BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Date of Decision : 27.08.2019
Appeal No. 338 of 2018
Man Industries (India) Ltd.
MAN HOUSE, 101,
Opp. Pawan Hans Airport,
S. V. Road, Vile Parle (W),
Mumbai – 400056.

….. Appellant
Versus
1. Securities & Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai – 400 051.
2. BSE Ltd.
Floor 25, P. J. Towers,
Dalal Street, Mumbai – 400 001.

… Respondents
Mr. Shashank Belkhede, Company Secretary for the Appellant.
Mr. Sumit Rai, Advocate with Mr. Chirag Bhavsar, Advocate i/b
MDP & Partners for the Respondent No. 1.
Mr. Anubhav Ghosh, Advocate with Ms. Rashi Dalmia, Advocate i/b
The Law Point for the Respondent No. 2.

CORAM : Justice Tarun Agarwala, Presiding Officer
Justice M. T. Joshi, Judicial Member
Per : Justice Tarun Agarwala, Presiding Officer (Oral)
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1.

Against the order of the Adjudicating Officer (hereinafter
referred to as, ‘AO’) imposing a penalty of Rs. 1 lac for failure to
make the disclosure under Section 13(6) of the Securities and
Exchange Board of India (Prohibition of Insider Trading)
Regulations, 1992 (hereinafter referred to as, ‘PIT Regulations’), the
present appeal has been filed.

2.

The facts leading to the filing of the appeal is that Man Finance
Ltd. (MFL) who was the promoter of the appellant company acquired
2,58,190 shares and 23,566 shares of the appellant company on
September 27, 2012 and September 28, 2012. The said acquirer
made two separate disclosures to the appellant company in terms of
Regulation 13(4) and 13(4A) of the PIT Regulations. The appellant
company, in turn, was required to make the necessary disclosure to
the stock exchange under Regulation 13(6) of the PIT Regulations.
Since the appellant failed to make the requisite disclosure to BSE
Ltd. (hereinafter referred to as, ‘BSE’), a show cause notice was
issued and after considering the reply and after giving an opportunity
of hearing, the impugned order was passed imposing a penalty.

3.

We have heard Mr. Shashank Belkhede, Company Secretary
for the appellant and Mr. Sumit Rai, with Mr. Chirag Bhavsar, the
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learned counsel for the Respondent No. 1 and Mr. Anubhav Ghosh,
with Ms. Rashi Dalmia, the learned counsel for the Respondent No.
2.

4.

The stand of the appellant is that the appellant company had
made the requisite disclosure under Regulation 13(6) of the PIT
Regulations to BSE as well as to National Stock Exchange of India
Ltd. (hereinafter referred to as, ‘NSE’). Proof of acknowledgment of
the disclosure sent by the appellant has been annexed to the appeal as
‘Annexure D’ which indicates that the required disclosure was
received by the inward section of BSE on October 3, 2012. Similar
disclosure was also received by NSE.

5.

The AO accepted the disclosure made by the appellant to NSE
but did not accept the disclosure made to BSE as BSE stated that
they did not receive the said letter.

6.

Before us, the same stand has been taken by BSE, namely, that
the exchange did not receive the disclosure as mentioned in the
company’s letter dated October 3, 2012.

7.

Having heard the learned counsel for the parties, we are of the
opinion that the stand taken by BSE that they did not receive the
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letter dated October 3, 2012 cannot be accepted.

A perusal of
‘Annexure D’ to the memo of appeal indicates that the letter dated
October 3, 2012 sent by the company was received by the inward
section of BSE on October 3, 2012.

BSE has given its
acknowledgment by putting a stamp on the letter sent by the
appellant company. There is a signature of some person who has
received the letter. BSE has nowhere stated in their reply that the
stamp contained in the said letter is a forged one nor has denied the
signature of the person who has received the letter. Thus, it does not
lie in the mouth of the stock exchange to allege that they did not
receive the letter dated October 3, 2012 sent by the appellant. A
clear evidence has been filed by the appellant indicating receipt of
the letter dated October 3, 2012.

8.

However, we also find that the letter dated October 3, 2012 was
addressed to the manager NASDAQ Dubai Stock Exchange Ltd.
(hereinafter referred to as, ‘NASDAQ’) and was not addressed to
BSE. In our opinion, the error is obvious and an inadvertent error.
The letter which was sent to NASDAQ has been received by BSE
and this is not fatal for the disclosure that is required to be made
under Regulation 13(6) of the PIT Regulations. What is essential for
compliance of Regulation 13(6) is that the disclosure of the
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acquisition of the shares which has actually been received by BSE
through the aforesaid letter.

9.

Reliance was made by the respondent on a decision of this
Tribunal in Mega Resources Ltd. vs. SEBI in Appeal No. 49 of
2001 decided on March 19, 2002. In our opinion, this decision is
not helpful as it addresses the issue on the question that dispatch of
information by post is not sufficient and that the information sent
must actually be received by the stock exchange in order to fulfill the
disclosure compliance under Regulation 7(1) of the Securities and
Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997. In our opinion, the decision clearly
indicates that the purpose of the said regulation was that the
disclosure was required to be made and such disclosure stood
complied with when it was received by the person concerned. The
said decision, in fact, is helpful to the appellant in as much as the
disclosure of the acquisition of the shares was duly received by the
respondent. Once information is received by the respondent, the
requirement of Regulation 13(6) stands complied.

10.

We also find that the AO found that the appellant had all the
intention to make the disclosure to BSE and that the appellant also
made the requisite disclosure to NSE. In the light of this finding, we
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are of the opinion that the mere fact that the letter was addressed to
NASDAQ does not mean that no disclosure was made to BSE.
Consequently, we are of the opinion that the imposition of penalty
cannot be sustained.

11.

For the reasons stated aforesaid, the impugned order is quashed.

The appeal is allowed.

Sd/Justice Tarun Agarwala
Presiding Officer
Sd/Justice M. T. Joshi
Judicial Member
27.08.2019
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