Technical disclosure error in shareholding pattern, promptly corrected and lacking mala fide intent, did not attract monetary penalty.

Incorrect disclosure of two persons as promoters in the quarterly shareholding pattern under clause 35 of the Listing Agreement, read with section 21 of the Securities Contracts (Regulation) Act, 1956, was treated as a technical lapse because the error was corrected in the next quarterly filing and there was no evidence of mala fide intent or ulterior motive. On those facts, the disclosure mistake was not considered sufficient to justify monetary penalty under section 23E of the Securities Contracts (Regulation) Act, 1956, and the notice was disposed of in favour of the noticee.

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Issues: Whether incorrect disclosure of two persons as promoters in the quarterly shareholding pattern under clause 35 of the Listing Agreement, read with section 21 of the Securities Contracts (Regulation) Act, 1956, warranted monetary penalty under section 23E of the Securities Contracts (Regulation) Act, 1956.

Analysis: The disclosure records showed that the two persons were not promoters, yet they were reflected as promoters in the relevant quarterly statements. The error was corrected in the next quarterly filing, and the material on record indicated that the mistaken classification had been rectified at the first available opportunity. The lapse was treated as old, technical in nature, and not accompanied by any mala fide intent or ulterior motive. On these facts, the matter did not justify imposition of monetary penalty.

Conclusion: The penalty was not imposed and the notice was disposed of in favour of the noticee.

Ratio Decidendi: A technical and promptly rectified disclosure error, without evidence of mala fide intent, may not warrant monetary penalty under section 23E of the Securities Contracts (Regulation) Act, 1956.

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