TaxTMI 
TaxTMI 
2003 (12) TMI 321
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....ellants herein (original respondents) preferred two separate appeals against the impugned common order. 2. The Appellants Securities & Exchange Board of India for short (SEBI), is a statutory body constituted under the provisions of the SEBI Act. It can sue and be sued by that name. Being a person aggrieved and affected by the impugned order it has preferred this appeal. 3. The issue around which the controversy revolve is, whether, penalty imposed by SEBI against the acquirer, for delay in filing report, from the date of acquisition of shares, is valid and legal? 4. The respondent herein, alleged to be an individual and housewife. The respondent had acquired 6,98,500, equity shares and 11,76,895, Cumulative Convertible Preference (CCP) Shares of Vasparr Eischer Limited (VEL), respectively. Both the acquisitions were made on the same date i.e. 6-1-1999, in pursuance of an inter se transfer amongst promoters. The respondent's holding after the said acquisition, constituted 17.41% in the equity share capital and 29.08% in the CCP share capital. The respondent after acquisition of those shares had submitted the report to SEBI on 21-12-1999, which was beyond the specified period of ....
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....of the Constitution of India. The Securities Contracts (Regulation) Act, 1956, is the existing legislative measures, for regulation of Stock Exchanges. The said Act has been enacted to prevent undesirable transactions in the securities market by regulating the business of dealing therein and by providing, for certain other measures connected therewith. Therefore, the whole purpose of the Act is to regulate the business of the such Securities. The role of Stock Exchanges in the countries' economy is well-known. Therefore, their power and authorities to regulate, the related markets is the need of the time. 10. The developing securities market, in the international scenario, including the growth of the capital market, necessitated the comprehensive legislation for setting up the Statutory Board to promote orderly and healthy growth of the securities market. The Securities and Exchange Board of India Ordinance, 1992 was, therefore, promulgated on 13-1-1992 and ultimately the SEBI Act has been enacted and notified on 14-4-1992. The statement of objects and reasons appended to the bill, as relevant, is reproduced as under:- "The capital market has witnessed tremendous growth, in recen....
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....the SEBI Act, titled as "Penalties and Adjudication". Sections 15A, 15J (prior to amendment dated 29-10-2002) as referred by both the parties, are reproduced as under : "15A. Penalty for failure to furnish information, return, etc.-If any person, who is required under this Act or any rules or regulations made thereunder,- (a )to furnish any document, return or report to the Board, fails to furnish the same, he shall be liable to 'a penalty not exceeding one lakh and fifty thousand rupees for each such failure continues'; (b)to file any return or furnish any information, books or other documents within the time specified therefore in the regulations, fails to file return or furnish the same within the time specified therefore in the regulations, he shall be liable to 'a penalty not exceeding five thousand rupees for every day during which such failure continues'; (c )to maintain books of account or records, fails to maintain the same he shall be liable to 'a penalty not exceeding ten thousand rupees for every day during which the failure continues'. 15J. Factors to be taken into account by the adjudicating officer.-While adjudging the quantum of penalty under section 15-I, the ....
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....(1), the acquirer shall, within 21 days of the date of acquisition, submit a report alongwith supporting documents to the Board giving all details in respect of acquisitions which (taken together with shares or voting rights, if any, held by him or by persons acting in concern with him) would entitle such person to exercise 15 per cent or more of the voting rights in a company." 15. It may be mentioned here that a committee chaired by Hon'ble Justice P.N. Bhagwati, has made various recommendations and suggestions, for the Takeover Regulations, 1994/1997 in question, which are referred by the Adjudicating Officer in its order dated 24-7-2000, in following paras, "2.4 Bhagwati Committee Report Also, in this context to set out the intention behind the regulations, the following extract from the Report of the Committee on Substantial Acquisition of Shares and Takeovers Under the Chairmanship of Justice P.N. Bhagwati is given below : The Approach of the Committee The Committee was of the view that the regulations for substantial acquisition of shares and takeovers should operate principally to ensure fair and equal treatment of all shareholders in relation to substantial acquisition ....
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.... acquisitions under clauses (a), (b ), (e) and (i) of sub-regulation (1), the Acquirer shall, within 21 days of the date of acquisition, submit a report supporting document to the Board giving all details in respect of acquisition which (taken together with shares or voting rights, if any, held by him or by persons acting in concert with him) would entitle such person to exercise 15% or more of the voting rights in a company'. 2.7 For the purpose of ensuring compliance of such reporting system, a coercive provision of law, viz. clause (b) of section 15A of the Securities and Exchange Board of India Act, 1992 has been enacted prescribing penalty for failure to furnish information, return, etc., within the specified time by any person as required under the Securities and Exchange Board of India, 1992, rules and regulations. Clause (b) of section 15A, the penal provision is as under : 'If any person who is required under this Act or any rules or regulations made thereunder. (b)To file any return or furnish any information, books or other documents within the time specified therefore in the regulations. (c )Fails to file return or furnish the same within the time specified therefor....
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....s. These compliances therefore, in our opinion, are essential to serve the purpose and object of the Act, as referred above. The provisions of penalty for non-compliances of the said mandate of the Act is definitely with an object to have an effective deterrent to ensure better compliances of the provisions of such laws, which is in the interest of public at large, investors and essential to regulate and control such markets, through the regulatory authority, like SEBI. 18. The Appellants therefore, while assailing the order, passed by Securities Appellate Tribunal dated 30-11-2000, contended that the said impugned order is unsustainable and the interpretation, of section 15A(a) or section 15A(b) as given by the aforesaid Appellate Authority is not correct. The appellant further contended that the order passed by the Adjudicating Officer dated 24-7-2000 is correct fair and reasonable and be maintained. It was further contended that section 15A(a) is applicable to complete failure, i.e., default in furnishing documents, report, return to SEBI, whereas section 15A(b) is meant to cover the cases where time is prescribed under the Act and/or Regulation and there is delay in filing any....
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....ission of the Respondent in the appeal, based on the impugned orders, passed by the Securities Appellate Tribunal, was that, since there is a specific provision in clause (a) of section 15A of the SEBI Act, providing for one time penalty, in case of each failure to furnish any report to the Board, and reg. 3(4), of Takeover Regulations, 1997 also requires to submit the report to the Board. Therefore, section 15A(b) could not have been invoked by the Appellant/SEBI. 21. It was further contended by the Respondent that two clauses are made to meet different requirements, that clause (a) takes care of matters exclusively dealing with the Board, clause (b) is in exclusion of the matter dealing with Board. Respondent further supported the impugned orders on the ground that failure to file report or submit the report, could not be under clause (b), as report, contemplated was submitted by Respondent, to the Board and as specific provisions and penalties are provided for failure to furnish any report to the Board, therefore, the appellant's action in terms of clause (b) of the said section 15A, cannot be considered legal. 22. At the outset, there cannot be any debate, so far, as the lega....
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....o bear back or repeat to another as an answer. 3. To complain about, esp. to the authorities. 4. To state the result of consideration concerning the committee reported the bill. 5. To make a report. 6. To act as a reporter. 7. To present oneself as for duty, and As per Oxford Dictionary (5th Edition) "report" means 1. Common talk. 2. Account given or opinion formally expressed after investigation or consideration or collateral of information, description or epitome or reproduction of scene or speech or law case esp. for newspaper publication, House of Commons debate on bill when reported periodical statement on public work. 3. Sound of explosion. As per Webster Dictionary 1959 Edition " Information" means : 1. Knowledge communicated or received concerning a particular fact or circumstance, news information concerning a crime. 2. Any knowledge gained through communication research instruction etc. 4. An office or employee for distributing information to the public. 5. An official criminal charge presented usually by the prosecuting officers by the State. 6. (in communication theory) an indication of the number of possible chances of messages expressible as the value of the some mo....
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....egated officers, inspecting officers or such other officers, before whom information or particular, requires to furnish or submit or file. 27. The information whenever necessary must be submitted or furnishes directly to the board or through such officers, as per the requirement of the relevant regulations. There cannot be any dispute, that maintenance of records, documents and furnishing of information to the board is the basic need of SEBI Act and its regulations, for all related and connected purposes, to achieve the positive object of the policy. It is very clear that section 15A(a), (b), (c ), is charging section for penalty in case of non-compliances, as provided under the various rules and regulations. 28. We are of the view that information, report, return, required to be submitted or furnished to the Board, in the standardised format, includes, information and all details with documents, by the "acquirer" within fixed and specified period, as contemplated under reg. 3(4), of Takeover Regulations, 1997, is the scheme of the provisions. Thus, the reading or interpretation as sought by the Respondent, cannot be accepted by selecting or isolating the word "report" or "Board"....