SAT order in the matter of M/s. E-Ally Consulting (India) Private Limited, M/s. Shree Jaisal Electronics & Industries Limited and others

Testing Headings
Facts: M/s. E-Ally Consulting (India) Private Limited, M/s. Shree Jaisal Electronics and Industries Limited, Mr. Sandeep Maloo, Mrs. Neeta Maloo, Mr. Labhchand Maloo, Mrs. Lata Maloo, Sandeep Maloo HUF, Labhchand Maloo HUF (“Appellants”) had delayed inmaking disclosures as required under Regulation 30(1) and 30(2) read with 30(3) of SEBI (SAST) Regulations, 2011 by 15 days. Accordingly SEBI imposed a penalty of Rs. 3, 00,000 for the aforesaid violations on the Appellants. Being aggrieved by the direction of SEBI, the Appellants have filed the appeal before Hon’ble Tribunal and contended that:
  • Appellants who are current/ existing promoters have acquired the company in the year 2011-2012. Although all regulatory requirements were duly complied with declaration under regulation 30(1) and 30(2) read with regulation 30(3) of SAST Regulations, 2011 were delayed by 15 days due to lack of proper advise from professional consultants.
  • In all the subsequent years declarations have been made within the stipulated time and therefore inadvertent delay of 15 days in the initial year deserves to be condoned.
  • There was no fraudulent intention or improper motive behind the delay in making disclosures.
  • There are no complaints from any investors claiming loss as a result of delayed disclosure.
  • Disclosures made in compliance with the provisions contained in the listing agreement contained all particulars that are required to be made under regulation 30(1) and 30(2) read with regulation 30(3) of SEBI (SAST) Regulations, 2011 and therefore delay of 15 days being only a technical delay, lenient view ought to have been taken by the AO.

Issues: Whether the penalty imposed by the SEBI on the appellants is justified?

Decision: After taking into considerations the facts and circumstances of the case, the Hon’ble Tribunal held that obligation to make disclosures under regulation 30(1) and 30(2) read with regulation 30(3) of SEBI (SAST) Regulations, 2011 is mandatory and is independent of the obligation to make disclosures under the listing agreement. Similarly, fact that proper advise was not there or that the delay was unintentional/without any fraudulent intention or there is no complaint from the investors, does not absolve appellants from their obligation to make disclosures under SEBI (SAST) Regulations, 2011.Accordingly SAT dismissed the appeal with no order to cost.

From Takeover Panorama, Sept. 2014 published on Slideshare....
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