BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI

Date of Decision : 25.3.2019

Appeal No.20 of 2019

Mr. Nitin Agrawal 67/1, Behind Ralas Motors, Tatibandh, Raipur – 492 099. ….. Appellant

Versus

Securities and Exchange Board of India SEBI Bhavan, Plot No.C4-A, “G” Block, Bandra Kurla Complex, Bandra (E), Mumbai – 400051. ..… Respondent

Mr. Deepak Dhane, Advocate i/b. Sterling Associates for the Appellant.

Mr. Karan Bhosale, Advocate with Mr. Chirag Bhavsar, Advocate i/b. MDP & Partners for the Respondent.

With Appeal No.21 of 2019

Mrs. Asha Agrawal 67/1, Behind Ralas Motors, Tatibandh, Raipur – 492 099. ….. Appellant

Versus

Securities and Exchange Board of India SEBI Bhavan, Plot No.C4-A, “G” Block, Bandra Kurla Complex, Bandra (E), Mumbai – 400051. ..… Respondent

Mr. Deepak Dhane, Advocate i/b. Sterling Associates for the Appellant.

Mr. Karan Bhosale, Advocate with Mr. Chirag Bhavsar, Advocate i/b. MDP & Partners for the Respondent.

With Appeal No.22 of 2019

Mr. Ravi Agrawal 67/1, Behind Ralas Motors, Tatibandh, Raipur – 492 099. ….. Appellant

Versus

Securities and Exchange Board of India SEBI Bhavan, Plot No.C4-A, “G” Block, Bandra Kurla Complex, Bandra (E), Mumbai – 400051. ..… Respondent

Mr. Deepak Dhane, Advocate i/b. Sterling Associates for the Appellant.

Mr. Karan Bhosale, Advocate with Mr. Chirag Bhavsar, Advocate i/b. MDP & Partners for the Respondent.

With Appeal No.24 of 2019

Mr. Anand Kumar Agrawal 67/1, Behind Ralas Motors, Tatibandh, Raipur – 492 099. ….. Appellant

Versus

Securities and Exchange Board of India SEBI Bhavan, Plot No.C4-A, “G” Block, Bandra Kurla Complex, Bandra (E), Mumbai – 400051. ..… Respondent

Mr. Deepak Dhane, Advocate i/b. Sterling Associates for the Appellant. Mr. Karan Bhosale, Advocate with Mr. Chirag Bhavsar, Advocate i/b. MDP & Partners for the Respondent.

With Appeal No.481 of 2018

Ms. Neha Agrawal 67/1, Behind Ralas Motors, Tatibandh, Raipur – 492 099. ….. Appellant

Versus

Securities and Exchange Board of India SEBI Bhavan, Plot No.C4-A, “G” Block, Bandra Kurla Complex, Bandra (E), Mumbai – 400051. ..… Respondent

Mr. Deepak Dhane, Advocate i/b. Sterling Associates for the Appellant.

Mr. Karan Bhosale, Advocate with Mr. Chirag Bhavsar, Advocate i/b. MDP & Partners for the Respondent.

CORAM: Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member Justice M.T. Joshi, Judicial Member Per : Justice Tarun Agarwala (Oral)

1. Even though separate orders have been passed we find that since the issue is the same, therefore all the appeals are being decided together. For facility, the facts in Appeal no.24 of 2019 is being taken into consideration.

2. The appellant was a promoter of Mahamaya Steel Industries Limited which was a company incorporated under the Companies Act, 1956.

3. As per Regulation 7(2)(a) of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (hereinafter referred to as “PIT Regulations”) every promoter, employee and director of the Company is required to disclose to the company the number of such shares acquired or disposed of within two trading days of such transaction if the value of the shares traded, whether in one transaction or a series of transactions over any calendar quarter, aggregates to a traded value in excess of ten lakh rupees. An extract of Regulation 7(2)(a) of the PIT Regulations is given below for ready reference: “7(2)(a) Every promoter, employee and director of every company shall disclose to the company the number of such securities acquired or disposed of within two trading days of such transaction if the value of the securities traded, whether in one transaction or a series of transactions over any calendar quarter, aggregates to a traded value in excess of ten lakh rupees or such other value as may be specified.”

3. It transpires that the said Regulation was not followed by the appellant and accordingly a show cause notice was issued to the appellant to show cause as to why an enquiry should not be initiated against him and penalty be not imposed under Section 15A(b) of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as ‘SEBI Act’) for having failed to make the relevant disclosure under the provisions of Regulation 7(2)(a) of the PIT Regulations. The appellant submitted his reply and thereafter the Adjudicating Officer passed an order holding him guilty of violating the provision of Regulation 7(2)(a) of the PIT Regulations and accordingly imposed a penalty of Rs.5,00,000 under Section 15A(b) of SEBI Act.

4. Similarly, in Appeal No.21 of 2019, the appellant Asha Agrawal was imposed a penalty of Rs.2,00,000/-. In Appeal No.20 of 2019 Nitin Agrawal vs. SEBI and in Appeal No. 22 of 2019 Ravi Agrawal vs. SEBI and in Appeal No.481 of 2018 Ms. Neha Agrawal the said appellants were imposed a penalty of Rs.1,00,000/- each. The said appellants being aggrieved by the imposition of penalty has filed the present appeal.

5. Having heard the learned counsel for the parties we find that admittedly the disclosure was not made by the appellants and thus there was a contravention of Regulation 7(2) (a) of the PIT Regulations. We however find that the Adjudicating Officer has given a specific finding that no disproportionate gain or unfair advantage was made by any of the appellants while undertaking the transactions in the shares of the Company nor any loss was caused to the investors as a result of non disclosure of change of the shareholding. In the light of this finding the violation is only technical in nature for which the appellants, namely, Mr. Nitin Agrawal, Mr. Ravi Agrawal and Ms. Neha Agrawal were imposed a minimum penalty of Rs.1,00,000/- each. We however find that the imposition of penalty of Rs.5,00,000/- in the case of Mr. Anand Kumar Agrawal and Rs.2,00,000/- in the case of Asha Agrawal is disproportionate and excessive. When three of the promoters have been penalized by a sum of Rs.1,00,000/- each it does not stand to reason for imposition of a higher penalty on the appellant Anand Kumar Agrawal and Asha Agrawal. Such imposition of higher penalty amounts to discrimination especially when it was the first offence made by them.

6. For the reasons stated aforesaid, Appeal No.24 of 2019 is allowed in part. The penalty of Rs.5,00,000/- is reduced to Rs.1,00,000/-. Appeal No.21 of 2019 is allowed in part. Penalty of Rs.2,00,000/- is reduced to Rs.1,00,000/-. The amount shall be deposited within 30 days from today.

7. In so far as Appeal Nos. 20 and 22 of 2019 and 481 of 2018 are concerned, we do not find any infirmity in the impugned orders. The appellants had violated Regulation 7(2)(a) of the PIT Regulations and consequently the minimum penalty was justifiable. These three appeals fail and are dismissed. In the circumstances of the case, we direct the appellants to deposit penalty amount within 30 days from today.

Sd/- Justice Tarun Agarwala Presiding Officer

Sd/- Dr. C. K. G. Nair Member

Sd/- Justice M.T. Joshi Judicial Member 25.3.2019 Prepared and compared by RHN