Tribunal overturns ex parte orders, upholds penalty for delayed public announcement under SEBI regulations

The Tribunal set aside the ex parte orders passed by the adjudicating officer of SEBI, directing SEBI to issue show cause notices to the appellants for proper service. An appeal against the penalty for violating Regulation 14(1) of SAST Regulations, 1997 was upheld due to a delayed public announcement. The imposition of the penalty under Section 15H(ii) of SEBI Act, 1992 was affirmed as proper notice delivery via speed post was deemed acceptable, despite the appellant's claim of non-receipt.

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Issues:
1. Challenge to ex parte orders passed by adjudicating officer of SEBI
2. Proper service of show cause notices
3. Violation of Regulation 14(1) of SAST Regulations, 1997
4. Imposition of penalty under Section 15H(ii) of SEBI Act, 1992

Issue 1: Challenge to ex parte orders
The appellants filed two appeals to challenge the ex parte orders passed by the adjudicating officer of SEBI imposing penalties of Rs. 5 lac and Rs. 15 lac respectively under the SEBI Act, 1992. The authorised representative of the appellants raised a grievance regarding the lack of proper service of show cause notices. In response, the counsel for the respondent agreed that the impugned orders should be set aside and restored to the adjudicating officer for fresh orders on merits and in accordance with the law.

Issue 2: Proper service of show cause notices
The Tribunal quashed and set aside the impugned orders dated January 20, 2014, directing SEBI to issue show cause notices to the appellants at the addresses provided in the appeals and to pass appropriate orders on merits after giving the appellants an opportunity of hearing. The notices were to be served afresh to ensure due process and compliance with legal requirements.

Issue 3: Violation of Regulation 14(1) of SAST Regulations, 1997
An appeal was filed against the order imposing a penalty of Rs. 5,00,000 for the violation of Regulation 14(1) of SAST Regulations, 1997, under Section 15H(ii) of the SEBI Act, 1992. The appellant had entered into a shares Purchase Agreement (SPA) with promoters, resulting in a delay of 32 days in making a public announcement of the offer, contrary to the regulatory provisions. The appellant, along with the promoters, was required to make a public announcement within four working days from the date of the SPA, but the delay led to the imposition of the penalty.

Issue 4: Imposition of penalty under Section 15H(ii) of SEBI Act, 1992
The Tribunal upheld the imposition of the penalty as the delay in making the public announcement of the offer was not contested by the appellant. Despite the appellant's claim of not receiving show cause notices, it was deemed unacceptable as all notices were sent by speed post to the residential address of the appellant, in accordance with the SEBI regulations. The mode of transmission via speed post was considered proper, and the proof of delivery was available with the respondent, leading to the dismissal of the appeal and the affirmation of the penalty imposed.

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