In the Matter of P C Surana
Case brief
What is this about?
The Tribunal upheld the adjudicating officer order. It held that promoters failed to make requisite disclosures under Regulation 3(1)(c) regarding identity of allottees and changes in control, defeating the preferential allotment exemption. Consequently, the acquisition triggered Regulation 11(1) requiring a public announcement. The omission to make such an announcement attracted the maximum penal
What did the court decide?
The appeal was dismissed and the penalty of Rs. 5,00,000 imposed on the appellants was sustained.
BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI
Appeal No. 96/2002
In the matter of: P. C. Surana Appellant Vs. Poonam A. Bamba, Adjudicating Officer Respondent Present: Shri T. N. Tripathi, Advocate, for Appellant Shri Ananta Barua, Jt. Legal Adviser, SEBI Shri Santosh Shukla, Asstt. Legal Adviser, SEBI for Respondent
ORDER
Magnum Intermediates Ltd., is a public limited company (the company). Its shares are listed on OTC Exchange of India. The company is jointly promoted by Shri G. P. Aggarwal, Shri P. C. Surana and Shri Bansidhar Poddar. The company, as has been stated in the appeal, to meet partly the fund requirements for the proposed expansion, issued 25,00,000 equity shares on preferential basis to “promoters” (Shri G. P. Aggarwal and relatives, Shri P. C. Surana and relatives) and “others” in March 1999. Out of the said 25 lakh shares issued, 16,70,000 shares were alloted to the promoters and the remaining 8,30,000 shares to others. The shares of face value of Rs.10/- each were issued at a price of Rs.12/- per share i.e. with a premium of Rs.2/per share. As a result of allotment of 16,70,000 shares to the promoters, their voting capital in the company increased from 52% to 59.15% i.e. by 7.15%. On knowing about the said acquisition of shares by the company’s promoters, the Respondent
sought details thereof. Based on the information so collected the Respondent
2
officer was appointed. The adjudicating officer on concluding the enquiry, held the promoters guilty of violating regulation 11(1) and imposed a penalty of five lakhs rupees on the promoters who acquired the shares. Shri P.C. Surana, one of the promoters, claiming to be aggrieved by the said order, preferred the present appeal.
Issues for consideration
3 issues framed by the court
Whether the preferential allotment attracted the exemption under Regulation 3(1)(c) of the Takeover Regulations due to failure in specific disclosures.
Whether failure to make a public announcement under Regulation 11(1) attracts penalty under Section 15H(ii) of the SEBI Act.
Whether the quantum of penalty imposed by the adjudicating officer was justified considering the statutory factors under Section 15J.
Parties & counsel
- appellant
P. C. Surana
- respondent
Poonam A. Bamba
Coram
C. ACHUTHAN
Case details
As recorded by the court registry
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