ORDER
B. Samal, Member
1. These two appeals were taken up for final disposal through this common order with the consent of parties.
2. In both these appeals the Adjudicating Officer has imposed a penalty of Rs. 1 crore on each of the appellants under Section 15-A of the Securities and Exchange Board of India Act, 1992 on the charge of their having failed to furnish necessary information sought by the Securities and Exchange Board of India (SEBI) in connection with the transactions in the shares of M/s. Shonkh Technologies Internationals Limited. The appellant in appeal No. 36/2004 is the company from which the information was sought in by the Investigating Officer while the appellant in appeal No. 37 of 2004 is its Managing Director. In appeal No. 36 of 2004 it is common ground that the respondent had issued summons dated 27/08/2001 to the appellant company seeking certain information and that the appellant company had sent a communication furnishing the information on 03/09/2001. The adjudicating officer has, however, held that the company had supplied only partial information and had thus not cooperated fully with the respondent’s investigations. In appeal No. 37/2004 the additional allegation against the appellant Managing Director of the company is that he failed to put in personal appearance as he was required to in compliance with the summons dated 28/03/2003 and the summons dated 07/04/2003. The appellants have challenged the impugned orders both on questions of law as well as on facts. The basic question of law raised in the memorandum of appeal in both the cases is that Section 15A(a), under which the penalty has been imposed by the Adjudicating Officer, is not at all relevant to the facts of the case in the sense that this section deals only with failure to furnish information, returns, etc., required to be furnished under the Act or any rules or regulations made thereunder. According to the memorandum of appeal investigations are carried out under a separate Section 11(C) of the SEBI Act which also specifically outlines the consequences of any individuals or entities not cooperating fully with the investigating officer. It is thus argued that there is a specific section dealing with investigations and providing for specific penal consequences for any failure to cooperate with the investigating authority and the general provisions of Section 15 cannot be invoked for dealing with such cases.
3. However, at the time of hearing, the matter was fairly argued on both sides on the facts of the case and these questions of law were not pressed. It was fairly conceded by the learned counsel for the respondent that in keeping with the general approach adopted for penalizing defaults of this nature, the respondent would have no objection if the appeals were disposed of by reducing the penalties to the amount of Rs. 1,50,000/- already deposited by each of the appellants in compliance with the interim orders passed by this Tribunal. The learned counsel for the appellants on the other hand fairly admitted that there could have been some deficiencies in the information submitted by them vide their communication dated 03/09/2001 in compliance with the respondent’s summons dated 27/08/2001. It was, however, his contention that before initiating the adjudication proceedings on 26/06/2003 the respondent had been in possession of their communication dated 03/09/2001 i.e., for a period of almost two years and that the respondent could have utilized this opportunity to once again write to the appellants seeking compliance of the deficiencies in the information supplied. The learned counsel for the appellants further submitted that the maximum penalty at the relevant time was only Rs. 1.5 lakhs and the present case was certainly not one where this extreme penalty was warranted in the sense that it was not as if they were avoiding the investigations and had in fact they promptly responded to the summons within a matter of one week. The learned counsel further brought to our notice that in addition to the penalty of Rs. 1,50,000/- deposited by each of the appellants in compliance with the interim orders they had also paid heavy fees amounting to more than Rs. 2 lakhs for filing these two appeals because of certain delay in carrying out the amendments in the relevant rules prescribing the fees payable for filing appeals before this Tribunal. The learned counsel further argued that after filing of these two appeals, the Hon’ble Bombay High Court had passed interim orders reducing the fees drastically and that this Tribunal had also issued instructions enabling filing of appeals on the basis of High Court orders. The learned counsel therefore prayed that all these circumstances be kept in mind while determining the quantum of penalty for the fault of submitting somewhat deficient information in compliance with the summons.
4. We have carefully gone into the submissions made by the learned counsel on both sides and we appreciate the fair and forthright manner in which they have stated their respective positions. We have noticed that the impugned order in appeal No. 36 of 2004 takes note of the fact that information was submitted by the appellant company within a week of the receipt of summons from SEBI although it goes on to point out several deficiencies in the information so furnished. We are in agreement with the learned counsel for the appellant that the same deficiencies could have been pointed out by the investigating officer particularly when the information was available with him for almost two years. We, therefore, consider it as a strong mitigating factor in appeal No. 36 of 2004. In appeal No. 37 of 2004, the charge against the Managing Director of the company is that of not appearing before the investigating officer in response to summons dated March 28, 2003 and April 7, 2003. The appellant contends that these two summons issued from Mumbai on these dates and served on him in Delhi required him to appear before the investigating officer in Mumbai with the relevant information on April 5, 2003 and April 10, 2003 giving him very short notice to collect and compile the relevant information pertaining to the year 2000. While, we agree that sufficient time was not given to the appellant to appear before the investigating officer, we do not consider this as good and sufficient reason for non-compliance on the part of the appellant in the absence of any written request for change of dates. We do hope, however, that SEBI would adopt the practice of granting reasonable time to witnesses while issuing summons for information of personal appearance.
5. For determining the quantum of punishment, there is a mandatory provision of Section 15J of the SEBI Act, 1992 requiring consideration to be given to specific factors. Unfortunately the impugned orders are totally silent on this aspect and we have therefore no alternative except to go by our own judgment and our earlier pronouncements in similar cases. We are of the view that in the context of the circumstances analysed in the preceding paragraphs the objects of the Act would be met if the penalty in appeal No. 36 of 2004 is reduced to Rs. 10,000/- and that in 37 of 2004 is reduced to Rs. 40,000/-
6. Accordingly the impugned orders are upheld but the amount of penalty stands reduced to the level herein indicated. The excess amount paid pursuant to our interim orders shall be refunded to the appellants by the respondent within four weeks from the date of this order. No order as to costs.