BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Appeal No. 33 of 2011
Date of Decision : 26.04.2011
M/s Asian Films Production and Distribution Ltd.
(earlier known as K C Bokadia Films Ltd.)
D-164, G Tower,
Outside Delhi Darwaja,
Ahmedabad – 3800 04.
…Appellant Versus
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G-Block,
Bandra-Kurla Complex, Bandra (East),
Mumbai – 400 051.
…Respondent
None for the Appellant.
Dr. Poornima Advani, Advocate with Mr. Aj ay Khaire and Mr. Anshuman Kaushik,
Advocates for the Respondent.
CORAM : Justice N.K. Sodhi, Presiding Officer
P.K. Malhotra, Member
S.S.N. Moorthy, Member
Per : Justice N.K. Sodhi, Presiding Officer (Oral)
The appellant before us is Asian Films Production and Distribution Ltd.
(formerly known as K.C. Bokadia Films Ltd.) which is a listed company whose
shares are listed on the Bombay Stock Ex change (BSE) and the Ahmedabad Stock
Exchange. At the instance of the Securities and Exchange Board of India
(for short the Board), BSE carried out a snap investigation in the scrip of the appellant
company. Investigations revealed that there were signifi cant changes in the
shareholding pattern of the company incl uding those of its promoters and persons
acting in concert with them. It also transpired that the company had not made the
necessary disclosures of its shareholding pattern under the Secu rities and Exchange
Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997
2
(for short the takeover code) and Securities and Exchange Board of India (Prohibition
of Insider Trading) Regulations, 1992 (for short the Insider Trading Regulations). The
Board also carried out its investigations to examine the violation of the takeover code
and the Insider Trading Regulations. During these investigations the Board observed
that there were significant changes in the shareholding pattern as referred to in para 2
of the impugned order. Since the company had not made the necessary disclosures,
adjudication proceedings under Chapter VI A of the Securities and Exchange Board
of India Act, 1992 were initiated. A s how cause notice dated June 25, 2008 was
issued alleging violation of Re gulations 7 and 8 of the takeover code and
Regulation 13 of the Inside r Trading Regulations. This notice was sent through
registered post and the same was received by the appellant company. However, it did
not file any reply. Another notice dated October 26, 2010 was issued affording an
opportunity of personal hearing to the appe llant to appear on October 26, 2010. This
notice was served by affixing the same at the last known addre ss of the appellant.
This became necessary because earlier notices sent had come back undelivered. The
appellant did not appear before the adj udicating officer who then considered the
matter on the basis of the material collected during the course of the investigations
and the enquiry. The adjudicating officer noticed in para 13 of the impugned order the
changes that were made in the shareholdi ng pattern of the appellant company which
had not been disclosed under Regulations 7 and 8 of the takeover code and
Regulation 13 of the Insider Trading Regulations. He concluded that these provisions
had been violated by the appellant and by his order dated December 21, 2010
imposed a monetary penalty of ` 5 lakhs on the appellant. It is against this order that
the present appeal has been filed.
- Despite notice of hearing served on the appellant by this Tribunal on two
occasions, it has not appeared. We have heard the learned counsel for the respondent
Board who has taken us thr ough the record and the impugned orde r. We have also
perused the grounds of appeal filed before us and find that the appellant has in fact
taken two grounds to challenge the impugned order. The first plea of the appellant is 3
that it had not been served at the tim e of personal hearing and, therefore, the
impugned order stands vitiated. We are unabl e to accept this pl ea. The show cause
notice dated June 25, 2008 that had been issued under Rule 4 of the adjudicating rules
had been served on the appe llant which fact is not disp uted in the memorandum of
appeal. This notice was served on the appellant at its following address:
“B-301, Morya Apartment,
Juhu Versova Road,
Mumbai – 400 053.”
The company not only changed its name but has also been changing its address from
time to time. It appears that multiple proceedings were going on against the appellant
and one of the addresses that was furn ished to the respondent Board was “509,
Devpath Tower, Off C.G. Road, Ahmedabad – 380 009.” The appellant admits in the
memorandum of appeal that this was the co rrect address. The notice of hearing was
sent on this address but it came back unde livered with a repor t “Always Closed”.
During the course of the consent proceedings which had been initiated by the
appellant which eventually failed, the appe llant had furnished another address which
is as under:
“402, Anand Housing Society,
Juhu Versova Link Road,
Andheri (W), Mumbai – 400 053.”
Another notice of hearing was sent on the aforesaid address and that too came back
undelivered with a report “Persons Staying & Room Close.” The adjudicating officer
then directed a fresh notice of hearing which was affixed at the aforesaid address and
this is how the appellant was served for the hearing. It is interesting to note that in the
memorandum of appeal the appellant has furn ished a different address altogether. Be
that as it may, we are satisfied that the a ppellant was playing hide and seek with the
respondent Board in the matter of receiving notices for hear ing. In this view of the
matter, we cannot find any fault with the adjudicating officer in proceeding in the
absence of the appellant. The impugned or der has noticed in para 13 thereof the
substantial changes in the shareholding pattern and the appellant being a listed
company was required to make the necessary disclosures under the takeover code and 4
also under the Insider Trading Regulations . Not having done so, the adjudicating
officer was right in holding that the aforesaid provisions of the Regulations had been
violated. He has imposed a monetary penalty of ` 5 lakhs which, in the circumstances
of the case, appears to be on the lower side which does not call for any interference at
our level.
In the result, the appeal fails and the same stands dismissed with no order as to
costs.
Sd/-
Justice N.K. Sodhi
Presiding OfficerSd/- P.K. Malhotra Member Sd/- S.S.N. Moorthy Member </code></pre>26.4.2011
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