Reasonable time and technical breach principles defeat penalties for delayed market-code action and trading-window noncompliance.

Regulatory proceedings for delayed adoption of the model code of conduct could not be sustained because, although no limitation period was prescribed, the action was initiated only after more than 15 years and was therefore not taken within a reasonable time; the penalty on the company was set aside. A penalty for failure to close the trading window was also unsustainable because the breach was only technical, no trading took place, and no gain or investor loss was shown; the penalty on the compliance officer was set aside. The common adjudication order was quashed insofar as it concerned the appellants.

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Issues: (i) Whether penalty for delayed adoption of the model code of conduct could be sustained when the show cause notice was issued after an inordinate lapse of time; (ii) Whether a penalty could be imposed on the compliance officer for not closing the trading window where the default was technical and no trading, gain, or investor loss was shown.

Issue (i): Whether penalty for delayed adoption of the model code of conduct could be sustained when the show cause notice was issued after an inordinate lapse of time.

Analysis: In the absence of any prescribed limitation period, the power to initiate proceedings must nevertheless be exercised within a reasonable time. The model code of conduct was adopted after a delay, but the regulatory action itself was launched only after more than 15 years. Such a prolonged and unexplained delay was held to be unreasonable and sufficient to defeat the penal proceedings.

Conclusion: The penalty imposed on the company could not be sustained and was set aside.

Issue (ii): Whether a penalty could be imposed on the compliance officer for not closing the trading window where the default was technical and no trading, gain, or investor loss was shown.

Analysis: The trading window had to remain closed until the relevant information was made public and for 24 hours thereafter. Although a violation was made out, the record showed that no trading occurred and no investor suffered any loss. The breach was therefore technical in nature and did not justify penal action.

Conclusion: The penalty imposed on the compliance officer was not sustainable and was set aside.

Final Conclusion: The common adjudication order was quashed insofar as it concerned the appellants, as the first matter was barred by unreasonable delay and the second involved only a technical infraction warranting no penalty.

Ratio Decidendi: Where no limitation period is prescribed, regulatory action must be taken within a reasonable time, and a purely technical breach causing no trading, gain, or loss may not justify monetary penalty.

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