IN THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
�������� Appeal No.6 of 2003
���� ������������Date
of Decision : 14.11.2006
Classic
Credit Ltd. |
���������������������� ......� Appellant |
�������������� Versus |
|
Securities
and Exchange Board of Mr.
S.V. Krishna Mohan Adjudicating
Officer Securities
and Exchange Board of |
������������������� ..�Respondents |
Shri Zal T. Andhyarujina, Advocate alongwith Ms.
Ruchira Gupta, Advocate for the Appellant
Shri Kumar Desai, Advocate alongwith Ms. Daya Gupta,
Advocate for the Respondents
CORAM
����������� Justice N.K. Sodhi, Presiding Officer
����������� C. Bhattacharya, Member
Per:� � Justice N.K. Sodhi,
Presiding Officer (Oral)
This appeal under section 15T of the
Securities and Exchange Board of India Act, 1992 (for short �the Act�) is
directed against the order dated October 31, 2002 passed by the adjudicating
officer imposing a penalty of Rs.1,50,000/- on the appellant for violating Regulation
7 of the Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997 (for short the �Regulations�).� Regulation 7 provides that any acquirer who
acquires shares which taken together with shares already held by him would
entitle him to more than 5% shares in a company shall disclose his shareholding
in that company to the company.� The
appellant was issued a show cause notice dated
�From the
above mentioned table it is observed that as on November 20, 2000, Classic
Credit Ltd. was having a net sell position of 63,32,718 (5.22% of the total
paid up capital of GTB).� This implies
that prior to the first day on which Classic Credit Ltd. transacted during the
period, i.e.
The table relied upon by the
adjudicating officer may not be incorrect but it is incomplete.� It does not contain a column showing the net
closing balance of the shares of GTB acquired by the appellant.� The adjudicating officer should have collected
complete data showing the total number of shares acquired by the appellant and
the date on which it crossed the five percent limit referred to in Regulation
7.� Since the data was incomplete, the
adjudicating officer could not even specify the date on which the appellant is
alleged to have exceeded the five percent limit referred to in Regulation
7.� This was the least that was required
before alleging that the appellant had violated Regulation 7.� We are of the view that the charge leveled in
this regard is vague.�
There is yet another charge referred
to in the show cause notice which reads as under:
�Further it has been observed that
all the shares allotted to Nishkalp Investments & Trading Co. Ltd. in the
preferential issue of GTB have been acquired by Classic Credit Ltd. at prices
lower than the issue price.� Besides
this, two companies of Ketan Parekh group, Chitrakut Computers Pvt. Ltd. and
Nakshatra Software Pvt. Ltd. acquired 7,19,650 shares and 6,00,000 shares
respectively.� Thus a total of 72,02,000
shares out of the preferential issue has been acquired by with Classic Credit Ltd.,
which is 5.93% of the total paid up capital of GTB.�
Here again the allegation is that
Nishkalp Investments and Trading Company Ltd was allotted shares of GTB in
preferential issue and those were acquired by the appellant herein.� Which is the date of acquisition and what is the
quantity of shares allotted have not been specified.� All that is stated in the show cause notice
is that a total of 72,02,000 shares out of the preferential issue had been
acquired which is 5.93% of the total paid up capital of GTB.� This may or may not be so but the charge
definitely is vague.� It does not specify
the date on which the appellant is alleged to have crossed the five percent
limit mentioned in Regulation 7 of the Regulations.
Shri Kumar Desai, Advocate appearing
for the respondent Board strenuously contended that on the basis of the
calculations referred to in the table contained in the show cause notice the
figures arrived at by the adjudicating officer could be sustained.� It appears to us that the adjudicating
officer has taken a short cut and did not refer to the entire material either
in the show cause notice or in the impugned order assuming that he had the same
with him.� He should have called upon the
concerned entities to furnish the details of various allotments and acquisitions
and then furnish the said information to the appellant in the show cause notice
to enable it to file its reply.� He has
not dealt with the matter in a satisfactory manner.
We have, therefore, no hesitation in
allowing the appeal which we hereby do so and set aside the impugned
order.� It will, however, be open to the
respondent to proceed afresh against the appellant in accordance with law if it
so desires.� In the circumstances, there
is no order as to cost.���������
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����������������������������������������������������������������������������������������������� Justice
N.K. Sodhi
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Officer
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����������������������������������������������������������������������������������������������� C.
Bhattacharya
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RRN
14.11.06