BEFORE THE
SECURITIES APPELLATE TRIBUNAL
MUMBAI
Order Reserved on: 24.06.2019
Date of Decision
: 02.07.2019
Appeal No. 309 of 2017
1. Smt. Shilpa Amit Kotia
2/B, State Bank Staff Colony,
Near Navrang School, Naranpura,
Ahmedabad – 380 013.
2. Shri Dhaval Ramesh Kotia
2/B, State Bank Staff Colony,
Near Navrang School, Naranpura,
Ahmedabad – 380 013.
3. Smt. Shwetha Dhaval Kotia
2/B, State Bank Staff Colony,
Near Navrang School, Naranpura,
Ahmedabad – 380 013.
4. Smt. Seema Rajiv Kotia
A/73, Avani Complex,
Near Naranpura Bus Stop,
Naranpura,
Ahmedabad – 380 013.
5. Shri Ravi Rajiv Kotia
A/73, Avani Complex,
Near Naranpura Bus Stop,
Naranpura,
Ahmedabad – 380 013.
….. Appellants
Versus
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G-Block,
Bandra-Kurla Complex, Bandra (East),
Mumbai – 400 051.
…. Respondent
2
Mr. Amit Kotia, Authorized Representative for Appellants.
Mr. Vishal Kanade, Advocate with Mr. Jinay Padh, Advocate
i/b Dave & Girish & Co. for the Respondent.
CORAM : Justice Tarun Agarwala, Presiding Officer
Dr. C.K.G. Nair, Member
Justice M.T. Joshi, Judicial Member
Per : Justice Tarun Agarwala, Presiding Officer
1.
For violating the provisions of Regulation 7(1A) read
with Regulation 7(2) of SEBI Substantial Acquisition of
Shares
and
Takeovers)
Regulations,
1997
(‘SAST
Regulations 1997’ for short) the Adjudicating Officer (‘AO’
for short) of the Securities and Exchange Board of India
(‘SEBI’ for short) by order dated June 30, 2017 has imposed a
monetary penalty on the appellants a sum of ` 10 Lakhs under
Section 15A(b) of the SEBI Act, 1992 to be paid jointly and
severally. The appellants being aggrieved by the imposition of
the aforesaid penalty has filed the present appeal.
2.
We
have
heard
Shri
Amit
Kotia,
Authorized
Representative for the appellants and Shri Vishal Kanade, the
learned counsel for the respondent.
3
3.
The AO found that the appellants were persons acting in
concert and held more than 15% of the share capital of
Sungold Capital Limited and had failed to make timely
disclosures with regard to the sale of shares which resulted in
the change of their shareholding by more than 2% of the share
capital of the Company during the period April to June, 2009.
4.
We find that in spite of issuance of show cause notice
no reply was submitted. Hence, the non-disclosure under
Regulation 7(1A) read with Regulation 7(2) of the SAST
Regulation, 1997 is admitted. The fact that the appellants
were persons acting in concert is also admitted since it has not
been denied. The appellants, however, submitted that they
were ignorant of the law, namely, that they were required to
make the necessary disclosures under Section 7(1A) and 7(2)
of the SAST Regulations, 1997. Further, the imposition of
penalty of ` 10 Lakhs is very excessive as their financial
conditions is not that sound after the 2001 earthquake in
Gujarat from which they could not recover financially. It was
submitted that on account of financial constraints they had to
sell their shareholding of the Company in order to make their
ends meet.
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5.
In our view, the controversy involved in the present
appeal, is squarely covered by a decision of this Tribunal in
the case of Mr. Ravi Mohan & Ors. vs. SEBI (Appeal No. 97
of 2014 decided on December 16, 2015) and decision of this
Tribunal in Mr. Rakesh Kathotia vs SEBI (Appeal No. 7 of
2016 decided on May 27, 2019) wherein it has been held that
for violation of Regulation 7(1A) and Regulation 7(2) of the
SAST Regulations, 1997 no penalty can be imposed. The
decision of Mr. Ravi Mohan has also been accepted by SEBI.
6.
In the light of the aforesaid, the imposition of penalty
cannot be sustained and is quashed. The appeal is allowed.
In the circumstances, there shall be no order on costs.
Sd/Justice Tarun Agarwala
Presiding Officer
Sd/Dr. C.K.G. Nair
Member
Sd/Justice M.T. Joshi
Judicial Member
02.07.2019
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