The present appeal arises against the order passed by the Adjudicating Officer on 18.7.2002, against the Appellant, imposing monetary penalty of one lakh rupees holding the Appellant guilty of non compliance of the requirements of reporting in terms of regulation 8(3) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the Takeover Code). The Respondent vide order dated 26.3.2002 had appointed an Adjudicating Officer to inquire into and adjudge under section 15A(b) of the Securities and Exchange Board of India Act, 1992 (SEBI Act) the contravention of regulation 8(3) of the Takeover Code, allegedly committed by the Appellant with reference to the financial year ended on 31.3.2001.

According to regulation 8(3):

Sub-regulation (1) referred in sub-regulation (3) reads as under:

"(1) Every person, including a person mentioned in regulation 6 who holds more than fifteen percent shares or voting rights in any company, shall, within 21 days from the financial year ending on March 31, make yearly disclosures to the company, in respect of his holdings as on 31^st March."

For failure to comply with the requirements of regulation 8(3), penalty has been provided in regulation 15A(b) as under:

15.A. If any person, who is required under this Act or any rules or regulations made thereunder,-

(a) ����.

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

In terms of section 15 I, the Respondent is empowered to appoint, an Adjudicating Officer for the purpose of adjudging under section 15A and imposing penalty as per the provisions specified in the section. The Adjudicating Officer so appointed , after following the prescribed procedure, and on satisfying that the person has failed to comply with the provisions of any of the sections specified in the section, is empowered to impose penalty.

The Adjudicating Officer, appointed by the Respondent in the instant case after holding the inquiry came to the conclusion that the Appellant had failed to comply with the requirements of regulation 8(3) in as much as the disclosure was made involving a delay of 63 days. Based on the said conclusion monetary penalty of one lakh rupees was imposed on the Appellant.

When the appeal was taken up for consideration, the learned Counsel appearing for the Appellant submitted that the Appellant had furnished the particulars required under regulation 8(3) to the stock exchanges in the other returns/reports, submitted to the exchange, that not making specific disclosure under regulation 8(3) was not intentional with a view to suppress the information, that there was nothing to gain by suppressing the factual information which the Appellant had already furnished to the exchange, though not under regulation 8(3).

Learned Counsel submitted that the Adjudicating Officer passed the order on 18.7.2002 and the Appellant filed the Appeal on 30.9.2002. He submitted that on 19.9.2002, the Respondent notified the "SEBI Regularization Scheme, 2002" (the Scheme), as a one time measure, enabling the persons who had failed to comply with the requirements of regulation 6 and the requirements of sub regulations (1) (2) and (3) of regulation 8, to regularise the default by paying certain lumpsum amount to SEBI as specified in the Scheme during the currency of the Scheme. The amount payable for the failure under regulation 8(3) for each year was ten thousand rupees and the Scheme was in operation with reference to the failures under regulation 8(3) upto 31.1.2003 and it was further extended by 2 months. He submitted that the Appellant in the said context approached SEBI to avail of the benefit of the said Scheme, but the Appellant was not allowed on the ground that the benefit was not available to cases where penalty under the SEBI Act had already been imposed. He submitted that the Scheme was also available to the cases where the proceedings under the SEBI Act were in progress. In this context he referred to this Tribunal�s decision in Zee Telefilms Ltd vs. Adjudicating Officer, SEBI (2003)42 SCL 484 and submitted that the Tribunal had held in the said case that the benefit of the Regularization Scheme was also available to the cases pending in appeal before the Tribunal as the appeal proceeding is a continuation of the adjudication initiated and decided by SEBI. Since the matter was pending in appeal the Respondent was not prepared to accept the lumpsum payment. He submitted that for the reason that the appeal could not be disposed of during the currency of the Scheme, the Appellant should not be denied of the benefit otherwise available to it and the Appellant should not be put to undue hardship. Learned Counsel submitted that the Appellant is willing to pay the lumpsum amount, which it was required to pay as per the scheme. He submitted that the penalty imposed by the Respondent be reduced to be in tune with the amount payable under the Regularization Scheme and appropriate order be passed.

Shri Vinay Chauhan, learned Representative of the Respondent submitted that the charge that the Appellant had failed to comply with the requirements of regulation 8(3) has been established and the Adjudicating Officer had rightly imposed the monetary penalty after taking into consideration all the relevant aspects including the provisions of section 15J and as such the order is to be sustained. He submitted in detail the importance of making disclosures by the concerned parties under the Scheme and the objective of the provisions of regulation 8(3) and section 15A(b). With reference to the Appellant�s contention that the Appellant could have been given the benefit of the Scheme, Shri Chauhan submitted that the impugned order was passed by the Adjudicating Officer on 18.7.2002 i.e. before the notification of the Scheme on 19.9.2002, and that since the Appellant had filed an appeal against the said order and the matter being subjudice, the benefit of the Scheme was not automatically applicable to the Appellant. He submitted that the Tribunal�s decision in Zee Telefilms (Supra) was pronounced on 29.1.2003, and thereafter the Appellant did not approach the Respondent, though the currency of the Scheme was extended upto 31.3.2003.

I have considered the submission made by the parties. It is seen that the impugned order was passed on 18.7.2002 and the appeal was filed on 30.9.2002. The Scheme was notified on 19.9.2002 and continued to be in operation upto 31.3.2003. This Tribunal had examined the applicability of the Scheme to the appeals filed under section 15T and remaining pending disposal, in the case of Zee Telefilms. In the said case the Tribunal had observed:-