SAT | Penalty imposed on appellants for violation of SCRA waived off by BSE; matter remanded for fresh adjudication

Securities Appellate Tribunal (SAT), Mumbai: Coram of Justice Tarun Agarwala, (Presiding Officer), Dr C.K.G. Nair (Member), and Justice M.T. Joshi, (Judicial Member) directed an Adjudicating Officer to look into a matter afresh since BSE waived off the penalty imposed by them on the appellants.

The appellant, in this case, failed to comply with the provisions of Rule 19 of the Securities Contract (Regulation) Rules, 1957 (SCRR) with regard to the continuous listing.  An Adjudicating Officer, therefore, imposed a penalty of Rs 4 lakhs under Section 23-E of the Securities Contracts (Regulation) Act, 1956 (SCRA). The said penalty was imposed inspite of the fact that the appellant had contended that the MPS requirement was not required to be done in view of the order passed by Board for Industrial and Financial Reconstruction (BIFR) pursuant to the scheme of rehabilitation.

Subsequent to the passing of the impugned order, SEBI issued a letter advising the appellant to file the correct shareholding pattern with the stock exchange as directed by a BIFR order back in 2014. Based on the fresh shareholding pattern filed by the appellant, BSE withdrew the fines imposed upon the appellant with regard to the non-compliance of the MPS requirements.

Based on the facts, the Tribunal directed the Adjudicating Officer to reconsider the matter afresh. They set aside the older order by the Adjudicating Officer so that he/she can pass a fresh order after giving an opportunity of hearing to the appellant. The decision as for the amount of penalty already deposited by the appellant would be decided by fresh orders passed by the Adjudicating Officer.[Smiths & Founders India Ltd. v. Securities & Exchange Board of India, 2019 SCC OnLine SAT 133, decided on 07-08-2019]

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