such nominal fees as may be specified by the mutual fund

Every mutual fund shall within six months from the date of closure of each financial year forward to the Board a copy of the Annual Report and other information including details of investments and deposits held by the mutual fund so that the entire schemewise portfolio of the mutual funds is disclosed to the Board.

If any person, who is required under this Act or any rules or regulations made thereunder:
  (a) to furnish any document, return or report to the Board, fails to furnish the same, he shall be liable to a penalty not exceeding one lakh and fifty thousand rupees for each such failure;

(b) to file any return or furnish any information, books or other documents within the time specified therefor in the regulations, fails to file return or furnish the same within the time specified therefor in the regulations, he shall be liable to a penalty not exceeding five thousand rupees for every day during which such failure continues;

(c) to maintain books of accounts or records, fails to maintain the same, he shall be liable to a penalty not exceeding ten thousand rupees for every day during which the failure continues.

If any person, who is

.........

(b) registered with the Board as a collective investment scheme, including mutual funds, for sponsoring or carrying on any investment scheme, fails to comply with the terms and conditions of certificate of registration, he shall be liable to penalty not exceeding ten thousand rupees for each day during which such failure continues or ten lakh rupees, whichever is higher;

The factual position putforth by the Appellant explaining the cause of delay has not been controverted. The Appellant�s version that "there was a delay of about 26 days and which was neither deliberate nor wilful, but has occurred for the reason bonafide and beyond their control" also remain unrebutted. In this context the following observation made by the Adjudicating Officer in para 3.6 of the order is considered relevant that:

It is an undisputed fact that the Appellant had complied with the requirements of regulation 56 and 57 belatedly (involving a delay of 26 days). But the Appellant has putforth convincing reason for the delay. The Adjudicating Officer has accepted the reason putforth by the Appellant that the delay was due to the supplementary audit demanded by the statutory auditors and the Appellant could not stop the statutory auditor seeking the supplementary audit. The Adjudicating Officer has absolved the Appellant from the charge of any intentional or willful default by categorically stating that "considering the circumstances of the case I accept the explanation of the Fund that the delay occurred due to supplementary audit requirements". It is also to be noted that in para 4.1 of the order, (supra) the Adjudicating Officer has stated that " in this case Escort Mutual Fund has violated Regulations 56 and 57 of SEBI (Mutual Funds) Regulations 1996, as alleged. The AMC submitted that unaudited accounts and portfolios of the scheme for the half year ended 30.9.1999 was published in the newspapers for half year ended 31.3.2000 was mailed to unit holders within the prescribed time period. Having regard to that submission and in view of my finding at para 3.10 I have proceeded to adjudicate this case under section 15A of SEBI Act. According to the Securities Appellate Tribunal (SAT) in respect of return or report to the Board (SEBI) such violation should be dealt under section 15A(a) and not under section 15(b). In this case I found that the Mutual Fund failed to submit annual report to the Board in the prescribed period and there was a delay of 26 days. Therefore, in terms of section 15A(a) of SEBI Act, I levy a penalty of Rs. 52, 000/- (Rupees fifty two thousand only) on Escort Mutual Fund for that default". From this observation it is clear that even though according to Adjudicating Officer the Appellant had violated the provisions of regulations 56 and 57, he felt it proper not to penalise the Appellant for violation of regulation and decided to impose penalty for violation of the requirement of forwarding copy of the annual report to SEBI as per regulation 57 though the reason for the delay for complying with the requirement of both the regulations is one and the same. In my view, in the light of the submission made by the Respondent�s Representative the gravity of default in complying with the requirement of regulation 56 is more compared with the non compliance of the requirements of regulation 57 in as much as regulation 56 is meant to enlighten the unit holders to take timely decision on their investments. The reason given by the Adjudicating Officer not to invoke the penal provision for violation of regulation 56 is worth noting. According to him the Appellant had published /mailed the report, well within time. In this context it is to be noted that the Appellant in its reply to the show cause notice issued by the Adjudicating Officer had stated that "the unaudited accounts for this period were published within the prescribed time limit and a copy of the same was sent to SEBI". The period referred to there is the year 1999-2000. The Respondent has not stated anywhere that it had not received the unaudited account stated to have been sent by the Appellant. There is no averment that it was forwarded belatedly.

In fact as mentioned above, from the disclosure angle and the consequential benefit to the investors, compliance of regulation 56 is more significant compared with the requirement of forwarding the Annual Report to SEBI under regulation 57. While regulation 57 enables SEBI to examine the activities of the mutual fund with reference to the regulatory regime in position in the light of the information furnished in the Annual Report, regulation 56 is meant to help the unit holders to take informed decision on their investments based on the information made available to them. Since the explanation given by the Appellant is found satisfactory, so as not to impose any monetary penalty for violation of regulation 56, why the same explanation was not found acceptable with reference to failure to comply with the requirements of regulation 57 remains unexplained in the impugned order. According to the Adjudicating Officer "there would be gain to the Mutual Fund for delaying the finalisation of accounts if there is some fraud or if there is some reason to conceal the information and if the delay is beneficial to the concerned persons in the AMC or Mutual Fund for some other reason. In this case there are no allegations to that effect". In the light of the said view he has held that there is no gain on this account to the Appellant. The Adjudicating Officer has further stated that he agreed with the SEBI Mutual Fund Department that "the delay in availability of information to the unit holders due to the delay caused in finalisation of accounts will be of diminishing value". According to him "during the intervening period the investor did not have information with them either to continue with the fund or to make exit� therefore the investors were put to loss due to delay in finalisation of accounts." This observation is out of context in view of the finding of the Adjudicating Officer accepting the Appellant�s version that the unaudited accounts and portfolios of the scheme were published in the newspapers / mailed to unit holders, and holding that penalty is not warranted. Further that forwarding of the Annual Report to SEBI in terms of regulation 57 is not a measure for enlightening the investors to take timely decision on their investments, it is meant to enable SEBI to take action for the purpose of the enforcement of the regulations. In this context it is also to be noted that the Adjudicating Officer has not penalised the Appellant for not complying with the requirements of regulation 56 and as such his observation on "loss to investors" is not relevant at all in the context of penalising the Appellant for the failure in terms of regulation 57. Therefore in the context of invoking powers under section 15A(a) against the Appellant, the basis for holding that the investors have been put to loss is untenable in the light of the facts of the case.

As already stated herein, imposition of penalty by the Adjudicating Officer is only with reference to non compliance of the requirement of forwarding the annual report for the year 1999 - 2000 to SEBI in terms of regulation 57 and that Adjudicating Officer has invoked the penal provisions of section 15A(a) for the purpose. In terms of section 15 A (a) the maximum penalty leviable for failure to furnish report etc. to SEBI is one lakh and fifty thousand rupees.

It is clear from the undisputed facts on record that the audited Annual Report for the year 1999 - 2000 was forwarded to SEBI involving delay of 26 days. The Appellant has stated that the delay was neither wilful nor intentional, but due to circumstances beyond its control as the supplementary audit requirement was the cause of delay. In this context it has to be noted that the requisite audited report was not available to the Appellant. Audit report was delayed due to supplementary audit. Supplementary audit decision was not that of the Appellant. It was at the behest of the statutory auditors. Since the delay is attributable to the finalisation of the audit report and that the Appellant had no role in finallising the audit report, it is difficult to hold the Appellant guilty of willful violation of the regulations. Though the Hindustan Lever (supra) case cited by the Appellant�s counsel is of no use to the Appellant in view of the distinguishable facts, the Hindustan Steels Case lends support. The following guiding principle provided by the Hon�ble Supreme Court in Hindustan Steels� case (supra) is required to be followed while imposing penalty. As per the Hon�ble Supreme Court�s decision in the said case:

In this context, it is relevant to have a look at the clear-cut guidelines provided by the Supreme Court in Hindustan Steel�s case (supra). Para 7 from the judgement considered relevant in this context is extracted below:

The facts of the present case are reasonably comparable with the case cited above. In the light of the clear observation of the Court as to when penalty for failure to carry out a statutory obligation could be imposed, it is to be seen as to whether the facts of the present case warranted penalty. The facts to be considered are whether there is anything to show that the Appellant acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. It is also to be seen that whether the breach flows from a bonafide belief of the Appellant that it was not liable to act in the manner prescribed by the statute.

In this context it is also relevant to know the significance of the expression "shall be liable to a penalty" appearing in the section 15A. The Supreme Court in Superintendent & Remembrancer of Legal Affairs to Govt. of West Bengal (supra) held that "the expression "shall be liable to a penalty" occurring in many statutes has been held as not conveying the sense of an absolute obligation or penalty but merely importing a possibility of such obligation or penalty".

As already stated above, in terms of section 15I whether penalty should be imposed for failure to perform the statutory obligation is a matter of discretion left to the Adjudicating Officer and that discretion has to be exercised judicially and on a consideration of all the relevant facts and circumstances. Further in case it is felt that penalty is warranted the quantum has to be decided taking into consideration the factors stated in section 15J. It is not that the penalty is attracted per se the violation. The Adjudicating Officer has to satisfy that the violation deserved punishment."

The above observations are applicable in equal force to the present case in view of the comparable nature of the facts and circumstances. The argument of the Respondent that the failure per se is punishable can not sustain in the light of the observation made by the Hon�ble Supreme Court in Hindustan Steels case (supra). In fact in Directorate of Enforcement Vs MCTM Corporation (Supra) which the Respondent has cited also the Hon�ble Supreme Court had held that even though mensrea or guilty intention is not required to be established to attract penalty for the breach of a "civil obligation" it is necessary to show that contravention was wilful. It is not the Respondent�s case that the Appellant had wilfully delayed the compliance of the regulations. The Respondent�s argument is that since there is delay, penalty should be levied. This view is contrary to the view taken by the Hon�ble Supreme Court in Hindustan Steel�s case.

The Respondent had cited Disciplinary Authority-cum-Regional Manager Vs. Nikunja Bharati Palnaik (supra) to show that proof of losses is not necessary to impose penalty. This is a case with reference to misconduct of a bank employee and the attendant consequences under the governing service regulations. The facts of the case and the governing rules are entirely different and not comparable to the Appellants� case and therefore the said decision is of no help to the Respondent.

In the light of the admitted facts it is clear that the failure to comply with the requirements of regulations 56 and 57 promptly, was neither willful nor intentional. It is evident from the adjudication order itself that but for the technicality involved, substantive requirement of disclosure envisaged in the regulation has been met with by the Appellant. The adjudicating officer has accepted this aspect and accordingly did not penalise the Appellant for the failure in complying with the requirements of regulation 56. The reason which prevailed in taking the view for non imposition of penalty for delayed compliance of regulation 56 should in equal force be applicable to the failure to comply with the requirements of regulation 57. In fact, gravity of failure with reference to the time factor, under regulation 57 is comparatively less when compared with the gravity of failure under regulation 56.

Taking into consideration the facts and circumstances of the case putforth by the parties and the guiding principles laid down by the Hon�ble Supreme Court in Hindustan Steel case, the decision of the Adjudicating Officer imposing monetary penalty on the Appellant is not tenable. Therefore the impugned order cannot survive and deserves to be set aside. I do so.

Appeal is allowed