Person acting in concert requires cogent material; unsupported takeover penalty was remanded, while summons-related penalties were upheld.

A finding of person acting in concert under takeover regulations must rest on cogent supporting material and cannot be based merely on common management or shareholding. On the facts, the tribunal found the concerted-action inference unsupported and beyond the scope of the show cause notice, so the takeover- and insider-trading-related penalty was set aside and remanded for fresh consideration. Penalties for failure to furnish information and for non-compliance with summons were not disturbed, as those violations were left undisturbed in light of an earlier decision. The appeal succeeded only to the extent of remission on the takeover-related penalty, while the remaining penalties were sustained.

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Issues: (i) Whether the penalty imposed for alleged violation of the takeover and insider trading disclosure obligations could be sustained on the basis that the appellant was a person acting in concert with another entity; (ii) Whether the penalties imposed for non-compliance with summons and disclosure requirements under the securities law were liable to be upheld.

Issue (i): Whether the penalty imposed for alleged violation of the takeover and insider trading disclosure obligations could be sustained on the basis that the appellant was a person acting in concert with another entity.

Analysis: The finding of deemed concerted action was held to be unsupported by convincing material. The basis adopted by the adjudicating officer, including reliance on common management and common shareholding, was found insufficient to establish person acting in concert within the meaning of the relevant takeover regulations. The order was also found to have travelled beyond the scope of the show cause notice in relation to this aspect.

Conclusion: The penalty for the alleged takeover and insider trading disclosure violation was set aside and the matter was remanded for fresh consideration in accordance with law.

Issue (ii): Whether the penalties imposed for non-compliance with summons and disclosure requirements under the securities law were liable to be upheld.

Analysis: The penalties relating to failure to furnish information and failure to appear in response to summons were not pressed in view of an earlier decision and were therefore left undisturbed. The corresponding penalty amounts were maintained.

Conclusion: The penalties for violation of the summons and information-furnishing obligations were upheld.

Final Conclusion: The appeal succeeded only to the extent that the takeover-related penalty was remitted for reconsideration, while the remaining penalties were sustained.

Ratio Decidendi: A finding of person acting in concert must rest on cogent supporting material and cannot be sustained on conjectural inferences such as common management alone; where such finding is unsupported, the penalty based on it cannot stand and the matter may be remanded for reconsideration.

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