TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 1527
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.....1 Gold Line International Finvest Ltd ("Noticee No. 1"), Mr Mahendra Singh Bisht ("Noticee No. 2") and Mr Rajesh Narula ("Noticee No. 3") violated the provisions of Section 12A(a)(b)(c) of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as "SEBI Act") and Regulation 3(b)(c)(d),4(1),4(2)(f),(k) and (r) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as "PFUTP Regulations") read with (r/w) Section 27(2) of the SEBI Act; 2.2 Mr Nihar Ranjan Mishra ("Noticee No. 4"), Mr Akshod Kumar Sharma ("Noticee No. 5"), Mr Ashish Kumar ("Noticee No. 6"), Ms Archana Devi ("Noticee No. 7"), Mr Uma Shanker ("Noticee No. 8"), Mr Ashok Marwah ("Noticee No. 9"), Mr Mahesh Chand ("Noticee No. 10"), Ms Asha Rani ("Noticee No. 11") and Mr Arun Kumar Gupta ("Noticee No. 12") violated the provisions of Clause B(6) (Part C) of Regulation 18(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as "LODR Regulations"); and 2.3 Noticee No. 1 violated the provisions of Clause 43 of the Listing Agreement r/w Regulation 32 of t....
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....the opportunity of personal hearing. Further, Noticee made additional submissions, vide emails dated May 30, 2023 and June 21, 2023. 4.2. Noticee No. 2 SCN was served on the Noticee, vide SPAD and digitally signed email dated March 21, 2023. Vide response dated April 01, 2023, Noticee, interalia, sought opportunity of inspection of documents in the matter. Vide email dated April 13, 2023, Noticee was granted opportunity to inspect the documents on April 18, 2023. Noticee inspected the documents on the scheduled date i.e. April 18, 2023. During the course of inspection, all documents relied upon and relevant in the matter were provided to Authorized Representative of the Noticee. Vide response dated May 13, 2023, Noticee submitted its reply to the SCN on merits. Further, vide email dated May 16, 2023, Noticee submitted that he does not want to avail the opportunity of personal hearing. 4.3. Noticee No. 3 SCN was served on the Noticee, vide SPAD and digitally signed email dated March 21, 2023. Vide response dated April 03, 2023, Noticee, interalia, sought opportunity of inspection of documents in the matter. Vide email dated April 13, 2023, Noticee was granted opportunity....
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....cees, vide digitally signed email dated March 21, 2023. Vide responses dated April 03 and April 02, 2023, Noticee No. 7 and 11 respectively, interalia, sought inspection of documents. Vide email dated April 13, 2023, Noticees were granted opportunity to inspect the documents on April 18, 2023. Noticees inspected the documents on the scheduled date i.e. April 18, 2023. During the course of inspection, all documents relied upon and relevant in the matter were provided to Authorized Representative of the Noticees. Vide email dated April 20, 2023, Noticees were granted opportunity of personal hearing in the matter on May 16, 2023. Vide email dated May 15, 2023, Noticees were provided the web address to avail the aforesaid opportunity of personal hearing. However, Noticees did not avail of the opportunity of hearing. 4.8. Noticee No. 8 and Noticee No. 10 SCN was served on the Noticees, vide digitally signed email dated March 21, 2023. Thereafter, it was noted from the website of MCA ('www.mca.gov.in'), that the Noticee No. 8 is a director in four LLPs and Noticee No. 10 is a director in three LLPs. Therefore, alternate email IDs of Noticee Nos. 8 and 10 were obtained perta....
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.... disclose statement of variation between projected utilization and actual utilization of funds raised through preferential issue, resulting in violation of provisions of Clause 43 of the Listing Agreement r/w Regulation 32 of the LODR Regulations r/w Section 21 of the SCRA? 5.3. Whether Noticee No. 1 carried out invalid ratification of utilization of funds raised through the preferential allotment, resulting in violation of provisions of Section 12A(a)(b)(c) of the SEBI Act and Regulation 3(b)(c)(d),4(1),4(2)(f),(k) and (r) of the PFUTP Regulations r/w Section 27(2) of the SEBI Act? 5.4. Whether Noticee Nos. 4 to 12 failed to review the statement of deviation of issue proceeds, resulting in violation of provisions of Clause B(6) (Part C) of Regulation 18(3) of the LODR Regulations? 5.5. If yes, whether the violations, if any, attract monetary penalty under the provisions of Section 23A(a) of the SCRA and/ or Section 15HA, Section 15HB and/ or Section 15A(b) of the SEBI Act, as applicable? If so, what quantum of monetary penalty should be imposed on the Noticees after taking into consideration the factors mentioned in Section 23J of the SCRA and Section 15....
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....tock exchange; (d)engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with any dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and the regulations made there under. 4. Prohibition of manipulative, fraudulent and unfair trade practices (1) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an unfair trade practice in securities. (2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves :- ... ... ... (f) publishing or causing to publish or reporting or causing to report by a person dealing in securities any information which is not true or which he does not believe to be true prior to or in the course of dealing in securities; ... ... ... (k) disseminating information or advice through any media, whether physical or digital, which the disseminator knows to be false or misleading and which is designed or likely to influence the decision of i....
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....on pertaining to Misutilization of proceeds of preferential issue 7.1.1. Noticee No. 1 made 5 preferential allotments during the Investigation Period amounting to Rs 48.72 Crores. The Objects of the preferential issue, as per the notice calling for Extra Ordinary General Meeting for the issue were as below: ● To strengthen the equity base of the company, ● To arrange the funds required for meeting the enhanced working capital requirements of the company, ● To meet certain capital expenditure and ● To meet expenditure for general corporate purposes 7.1.2. It was found from the information submitted by Noticee No. 1, vide email dated March 11, 2019 and letter dated August 05, 2022, that it had utilized Rs 11,70,75,000 i.e. 24.03% of proceeds of preferential issue for giving 'Loan without Interest' to 30 entities. Further, the Investigation observed that Noticee No. 1 was not authorized to give Loan without interest as per its Information Memorandum filed with BSE during direct listing, its Memorandum of Association and as per its Objects of Issue for EGMs. 7.1.3. The aforesaid Loan Agreements were not legall....
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....gh preferential issue' was discussed in the said AGM. Further, all the 38 members present in the AGM voted in favor of the resolution accounting for 5.57% of total votes. 7.3.2. Further, Noticee No. 1 had published on the Millenium Post on August 21, 2018, stating that the 26th AGM had been scheduled on September 15, 2018, and that the said Notice along with the Proxy Form, Attendance Slip and Annual Report has been dispatched to all Members to their registered address or email ids on September 8, 2018, and the notice was also available on the website of Noticee No. 1 and NSDL. It was also published that the members could contact M/s Bigshare Services Pvt. Ltd., the then Registrar and Share Transfer Agent of Noticee No. 1, in case of any grievance. 7.3.3. However, M/s Bigshare Services Pvt. Ltd. submitted during the Investigation that Noticee No. 1 had not approached it for sending AGM notices along with Proxy form, Attendance slip etc. Also, NSDL, vide e-mail dated November 07, 2022, submitted that it had not received scrutinizer report from Noticee No. 1 to upload on the e-Voting website of NSDL, and that the notice was also not uploaded by Noticee No. 1 on the e-Voting....
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....ion 18(3) of the LODR Regulations, the members of the Audit Committee were responsible to mandatorily review the statement of deviation of issue proceeds. Therefore, it was alleged that Noticees No 4 to 12, were liable for not reviewing the statement of deviation of issue proceeds, resulting in violation of provisions of Clause B(6) (Part C) of Regulation 18(3) of the LODR Regulations. 8. The submissions made by the Noticees as regards allegations levelled against them are summarized below. Further, the submissions made by Noticees which are common, have not been repeated for the sake of brevity. 8.1. Noticee No. 1: 8.1.1. The instant SCN has been issued after a gap of more than 10 years from the date of preferential issue and 7 to 10 years from utilization of proceeds of preferential issue. Now the management of the company has changed, and it is not possible to know the strategy of the management at the time in question. Therefore, there is an inordinate delay in initiation of proceedings. In this regard, Noticee No. 1 relied upon the Orders passed by the Hon'ble Securities Appellate Tribunal (hereinafter referred to as "SAT") in the matters of Shriram Insight Share ....
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....ment r/w Regulation 32 of the LODR Regulations r/w Section 21 of the SCRA. 8.1.6. As regards the allegation of misleading shareholders about ratification of utilization of proceeds of preferential issue, Noticee No. 1 submitted that the period of allegation pertains to September, 2018, which is outside the Investigation Period in the instant matter. Further, the Notice of AGM and its voting results were uploaded on BSE website, and thus, was available to public at large. Further, there was no complaint from any shareholder in this regard. 8.1.7. Noticee has relied upon Order dated May 28, 2021 passed by the WTM of SEBI in the case of Tatia Global, and contended that allegation of violation of provisions of Section 12 A (a), (b) and (c) of SEBI Act and provisions of PFUTP Regulations were not upheld, and that instant violations must also not be upheld on similar grounds. 8.2. Noticee No. 2 8.2.1. The Investigation Period is 7 to 10 years old. Presently, Noticee does not have all the material to verify the contents of SCN. In this regard, Noticee has relied upon the judgements of the Hon'ble SAT in the matters of Ashok Shivlal Rupani & Anr. Vs SEBI, Mr Rakesh Kathotia....
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....great prejudice has been caused as no information was sought from him during the course of investigation. 8.3.4 Noticee No. 3 had ensured that Noticee No. 1 remained a law abiding company during his tenure as the Executive Director. 8.3.5 Noticee No. 1 has balance of cash and cash equivalent of Rs 38 Lacs on March 31, 2015, which would have been the maximum amount from the proceeds of preferential issue not utilized on that day i.e. March 31, 2015. Thereafter, till March 11, 2016, Noticee No. 1 had already given loans with interest amounting to Rs 42.5 Lacs. Therefore, the loan of Rs 20 Lacs given on March 11, 2016, during the tenure of Noticee No. 3, could not have been from the proceeds of the Preferential Issue. 8.3.6 Noticee No. 3 did not work for Noticee No. 1 after March 01, 2016, and drew last remuneration only on March 08, 2016. Therefore, he had not involvement in the loan granted on March 11, 2016. 8.3.7 Noticee No. 1 had newly opened a bank account during the tenure of Noticee No. 3, which did not receive any amount pertaining to proceeds of the preferential issue. Therefore, Noticee No. 3 was not capable of misutilizing the proceeds of the preferential issue....
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....icee No. 1. Therefore, Noticee cannot be held liable for not reviewing the statement of deviation of issue proceeds. 8.6.2 Noticee No. 6 was unaware of compliance requirements of Noticee No. 1, which were handled by Compliance Department. 8.6.3 As per the provisions of Section 27 of the SEBI Act, no person must be held liable for violation, if it is proved that the offence was committed without his/ her knowledge. Further, as per Section 149(12) of the Companies Act, 2013, the Independent Director cannot be held liable unless he had knowledge of the commission of wrong doing by the Company or did not act diligently. In the present case, the violations, if any, were committed without knowledge of the Noticee. In this regard, Noticee has also relied up on the judgements of the Hon'ble Supreme Court in the matters of State of Haryana vs Brij Lal Mittal & Ors and Municipal Corporation of Delhi vs Ram Kishan Rohtagi, of the Hon'ble SAT in the matters of Prafull Anubhai Shah vs SEBI, Pritha Bag vs SEBI and Sayanti Sen and P.G. Electroplat Ltd & Ors vs SEBI and certain other Orders passed by SEBI. 8.7 Noticee No. 7 8.7.1 Noticee No. 7 was appointed as a non-independent....
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....ctorship form with RoC to become director of Noticee No. 1. He has never provided his DIN, PAN, Aadhaar or DSC to any person related to Noticee No. 1. If any of such documents have been used, then it's a fraudulent exercise. 8.10.2 He has never attended any Board or General Meetings or signed any attendance sheet. He never received any notice from Noticee No. 1 to attend its meetings. He has also never visited office premises of Noticee No.1. 8.10.3 In terms of Section 283(1)9g) of Companies Act, 1956, office of director becomes vacant if he is absent from three consecutive meetings of the board of directors, without obtaining leave of absence. As Noticee No. 12 never attended any Board Meeting, he could not be a director of Noticee No. 1. 8.10.4 Noticee No. 12 is not aware of the shareholders, utilization of proceeds of preferential issue and has never receive any remuneration. Issue No. I: Whether Noticee Nos. 1 to 3 mis-utilized funds raised through preferential issue, resulting in violation of provisions of Section 12A(a)(b)(c) of the SEBI Act and Regulation 3(b)(c)(d),4(1),4(2)(f),(k) and (r) of the PFUTP Regulations r/w Section 27(2) of the SEBI Act? 9. Bef....
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....n by the Noticees are distinguishable from the instant matter. For instance, in the matter of Ashok Shivlal Rupani vs SEBI, the violations alleged therein occurred in 2010, and the Investigation Period was observed between January 04, 2010 to January 10, 2011, while the SCN was issued in 2018. Further, the disclosure violations that had occurred were held to be 'technical' in nature by the Hon'ble SAT, which is distinguishable vis-a-vis the instant matter. In the matter of Shriram Insight Share Brokers Ltd vs SEBI, the inspection report pertaining to the matter was submitted on May 07, 2012 and a reply was submitted by the Noticee therein on June 14, 2012. Thereafter, the SCN was issued after more than seven years. In the matter of HB Stockholdings vs SEBI, after issuance of SCN in 2005 and conduct of hearing in 2006, proceedings remained in abeyance till 2011, when another hearing was called, and prejudice was caused due to such delay, interalia, including application of substantive portions of amended law in the judicial proceedings which were not in force at the time of commission of offence. Further, in the matter of GR Capital & Finance Pvt Ltd & Ors. vs SEBI, the ....
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.... 1 Loan on interest 14,43,50,000 29.63 2 Advance for Business 12,29,50,000 25.24 3 Loan without interest 11,70,75,000 24.03 4 Repayment of Loan 3,43,00,000 7.04 5 Working Capital 3,34,75,000 6.87 6 Miscellaneous Expenses 1,22,70,344 2.52 7 Investments 90,00,000 1.85 8 Loan for Business 54,00,000 1.11 9 Expenses Paid 36,25,000 0.74 10 Kalicharan 25,00,000 0.51 11 Fixed Assets Purchase 17,00,000 0.35 12 Expenses Paid 2,16,000 0.04 Total 48,68,61,344 99.93 14. I note that Noticee No. 1 had granted loans without interest amounting to Rs 11,70,75,000/-, constituting 24.03% of the proceeds of the issue, in 30 tranches. I note that the SCN states that the aforesaid loan was granted to 30 entities. However, upon perusal of the list of entities, provided as Annexure 7 to the SCN, I note that that loans were granted to only 23 entities, in 30 separate tranches. Notwithstanding the same, Noticee No. 1 was not authorized to give loans without interest to the 23 entities because of the following reasons: 14.1. In the Information Memorandum....
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....ects of Noticee No. 1 as per its Information Memorandum, Memorandum of Association or the objects of the preferential issues, as stated in the notices for its EGMs. 15. I further note from the sample loan agreement executed by Noticee No. 1 pertaining to the loans granted without interest, that, the said agreements had been executed on the letter head of Noticee No. 1. They were neither notarized nor registered, and had been drafted casually without recording terms, conditions and other ancillary details expected in a prudently drafted agreement. The loans were granted on the personal guarantee of the borrower without any collateral. 16. For instance, I note that in the loan agreement entered by Noticee No. 1 with Ashok Kumar Goyal and Sons HUF, the following had been, interalia, stated: 'NOW THIS AGREEMENT WITNESSETH and it is hereby agreed by and between the parties hereto as under :- 1. The Borrower hereto, being in need of money, has requested the Lender to given an interest free loan of Rs 30,00,000/- (Rupees Thirty Lakhs only). 2. The said loan is required by the Borrower, commencing from 27/03/2014. 3. The Borrower hereby agrees and under....
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....ations are based on peripheral possibilities, and that it had ensured necessary compliance with the laws applicable at the time. In this regard, I note from the facts of the case that the Noticee had misutilized the proceeds of the issue for granting loans without interest as per its own submissions to the Investigation. The said act constituted an attempt devised to defraud investors, involving misutilization of proceeds to enter into transactions which were not capable of earning returns and were devoid of business logic. Further, Noticee has contended that it was not connected to the majority of entities to whom the interest free loans were granted. I note in this regard that allegation of direct connections has not been made in the instant matter, and instead, the interest free loans granted to the said entities have been considered along with the objects of the issue and nature of the loan agreements, to arrive at the findings. 19. Noticee has submitted that the loans were granted to the 23 entities, because said entities went on to introduce Noticee to certain other entities. Noticee then granted loans with interest to the said newly introduced entities, earning substantia....
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....formation Memorandum dated April 04, 2014 and was responsible for day to day functioning of Noticee No. 1 as per the annual report of Noticee No. 1 for FY 2012-13, 2013- 14 and 2014-15. Further, Noticee No. 3 was Whole Time Director during the period October 23, 2015 to March 15, 2016 and was responsible for the day to day functioning of Noticee No. 1 as per the annual report of for FY 2015-16. I note that the preferential allotment and disbursal of loans out of the proceeds of preferential issue took place during the tenure of Noticee Nos. 2 and 3 as directors. 22. Noticee No. 3 has contended that he was employed with Noticee No. 1 only for 5 months, and during his tenure, only one such loan was granted, which was eventually repaid. Further, Noticee No. 3 was not involved in even the aforesaid loan, as he did not work for Noticee No. 1 after March 01, 2016 and was not a signatory to the relevant loan agreement. In this regard, I note from the disclosures made by Noticee No. 1 on the website of BSE and the Annual Report for FY 2015- 16, that Noticee was first appointed as a Non-Executive Director on October 06, 2015, and then as a Whole Time Director in place of Noticee No. 2 on....
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....iation with the company after resignation. There was no mens rea or actual act of commission or omission, and violation, if any, had taken place without his knowledge. Further, Noticee No. 2 was not signatory to the loan agreements, and was not known to the entities to whom loans without interest were granted. I note that Noticee No. 2 was Whole Time Director of the company for more than 3 years, which included the period during which preferential allotments were done and majority of loans without interest were granted, and thus he was directly responsible for Noticee No. 1's conduct including for legal compliance. However, as has been brought out in the foregoing paragraphs, the company i.e. Noticee No. 1 had misutilized the proceeds of preferential issue, and therefore, Noticee Nos. 2 also became responsible for the acts done by Noticee No. 1. Noticee Nos. 2 has also contended that he had not carried out any activity of buying or selling of shares of Noticee No. 1 during his tenure or even before that. I note that the aforesaid has not been alleged or does not form part of the facts/ allegations in the instant matter. 25. In this regard, I also place reliance on the judgem....
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....market, which is also portrayed by the changes brought in through the 2003 regulation to the 1995 regulation. On a comparative analysis of the definition of "fraud" as existing in the 1995 regulation and the subsequent amendments in the 2003 regulations, it can be seen that the original definition of "fraud" under the PFUTP regulations adopts the definition of "fraud" from the Indian Contract Act, 1872 whereas the subsequent definition in the 2003 regulation is a variation of the same and does not adopt the strict definition of "fraud" as present under the Indian Contract Act. It includes many situations which may not be a "fraud" under the Contract Act or the 1995 regulation, but nevertheless amounts to a "fraud" under the 2003 regulation. The definition of 'fraud' under clause (c) of regulation 2 has two parts; first part may be termed as catch all provision while the second part includes specific instances which are also included as part and parcel of the term "fraud" ... " 27. Per Hon'ble Justice Ranjan Gogoi - " ... 5. If Regulation 2(c) of the 2003 was to be dissected and analyzed it is clear that any act, expression, omission or conc....
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.... No. 2, violated the provisions of Regulations 3 (b) (c) (d), 4(1), 4(2)(f), 4(2)k and 4(2)(r) of the PFUTP Regulations r/w Section 12A (a) (b) (c) of the SEBI Act r/w Section 27(2) of the SEBI Act. Issue No. II - Whether Noticee No. 1 failed to disclose statement of variation between projected utilization and actual utilization of funds raised through preferential issue, resulting in violation of provisions of Clause 43 of the Listing Agreement r/w Regulation 32 of the LODR Regulations r/w Section 21 of the SCRA? 30. I note that Clause 43 of the listing agreement r/w Regulation 32 of the LODR Regulations mandated Noticee No. 1 to make disclosures to the Stock Exchange(s) on a quarterly basis, pertaining to the deviation between projected utilization of proceeds of, interalia, preferential issue, and its actual utilization. I note that Noticee No. 1 had misutilized Rs 11,70,75,000/- out of the proceeds of the issue, however, it had admittedly not filed such statements of deviation for the use of proceeds. I also note that Noticee No. 1 had not given any explanation regarding deviation in the proposed and the actual utilization of preferential issue proceeds in its Annual Repo....
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....nvestment Rs. 90,00,000/- Loan on Interest Rs. 14,77,00,000/- Loan Without Interest Rs. 10,72,75,000/- Repayment of Loan Rs. 3,43,00,000/- Working Capital Rs. 3,34,75,000/- Miscellaneous Expenses Rs. 1,12,00,000/- Total Rs. 48,67,75,000/- I also note that the notice of the meeting also stated that the remote e-voting period would commence on September 12, 2018 and end on September 14, 2018. 34. I further note from the letter dated September 15, 2018, filed by Noticee No. 1 on BSE website, that a total of 38 members attended the 26th AGM held on September 15, 2018 and the agenda of 'Ratification of utilization of funds raised through preferential issue' was discussed. I further note from the disclosure made on BSE website that all of the 38 members voted in the favour of resolution, accounting for 5.57% of the votes. 35. I further note that Noticee No. 1 had also provided a 'Newspaper clipping' published on the Millennium Post on August 21, 2018 pertaining to the 26th AGM of Noticee No. 1. Further, the clipping stated that the Notice of AGM along with the Proxy Form, Attendance Slip and Annual Report had been dispatched....
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....h of the said notices to the shareholders. 39. Noticee No. 1 has submitted that Notice of AGM and its voting results were uploaded on BSE website, and thus, was available to public at large. Further, there was no complaint from any shareholder in this regard. I note that the process of serving notices of AGM are governed by Companies Act, 2013. In the instant matter, Noticee had made a fraudulent claim of serving notice to all the shareholders in the newspaper advertisement, and providing them fair chance of participating in the AGM. However, Noticee failed to do so, in an apparent attempt to get the agenda of AGM approved without consent and information of the genuine shareholders. The said act involved publishing a false report pertaining to the affairs of Noticee No. 1, which would have affected the decision making of genuine shareholders, and satisfies the ingredients of 'fraud', as defined in paragraph 28 to 30. 40. Noticee No. 1 has also relied upon Order dated May 28, 2021 passed by the WTM of SEBI in the case of Tatia Global, and contended that allegation of violation of provisions of Section 12 A (a), (b) and (c) of SEBI Act and provisions of PFUTP Regulation....
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.... member 17-09-2015 27-03-2018 8 Mr. Uma Shanker Independent Director, Chairman of Audit Committee 25-01-2016 28-02-2017 10 Mr. Mahesh Chand Independent Director, Chairman of Audit Committee 30-05-2013 25-01-2016 11 Ms. Asha Rani Non-Independent Director, Audit Committee member 25-03-2015 17-09-2015 12 Mr. Arun Kumar Gupta Non Independent Director, Audit Committee member 02-06-2013 25-03-2015 43. It has been alleged that Noticee Nos. 4 to 12 were responsible for mandatorily reviewing the statement of deviation of issue proceeds, in terms of Clause B(6) (Part C) of Regulation 18(3) of the LODR Regulations. However, Noticee Nos. 4 to 12 allegedly failed to review the aforesaid statements. 44. I note for reference that Chapter IV of LODR Regulations pertains to 'Obligations Of A Listed Entity Which Has Listed Its Specified Securities And Non-Convertible Debt Securities'. Further, Regulation 18, which forms part of the aforesaid chapter, deals with obligations of the Audit Committee of the listed entity. Regulation 18(3) reads 'The role of the audit committee and the information to be reviewed by the aud....
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.... was obligated to place before audit committee the monitoring report annually. 47. I note in the instant matter that firstly, the listed entity viz. Noticee No. 1 did not submit the statement of deviation to the stock exchange in terms of Regulation 32(1) of the LODR Regulations, as held in Issue-II. Also, no monitoring report was placed in front of the audit committee in terms of Regulation 32(7) of the LODR Regulations. 48. I note that since the aforesaid reports had not been submitted neither to the Stock exchange nor to the audit committee, as applicable, the audit committee members i.e. Noticee Nos. 4 to 12 could not have been expected to review the same. The obligations mandated upon Noticee Nos. 4 to 12 were contingent on compliance of provisions of Regulation 32(1) and 32(7) by Noticee No. 1, which was not done. Therefore, I am of the considerate view that violations alleged against Noticee Nos. 4 to 12 in the instant matter are not established. Issue No. V: If yes, whether the violations, if any, attract monetary penalty under the provisions of Section 23A(a) of the SCRA and Section 15HA, Section 15HB and Section 15A(b) of the SEBI Act, as applicable? If so, what ....
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....h such failure; 50. While determining the quantum of penalty under Section 15HA and Section 15 A(b) of the SEBI Act and Section 23A(a) of the SCRA, it is important to consider the factors relevantly as stipulated in Section 15J of the SEBI Act and Section 23J of the SCRA, which read as under: - SEBI Act Factors to be taken into account by the adjudicating officer. 15J. While adjudging quantum of penalty under section 15-I, the adjudicating officer shall have due regard to the following factors, namely: - a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default; b) the amount of loss caused to an investor or group of investors as a result of the default; c) the repetitive nature of the default. SCRA Factors to be taken into account by the adjudicating officer. 23J. While adjudging quantum of penalty under section 23-I, the adjudicating officer shall have due regard to the following factors, namely: - a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default; b) the amou....