JUDGMENT
Kumar Rajaratnam, J. (Presiding Officer)
1. The appeal is taken up with consent of both the parties for final disposal.
2. The appellant challenges the order passed by the Adjudicating Officer under SEBI wherein the Adjudicating Officer has imposed a penalty of Rs. 1,00,00,000/- u/s 15A(a) of SEBI Act, 1992 for not furnishing necessary information in compliance with the summons issued by the respondent to the appellant.
3. The appellant is a company incorporated on 19th November 1992 under the Companies Act, 1956 having its registered office at Cabin No. 11, KNS Business Centre, A-71, Madhu Vihar, Delhi.
4. A show cause notice dated September 15, 2003 was issued to the company by registered post. The respondent is having postal acknowledgement of the same. The said show cause notice alleged that the appellant-company did not comply with the summons issued by the respondent on 6.5.2002 for production of, inter alia, following information and documents:
(i) Names and addresses of the directors on board of the company.
(ii) Detailed shareholding pattern of the company.
(iii) Details of the corporate shareholding of the company.
5. The appellant-company, according to the respondent, neither submitted any reply to the aforesaid show cause notice nor did it seek any extension of time for submission of the desired information. The company, according to the respondent, also did not attend the personal hearing on 7.11.2003 despite notice and forewarning that in case it does not attend the adjudication proceedings on the said date, the same will be held ex parte. The Adjudicating Officer proceeded with the matter ex parte based on the material on record.
6. According to the appellant, SEBI conducted an investigation in the matter of price rigging of the scrip of M/s. Shonkh Technologies International Ltd. (the company). In connection with this investigation, the respondent vide its letter dated 2nd July 2001, asked the appellant certain details.
7. The appellant submitted that in response to the aforesaid letter, it provided the information to the respondent as per its letter dated 22nd August 2001.
8. There can be no dispute that the appellant was liable to answer the summons and produce whatever information that was available with the appellant. Section 15A stipulates the penalty for failure to furnish such information. Section 15A reads as under:
“15-A. 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 of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less;
(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 of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less;
(c) to maintain books of account or records, fails to maintain the same, he shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less.”
9. The appellant submitted that since the information sought for by SEBI in its letter dated 2nd July 2001 had already been provided by the appellant to SEBI vide letter dated 22nd August 2001, there is no ground for holding an enquiry.
10. The appellant further submitted that apart from the corporates who were shareholders of the appellant (which the appellant can furnish and which have been furnished by it), the respondent sought several other details of each such corporate shareholder. By quoting an instance, the appellant stated that it was required to give the information about the promoter and non-promoter of each such corporate shareholder. The appellant submitted that these details could not be furnished by the appellant as the same were not within the possession or knowledge of the appellant. If the respondent so desired, it should have obtained the information directly from the concerned shareholder and could not direct the appellant for furnishing such information and cannot penalize the appellant for such lapses, if any. The appellant further submitted that whatever information, which the appellant could give, had been furnished by it.
11. There can be no dispute that if SEBI is to conduct investigation for violation of the regulations, it must have the power to summon any person who can furnish information with regard to the allegations. By an amendment in 2002, SEBI was given powers that are vested in a civil court under the Civil Procedure Code, 1908 u/s 11(3) of the Act for the purpose of summoning witnesses. In that view of the matter, I have no doubt in my mind that the appellant will be liable to answer the summons and co-operate with the investigation conducted by SEBI.
12. Section 15J of the SEBI Act reads as under:
“15-J Factors to be taken into account by the adjudicating officer.-
While adjudging the 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.”
13. In similar circumstances, the respondent has imposed a penalty of Rs. 30,000/- vide its order dated 30.11.2004 in the case of Motwani Enterprises (P.) Ltd. making reference to the order of this Tribunal in the case of Alkan Projects P. Ltd. in Appeal No. 88/04 dated 9.8.2004.
14. Accordingly, I find it appropriate that the respondent should be consistent in passing orders. Taking into account the factors mentioned in section 15J and also taking into account all the information sought for had been, admittedly, provided by the appellant although not within time, it would be appropriate to reduce the penalty as was done in Motwani Enterprises (P.) Ltd. by the respondent vide order dated 30.11.04 and reduce the penalty to Rs. 50,000/-.
15. I hereby find the appellant guilty of violating section 15A but, in the facts and circumstances of the case and taking into account the earlier precedents, impose a penalty of Rs. 50,000/-.
16. The order of SEBI is modified to that extent.
17. No order as to costs.