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of <h1>Directors' Penalty Orders Quashed Due to Delay</h1> <h3>Ashok Shivlal Rupani, Naresh Shivlal Rupani, Uttam Ravji Gada Versus Securities and Exchange Board of India</h3> Ashok Shivlal Rupani, Naresh Shivlal Rupani, Uttam Ravji Gada Versus Securities and Exchange Board of India - TMI Issues:1. Alleged violations of Regulation 13(4) and 13(5) of PIT Regulations, 1992.2. Alleged violations of Regulation 30(4) of LODR Regulations, 2015 read with clause 36 of the Listing Agreement.3. Inordinate delay in issuing show cause notice and penalty imposition.Analysis:1. The case involved allegations of irregularities in the scrip of a company, leading to show cause notices to directors for violations of PIT Regulations, 1992. The violations included failure to disclose share sales under Regulation 13(4) and 13(5). The Adjudicating Officer imposed penalties on the directors for these violations, which were challenged in Appeal Nos. 417 of 2018 and 440 of 2018.2. Another violation related to the failure of directors to make a corporate announcement regarding a proposed change in management, violating Regulation 30(4) of LODR Regulations, 2015. The directors were penalized for this violation as well. Both appeals were considered together due to a common ground.3. The main contention raised was the inordinate delay in issuing the show cause notice, as it was issued eight years after the alleged violations occurred. The appellants argued that this delay prejudiced their defense. The Tribunal, after considering precedents, held that the delay was unreasonable. Referring to a previous case, the Tribunal emphasized the need for authorities to act within a reasonable time frame. As a result, the show cause notice and penalties were quashed due to the delay, without delving into the merits of the case.4. The Tribunal's decision was based on the principle that in the absence of a prescribed limitation period, authorities must exercise their powers within a reasonable time. The delay in this case was deemed excessive, leading to the quashing of the show cause notice and penalty orders. The appellants were relieved of the penalties imposed due to the inordinate delay in initiating proceedings.
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