BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Date: 26.7.2019
Appeal No.275 of 2018
1. Banas Finance Ltd.
E/109, Crystal Plaza,
New Link Road, Andheri (West),
Mumbai-400053.
2. Handful Investrade Private Limited
E/109, Crystal Plaza,
New Link Road, Andheri (West),
Mumbai-400053.

…. Appellants
Versus
Securities and Exchange Board of India
SEBI Bhavan, Plot No.C4-A,
G Block, Bandra Kurla Complex,
Bandra (East), Mumbai-400051.

… Respondent
Mr. Deepak Dhane, Advocate with Mr. Shantibhushan
Nirmal and Mr. Ravi Kant Purohit, Advocates i/b. Profess
Law Associates for the Appellant.
Mr. Sumit Rai, Advocate with Mr. Kaushal Parsekar,
Advocate i/b. Legasis Partners for the Respondent.
CORAM: Justice Tarun Agarwala, Presiding Officer
Dr. C.K.G. Nair, Member
Justice M.T. Joshi, Judicial Member
Per : Justice M.T. Joshi (Oral)
1.

Aggrieved by the decision of the Adjudicating Officer
dated 27th April, 2018 directing the present appellants to
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jointly and severally pay penalty of Rs.10 lakhs for not
making disclosures under Rules 7(3), 8(3) of Securities and
Exchange Board of India (Substantial Acquisition of Shares
and Takeovers) Regulations, 1997 and Rule 13(6) of the
Securities and Exchange Board of India (Prohibition of
Insider Trading) Regulations, 1992 (hereinafter referred to as
‘SAST Regulations’ and ‘PIT Regulations’ respectively) the
present appeal is preferred.
2.

The Appellant no.1 had allotted 99 lakh equity shares at
a price of Rs.20 per share on preferential basis to 49 entities
including one of his promoter i.e. Appellant no.2 Handful
Investrade Private Limited. Out of these equity shares 14.50
lakh equity shares (i.e.14.22% shares) were allotted to
appellant M/s. Handful Investrade Private Limited. In view
of this fact Handful Investrade Private Limited had acquired
more than five percent of share capital it was therefore
required to make disclosure to the stock exchange. Similarly,
Appellant no.1 was also required to make disclosure received
from Handful Investrade Private Limited to stock exchange
and hence for want of disclosures the violation was alleged.
3.

In short, the submission of the appellant Handful
Investrade Private Limited was that in fact the required
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disclosures were made to the BSE within the time frame.
Handful Investrade Private Limited had submitted the copy
of the disclosure letter dated 30th December, 2010 addressed
to BSE which had the acknowledgment of BSE on 30th
December, 2010. So far as the appellant Banas Financial
Ltd. is concerned it also filed a copy of the letter dated 2nd
January, 2011 addressed to BSE bearing acknowledgement
seal of BSE dated 30th December, 2010.
The Adjudicating Officer (hereinafter referred to as
‘A.O.’) however found apparent contradiction in the said
letter. It was pointed out by A.O. that though the copy of this
disclosure
letter
is
dated
2nd
January,
2011,
the
acknowledgment seal of BSE is dated 30th December, 2010.
Therefore, the A.O. concluded that the document is a
fabricated document created as an afterthought to create
documentary evidence.
In affidavit-in-reply to the present appeal respondent
SEBI had additionally supported the said reasoning by
showing that when the present appellant made the claim of
making disclosure to BSE, the respondent had sent an email
to BSE. BSE’s response to it dated 9th January, 2015 would
show that as per the exchange record it had not received
4
documents as referred above.

It further pointed out the
contradiction in the date of the letter and exchange
acknowledgment stamp as detailed by the Adjudicating
Officer. In the circumstance, the respondent SEBI submitted
that the plea of the appellant cannot be accepted.
The explanation of the appellant was that the letter was
post dated for a last date as per the requirement but the same
was handed over to BSE earlier.

Neither there is the
contention of BSE in the email that the acknowledgment
stamp is a forged one nor any officer from the side of BSE
was examined by the Adjudicating Officer before confirming
his view on acknowledgment of document. Additionally,
learned counsel for the appellant during the course of
argument filed on record a true copy of the order delivered by
another Adjudicating Officer on 8th May, 2017 in the case of
Shreenath Commercial & Finance Ltd. The similar situation
had arisen in that case wherein the Adjudicating Officer had
examined Officer of BSE.

In para nos. 15 and 16 of the
order said Adjudicating Officer had made the following
observations:
“15. I note that the noticee has submitted copy
of acknowledgement which bears stamp of BSE
inward section dated December 10, 2009 for
5
filing of disclosures to BSE under Regulation
7(3) of SEBI (SAST) Regulations, 1997, and
Regulation 13(6) of SEBI (PIT) Regulations,
1992.
16. During the cross examination, the witness,
Shri Abijit Pai, Assistant General Manager,
BSE has also admitted that in 2009, the
inward section in BSE was receiving the letters
in physical form against acknowledgement and it
could be that at the entry level the
correspondence was received. However, it was
not received in the listing department where it
requires to be examined.”
Resultantly the proceedings were dropped.
4.

In the circumstances, he submits that though the copy
of the disputed disclosure letter was sent as an attachment to
the email issued by SEBI as can be seen from affidavit-inreply, the reply of BSE does not allege that the
acknowledgment over the said letter is fabricated and what is
merely stated is that it had not received the said disclosure
letter.

He further submits that there could be a
communication gap between the various departments of BSE
as has been highlighted by another Adjudicating Officer as
detailed above is not taken into consideration in the present
case.
5.

Upon hearing both sides, in our view, since there is no
material to show that the copy of the disclosure letter is
6
fabricated, merely because it is post dated no direct
conclusion could have been drawn by the Adjudicating
Officer that the said document is fabricated.

More
particularly taking into consideration the decision taken by
another Adjudicating Officer in the case of Shreenath
Commercial & Finance Ltd dated 8th May, 2017 as detailed
supra in our view the appellant had shown that the required
disclosure was made.
6.

In the circumstances, the appeal is allowed without any
order as to costs. The impugned order of the Adjudicating
Officer is hereby quashed and set aside.

Sd/Justice Tarun Agarwala
Presiding Officer
Sd/Dr. C. K. G. Nair
Member
Sd/Justice M.T. Joshi
Judicial Member
26.7.2019
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