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of <h1>Tribunal quashes penalty in delay case, emphasizes timely actions in regulatory matters.</h1> <h3>Anilkumar Nandkumar Harchandani, Nandkumar Khattumal Harchandani, Poonamdevi Nandkumar Harchandani, Riteshkumar Nandkumar Harchandani, Vijaykumar Nandkumar Harchandani, Archana Deepak Wani, Nandkumar Khattumal Harchandani HUF, Poonam Resorts Ltd., Kumar Hotels Ltd., Kardhar Finance Pvt. Ltd., Lire Investment Pvt. Ltd., N Kumar Housing & Infrastructure Pvt. Ltd. Versus The Adjudicating Officer, Securities and Exchange Board of India</h3> Anilkumar Nandkumar Harchandani, Nandkumar Khattumal Harchandani, Poonamdevi Nandkumar Harchandani, Riteshkumar Nandkumar Harchandani, Vijaykumar ... Issues:Violation of Regulation 11(1) of SAST Regulations - Imposition of penalty - Delay in proceedings.Violation of Regulation 11(1) of SAST Regulations:The judgment involves an appeal against the imposition of a penalty of Rs. 25 lakhs on 12 appellants for violating Regulation 11(1) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The investigation revealed that the appellants, as promoters of a company, acquired around 2% of the share capital, increasing their shareholding from 70.52% to 77.47%, crossing the limit set by the SAST Regulations. Show cause notices were issued, some appellants did not respond, and the Adjudicating Officer found a violation, leading to the penalty imposition.Imposition of Penalty:The appellant argued that the order should be quashed due to a delay in proceedings. The violation occurred between March 2004 to June 2004, but show cause notices were issued in November 2017, with the order passed in May 2018. The appellant contended that the investigating report lacked documentary evidence, recommending against a public announcement. Citing legal precedents, the appellant sought to quash the order based on the delay and lack of evidence, emphasizing the disclosure made to the Bombay Stock Exchange (BSE) at the time of acquisition.Delay in Proceedings:The respondent acknowledged the violation and the initiation of proceedings following a reference from the Income Tax authority. The appellant highlighted regular disclosures to the BSE, arguing for the appeal's allowance. The tribunal, after considering both sides, allowed the appeal due to the inordinate delay in initiating proceedings. Citing previous judgments, the tribunal emphasized that the delay prejudiced the appellants, leading to the quashing of the proceedings and no costs imposed. The tribunal's decision was based on the principle that authorities must exercise their powers within a reasonable time, considering the facts and circumstances of each case.In summary, the judgment addressed issues related to the violation of SAST Regulations, the imposition of a penalty, and the significant factor of delay in initiating proceedings. The tribunal allowed the appeal due to the inordinate delay, emphasizing the importance of reasonable timelines in regulatory actions and quashing the penalty based on legal precedents and the lack of evidence.
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