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Adjudication in the matter of M/s. MD Overseas Limited Page 1 of 17

BEFORE THE ADJUDICATING OFFICER
SECURITIES AND EXCHANGE BOARD OF INDIA
[ADJUDICATION ORDER NO. AK/AO-191/2014]
______________________________________________________________________________
UNDER SECTION 1-I OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT! 1992 READ "ITH
RU#E OF SEBI $%ROCEDURE FOR HO#DING IN&UIR' AND I(%OSING %ENA#TIES B'
ADJUDICATING OFFICER) RU#ES! 199
In respect of
(/*. (D O+,-*,.* #/0/1,2 $PAN No.AACCM9!"#$
In the matter of
M/s. MD Overseas Limited
______________________________________________________________________________

FACTS OF THE CASE
%. M/s. MD Overseas Limited &hereinafter referred to as 3the N41/5,,/ 16, C407.89'$ is a
compan( incorporated under the Companies Act. A suo moto consent app)ication
*earing +egistration No. ,-../,!%% /as fi)ed *( the Noticee /ith 012I on August !-3
,!%% to sett)e the non4comp)iance of +egu)ation .&-$ of the 012I &0u*stantia) Ac5uisition
of 0hares and 6a7eover$ +egu)ations3 %99" &hereinafter referred to a* 3T.:,4+,-
R,;<=.1/48*>$ during the period %99. to ,!%%. 6he 8igh Po/er Advisor( Committee of
012I vide its meeting he)d on March %93 ,!%, rejected the said consent app)ication of
the Noticee and the same /as informed to the Noticee vide )etter dated 0eptem*er !93
,!%,.

,. Pursuant to the rejection of the consent app)ication No.,-../,!%%3 012I e:amined the
facts in respect of the vio)ation/ non4comp)iance of +egu)ation .&-$ as admitted *( the
Noticee. 012I o*served that the compan( in the past had inter alia vio)ated/ non4
comp)ied /ith the provisions of +egu)ation .&-$ of the 6a7eover +egu)ations during the
period %99. to ,!%%. 2ased on the aforesaid information /ith respect to the non4
comp)iance of 6a7eover +egu)ations3 Adjudication proceedings under Chapter ;I4A of
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Adjudication in the matter of M/s. MD Overseas Limited Page 2 of 17

012I Act3 %99, &hereinafter referred to as ?A51<$ /ere initiated against the Noticee
under 0ec % A &*$ of 012I Act3 %99, to in5uire into and adjudicate the a))eged vio)ation
of the provision of +egu)ation .&-$ of the 6a7eover +egu)ations. 6he shares of the
compan( /ere )isted at De)hi 0toc7 1:change Ltd. &hereinafter referred to as =DSE'$ and
>ttar Pradesh 0toc7 1:change Ltd.&hereinafter referred to as =U%SE').

A%%OINT(ENT OF ADJUDICATING OFFICER
-. 6he undersigned /as appointed as the Adjudicating Officer vide order dated March ,.3
,!%? under 0ection %4I of the 012I Act read /ith ru)e - of 012I +u)es to in5uire into and
adjudge under 0ection %A&*$ of the 012I Act for the a))eged vio)ation of +egu)ation .&-$
of the 6a7eover +egu)ations committed *( the Noticee.

SHO" CAUSE NOTICE! RE%#' AND %ERSONA# HEARING
?. A 0ho/ Cause Notice &hereinafter referred to as SCN$ +ef No.
1AD9/A@/;+P/%9"""/,!%? dated Au)( 93 ,!%? /as issued to the Noticee under +u)e ?&%$
of 012I +u)es communicating the a))eged vio)ation of 6a7eover +egu)ations as detai)ed
*e)o/B
0r
No
+egu)ation Due Date of comp)iance Date of comp)iance
% .&-$ -!.!?.%99. Not Comp)ied
, .&-$ -!.!?.%999 Not Comp)ied
- .&-$ -!.!?.,!!! Not Comp)ied
? .&-$ -!.!?.,!!% Not Comp)ied
.&-$ -!.!?.,!!, Not Comp)ied
9 .&-$ -!.!?.,!!- Not Comp)ied
" .&-$ -!.!?.,!!? Not Comp)ied
. .&-$ -!.!?.,!! Not Comp)ied
9 .&-$ -!.!?.,!!9 Not Comp)ied
%! .&-$ -!.!?.,!!" Not Comp)ied
%% .&-$ -!.!?.,!!. Not Comp)ied
%, .&-$ -!.!?.,!!9 Not Comp)ied
%- .&-$ -!.!?.,!%! Not Comp)ied
%? .&-$ -!.!?.,!%% Not Comp)ied

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Adjudication in the matter of M/s. MD Overseas Limited Page @ of 17

. 6he Noticee /as ca))ed upon to sho/ cause as to /h( an in5uir( shou)d not *e initiated
against it and pena)t( *e not imposed under 0ection %A &*$ of the 012I Act for the
a))eged vio)ations. 6he said 0CN /as du)( ac7no/)edged *( the Noticee. 6he Noticee
vide emai) and )etter dated Au)( -%3 ,!%? re5uested %? da(s time to su*mit its rep)( to
the 0CN. 6he same /as acceded to. 0u*se5uent)(3 the Noticee vide )etter dated August
%-3 ,!%? /hi)e den(ing the vio)ation/ non4comp)iance /ith the provisions of +egu)ation
.&-$ of the 6a7eover +egu)ations during the period %99. to ,!%% has inter alia made the
fo))o/ing su*missions B
5.1. That, the shares of Company were last traded during the year 1995, and during
the period of alleged non-compliance, shares of the Company were not traded as
DSE !"SE were non-operati#e during such time. $ copy of the DSE letter dated
%uly &', (&11 stating that as per their records the company last traded on %uly &5,
1995 at )s. (5 was enclosed with the reply*
5.(. That e#en prior to the year 1995, the shares of Company were always thinly
traded and had ne#er +een acti#ely traded +ecause of the low pu+lic
shareholding. ,urther, that the aggregate issued and paid up share capital of the
Company is 9-,-(,&&&.-, which is #ery low in comparison with other listed
companies and ...C of the share capital of the /oticee was held +y the
promoter and promoter group and 10.151 was held +y the pu+lic and there was
no change in the promoter shareholding during the entire period from 1992 to
(&11*
5.3. That the company had ne#er #iolated. non-complied with the pro#isions of
)egulation 2435 of the Ta6eo#er )egulations during the period 1992 to (&11. The
consent application was filed +y the Company at the +ehest of DSE at the time
when the Company approached DSE for regulari7ation of all pending matters. 8t
has +een su+mitted that DSE was wrongly of the #iew that there was non-
compliance of )egulation 2435 of the Ta6eo#er )egulations, 199' during the
period 1992 to (&11 and ad#ised the company to apply to SE98 for condonation
of the alleged default under )egulation 2435 of Ta6eo#er )egulations, if any. The
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Adjudication in the matter of M/s. MD Overseas Limited Page 4 of 17

Company, in order to +uy peace and a#oid mental agony preferred the consent
route for condonation of the alleged default under )egulation 2435 of Ta6eo#er
)egulations, which was re:ected*
5.0. That the company was ad#ised that a disclosure under )egulation 2435 of
Ta6eo#er )egulations was re;uired to +e made, only if there was a change in the
shareholding in the Company and not otherwise. $s there was no change in the
o#erall shareholding of the persons referred to under su+-regulation 415 of the
Ta6eo#er )egulations and the shareholding of the promoters of the Company or
person4s5 ha#ing control o#er the Company and further since the company had
not proposed. declared any di#idend as on the periods ending on <arch 31 each
of 1992 to (&11, the Company was under the +onafide +elief that no disclosure
was re;uired to +e made +y the Company as prescri+ed under )egulation 2435 of
the Ta6eo#er )egulations, hence, did not ma6e the disclosure*
5.5. That e#en if it is assumed, without admitting, that disclosure under 2435 was
re;uired e#en when there was no change in shareholding, as alleged, the failure
to ma6e such alleged disclosures under )egulation 2435 of Ta6eo#er )egulations
for the years 1992 to (&11 was completely unintentional and there was no
malafide interest or intentions and did not result in any loss or damage to pu+lic
in#estors or any other person*
5.-. That, as a result of such alleged lapse and non-disclosure, if any, no +enefits were
drawn +y and ha#e accrued to the promoters of the Company or any other set of
shareholders of the Company. ,urther, due to such alleged lapse no loss or
damage was caused to the pu+lic shareholders in general or any other person, as
the Company does not ha#e a significant num+er of pu+lic shareholders and also
the shares were not traded*
5.'. That the o+:ecti#e of the Ta6eo#er )egulations is to afford fair treatment to the
shareholders who may +e affected +y a change in control of a company, to a#oid
any disproportionate or unfair ad#antage in fa#our of any person and . or
causing irretrie#a+le damage to the rights of shareholders. 8n their case, firstly it
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Adjudication in the matter of M/s. MD Overseas Limited Page of 17

is to +e determined whether there was any default as alleged, and e#en
assuming, without admitting that there was, then it is to +e seen whether there
was any disproportionate . unfair ad#antage drawn +y the promoters of the
Company or any other shareholder and whether any irretrie#a+le damage was
caused to the rights of any shareholder, particularly when the shares of the
Company were not +eing traded during the said period due to non operation of
DSE and . or !"SE*
5.2. That no in#estor complaint was made against unintentional #iolation of
)egulation 2435 of Ta6eo#er )egulations as no+ody was affected as such*
5.9. That the SE98 4Su+stantial $c;uisition of Shares and Ta6eo#er5 )egulations, (&11
4hereinafter referred to as Takeover Regulations, 20115 has done away with the
re;uirement of ma6ing disclosure of promoter share holding as on record date +y
a company*
5.1&. That in #iew of a+o#e, the aforesaid SC/ and the conse;uent proceedings need to
+e dropped a+-initio.

9. In the interest of natura) justice and in terms of ru)e ?&-$ of the 012I +u)es3 the Noticee
/as granted an opportunit( of hearing on August ,3 ,!%? vide notice dated August !?3
,!%?. According)(3 Mr. 0atish 2ansa) Managing Director3 AuthoriDed +epresentative
&hereinafter referred to as the EARE$ appeared on *eha)f of the Noticee and reiterated
the su*missions made vide )etter dated August %-3 ,!%? and made further su*mission
vide )etter dated August ,-3 ,!%? to the effect that the non disc)osure has not caused
an( )oss to an( shareho)der3 a)so that there /as no other vio)ation *( the compan( and
the share capita) of the compan( /as a)so sma))3 hence3 even if su*missions dated
August %-3 ,!%? are not found satisfactor(3 a )enient vie/ ma( *e ta7en and minimum
pena)t( imposed. In the matter3 the Noticee has further referred to the fo))o/ing
Orders of the 8on'*)e 0A6 and the Orders passed *( the Adjudication Officers invo)ving
non4disc)osure under +egu)ation .&-$ as per detai)s *e)o/B

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Adjudication in the matter of M/s. MD Overseas Limited Page A of 17

=rders passed +y Securities $ppellate Tri+unal 4S$T5 in similar cases>
S./o. $ppeal /o. Date 8n the matter of "enalty
4)s.5
1 129 of (&11, =rder dt
12.11.(&11
%ogeshwar )i:umal ?arachiwala
=rs. @s SE98
5&,&&&
$d:udication =rders passed +y $d:udicating =fficers 4$=s5 in similar cases>
S./o. $d:udication =rder /o.
Date
8n the matter of "enalty
4)s.5
1 $S?.)A$.$=.32.(&10-15
dt 31.&'.(&10
Shree 9hawani "aper <ills Bimited (5,&&&
( $?.$=-15-.(&13 dt
(&.&9.(&13
?amala6shi ,inance Corporation Btd 5&,&&&
3 "9.$=-09.(&1( dt
1(.&'.(&1(
Aupta Carpets 8nternational Btd 1 Ba6h
0 C,D.E8B.$=.D)?.$?S.E$D-
3.(93.59-11 dated
(3.11.(&11
EdueCal 8nfotainment Btd 1 Ba6h

". 6he A+ vide emai) dated 0eptem*er %.3 ,!%?3 in the matter3 has further for/arded
D01's )etter dated 0eptem*er %.3 ,!%? inter alia stating that there had *een no trading
in the shares of the companies )isted at D01 from Au)( ,!!-. 6he A+ has stated that this
on)( confirms their stand that no *enefits /ere dra/n *( the promoters of the compan(
and no )oss or damage /as caused to pu*)ic shareho)ders in genera).

CONSIDERATION OF ISSUES
.. I have carefu))( perused the /ritten su*mission of the Noticee and the documents
avai)a*)e on record. It is o*served that the a))egation against the Noticee is that the(
have fai)ed to ma7e the re)evant disc)osure under the provisions of +egu)ation .&-$ of
the 6a7eover +egu)ations during the period from %99. to ,!%%.

9. 6he issues that3 therefore3 arise for consideration in the present case areB
9.%. Fhether the Noticee has vio)ated the provisions of +egu)ation .&-$ of the
6a7eover +egu)ations during the period from %99. to ,!%%G
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Adjudication in the matter of M/s. MD Overseas Limited Page 7 of 17

9.,. Does the vio)ation3 if an(3 attract monetar( pena)t( under 0ection %A&*$ of 012I
ActG
9.-. If so3 /hat /ou)d *e the monetar( pena)t( that can *e imposed ta7ing into
consideration the factors mentioned in 0ection %A of 012I ActG
FINDINGS
%!. 2efore moving for/ard3 it is pertinent to refer to the provisions of +egu)ation .&-$ of
6a7eover +egu)ations3 /hich reads as underB
8. Continual disclosures.
415.......
4(5.......
435 E#ery company whose shares are listed on a stoc6 eCchange, shall within 3& days
from the financial year ending <arch 31, as well as the record date of the company for
the purposes of declaration of di#idend, ma6e yearly disclosures to all the stoc6
eCchanges on which the shares of the company are listed, the changes, if any, in respect
of the holdings of the persons referred to under su+ regulation 415 and also holdings of
promoters or person4s5 ha#ing control o#er the company as on 31st <arch.

%%. 6he issue for consideration is /hether the Noticee has fai)ed to ma7e the re)evant
disc)osures under +egu)ation .&-$ of the 6a7eover +egu)ations for fourteen &%?$
consecutive financia) (ears from %99"49. to ,!%!4%%. As per +egu)ation .&-$ of the
6a7eover +egu)ations3 Noticee /as re5uired to ma7e (ear)( disc)osure /ithin -! da(s
from the financia) (ear ending March -%3 to stoc7 e:changes on /hich the shares of the
compan( /ere )isted3 the changes3 if an(3 in respect of the ho)dings of the persons
referred to under su* regu)ation &%$ and a)so ho)dings of promoters or person&s$ having
contro) over the compan( as on -%st March.

%,. Fith regard to the non4comp)iance for the financia) (ears %99"49. to ,!%!4%%3 I find
that the Noticee vide its rep)( dated August %-3 ,!%? has inter alia su*mitted that the
compan( had never vio)ated/ non4comp)ied /ith the provisions of the +egu)ation .&-$ of
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Adjudication in the matter of M/s. MD Overseas Limited Page B of 17

the 6a7eover +egu)ations during the period %99. to ,!%%. It has inter alia further *een
su*mitted that the consent app)ication /as fi)ed *( the Compan( at the *ehest of D01
at the time /hen the Compan( approached D01 for regu)ariDation of a)) pending matters
in order to *u( peace and avoid menta) agon(. It has *een su*mitted that the shares of
Compan( /ere )ast traded during the (ear %993 and during the period of a))eged non4
comp)iance3 shares of the Compan( /ere not traded as D01 and >P01 /ere non4
operative during such time. I3 ho/ever3 find that during the period of non4comp)iance3
D01 and >P01 /ere recogniDed as stoc7 1:changes. I further note from D01's )etter
dated Au)( !"3 ,!%% for/arded a)ong /ith the su*mission dated August %-3 ,!%? that
D01 vide the said )etter had stated that as per their records3 the shares of the compan(
/ere )ast traded on Au)( !3 %99. In the matter3 I find from D01's /e*site
///.dseindia.org.in that the trading in shares of the Noticee had *een suspended since
Aanuar( !93 ,!!,. #urther3 I note from D01's emai) dated 0eptem*er %93 ,!%? that the
trading in e5uit( shares of the Noticee /as suspended *( D01 from Aanuar( !93 ,!!,
due to non4pa(ment of )isting fees. 8o/ever3 I note that the Noticee Compan( /as
)isted on D01 during the period of non4comp)iance. 6he A+ vide emai) dated 0eptem*er
%.3 ,!%? has further inter alia stated that the( had deposited up4to4date fees of D01
under the Amnest( 0cheme of D01 and the matter stood c)osed after that. 6hus3 I note
that it /as due to de)in5uenc( on the part of the Noticee /ith respect to pa(ment of
)isting fees of the 1:change3 /hich resu)ted in suspension of trading in Noticee's shares
on D013 and thus3 cannot support the Noticee's case for non4disc)osure under
+egu)ation .&-$ of the 6a7eover +egu)ations3 especia))( /hen the Noticee Compan( /as
)isted on D013 a recogniDed stoc7 1:change.

%-. #urther3 I find that the Noticee has su*mitted that as there /as no change in the overa))
shareho)ding of the persons referred to under su*4regu)ation &%$ of +egu)ation . of the
6a7eover +egu)ations and the shareho)ding of the promoters of the Compan( or
person&s$ having contro) over the Compan( and the compan( had not proposed/
dec)ared an( dividend as on the periods ending on March -% each of %99. to ,!%%3 the
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Adjudication in the matter of M/s. MD Overseas Limited Page 9 of 17

Compan( did not ma7e the disc)osure3 as it /as under the *onafide *e)ief that no
disc)osure /as re5uired to *e made *( the Compan( as prescri*ed under +egu)ation
.&-$ of the 6a7eover +egu)ations. In the matter3 I note that +egu)ation .&-$ is in the form
of mandator( annua) disc)osures to *e fi)ed *( a compan( to the concerned stoc7
e:changes on /hich the shares of the compan( are )isted3 the shareho)ding of the
persons referred to under su*4regu)ation &%$ of +egu)ation . of the 6a7eover +egu)ations
and a)so /ith respect to the ho)dings of the promoters or persons&s$ having contro) over
the compan(3 so that investors are made a/are of the changes3 if an(3 in the ho)dings of
these persons so as to ena*)e them to ta7e an informed investment decision.

%?. A)so3 I find that the Noticee has inter alia su*mitted that assuming /ithout admitting
that disc)osure under +egu)ation .&-$ /as re5uired even /hen there /as no change in
shareho)ding as a))eged3 the fai)ure to ma7e such a))eged disc)osures under +egu)ation .
&-$ of 6a7eover +egu)ations for the (ears %99. to ,!%% /as comp)ete)( unintentiona)
and there /as no ma)afide interest or intention. At this juncture I /ou)d )i7e to refer to
the Order of the 8onH*)e 0A6 in the matter of 8(*rid #inancia) 0ervices Limited v. 012I
&Appea) No.%%9 of ,!%? and Order dated Aune %,3 ,!%?$3 /herein 0A6 has inter alia
o*served as fo))o/sB
D E..$rguments of the appellant that the delay in ma6ing disclosures occurred due to the
incorrect, flawed and mista6en understanding and interpretation of )egulation 2435 of
S$ST )egulations, 199' is also without any merit +ecause plain reading of )egulation
2435 of S$ST )egulations, 199' ma6es it clear that the o+ligation to ma6e disclosure +y
persons holding 151 and more shares is not only when there is change in shareholding
+ut also when there is no change in the shareholding. Therefore, e#en if, there was no
change in the shareholdings it was o+ligatory on the part of the appellant to ma6e
disclosures in each of the financial yearsEE D.

%. #urther3 in the matter of Ia()ord Commercia) Compan( Limited v. 012I &Appea) No.9, of
,!%? and Order dated Apri) %!3 ,!%?$3 the 8on'*)e 0A6 had o*served as fo))o/sB
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Adjudication in the matter of M/s. MD Overseas Limited Page 10 of 17

DEE.=nce #iolation of regulation 2435 of S$ST )egulations, 199' on account of failure to
ma6e disclosures within the time stipulated therein is esta+lished, then, lia+ility to
penalty arises under Section 15$4+5 of SE98 $ct, 199(. "enalty prescri+ed for such
#iolations under Section 15$ 4+5 of SE98 $ct, 199( is )s 1 lac for each day during which
such failure continues or )s 1 crore whiche#er is lessEEE.F

%9. After considering a)) the contentions put forth *( the Noticee3 for the reasons stated
a*ove and the judgments of 8onH*)e 0A6 referred3 it is esta*)ished /ithout dou*t that
the Noticee has vio)ated the provisions of +egu)ation .&-$ of the 6a7eover +egu)ations
for the financia) (ears from %99"49. to ,!%!4%%. 6he respective num*er of da(s of non4
comp)iance in respect of each financia) (ear has *een enumerated in the ta*)e at Para ?
a*ove.

%". #urther3 I note that the 8on'*)e 0upreme Court of India in the matter of SE98 @s. Shri
)am <utual ,und J,!!9K 9. 0CL ,%9&0C$ has a)so he)d that G8n our considered opinion,
penalty is attracted as soon as the contra#ention of the statutory o+ligation as
contemplated +y the $ct and the )egulations is esta+lished and hence the intention of
the parties committing such #iolation +ecomes wholly irrele#antEF. A)so3 in the matter
of +anjan ;arghese v. 012I &Appea) No. %"" of ,!!9 and Order dated Apri) !.3 ,!%!$3 the
8on'*)e 0A6 had o*served G=nce it is esta+lished that the mandatory pro#isions of
Ta6eo#er Code was #iolated the penalty must follow.<

%.. In vie/ of the foregoing3 I am convinced that it is a fit case to impose monetar( pena)t(
under 0ection %A&*$ of the 012I Act3 /hich reads as underB
Section 15A(! a"ter S#$% (A&end&ent Act!, 2002 '.e." 2()10)2002
*enalt+ "or "ailure to "urnis, in"or&ation, return, etc.)
15.A(! To file any return or furnish any information, +oo6s or other documents within
the time specified therefor in the regulations, fails to file return or furnish the same
within the time specified therefor in the regulations, he shall +e lia+le to a penalty of one
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Adjudication in the matter of M/s. MD Overseas Limited Page 11 of 17

la6h rupees for each day during which such failure continues or one crore rupees,
whiche#er is less.
Section 15A(! -rior to S#$% (A&end&ent Act!, 2002
*enalt+ "or "ailure to "urnis, in"or&ation, return, etc.)
15.A(! To file any return or furnish any information, +oo6s or other documents within
the time specified therefor in the regulations, fails to file return or furnish the same
within the time specified therefor in the regulations, he shall +e lia+le to a penalty not
eCceeding fi#e thousand rupees for e#ery day during which such failure continues.

%9. Fhi)e determining the 5uantum of monetar( pena)t( under 0ection %A&*$3 I have
considered the factors stipu)ated in 0ection %4A of 012I Act3 /hich reads as underB
?1J 4 F.514-* 14 C, 1.:,8 /814 .554<81 C9 16, .2D<2/5.1/8; 4EE/5,-
Fhi)e adjudging 5uantum of pena)t( under 0ection %4I3 the adjudicating officer sha))
have due regard to the fo))o/ing factors3 name)(B
&a$ the amount of disproportionate gain or unfair advantage3 /herever 5uantifia*)e3
made as a resu)t of the defau)tL
&*$ the amount of )oss caused to an investor or group of investors as a resu)t of the
defau)tL
&c$ the repetitive nature of the defau)t.<

,!. In vie/ of the charges as esta*)ished3 the facts and circumstances of the case and the
judgments referred to and mentioned hereina*ove3 the 5uantum of pena)t( /ou)d
depend on the factors referred in 0ection %4A of 012I Act and stated as a*ove. 6he main
o*jective of the 6a7eover +egu)ations is to afford fair treatment for shareho)ders /ho
are affected *( the change in contro). 6he +egu)ation see7s to achieve fair treatment *(
inter alia mandating disc)osure of time)( and ade5uate information to ena*)e
shareho)ders to ma7e an informed decision and ensuring that there is a fair and
informed mar7et in the shares of companies affected *( such change in contro). Correct
and time)( disc)osures are a)so an essentia) part of the proper functioning of the
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Adjudication in the matter of M/s. MD Overseas Limited Page 12 of 17

securities mar7et and fai)ure to do so resu)ts in preventing investors from ta7ing /e))4
informed decisions 6hus3 the cornerstone of the 6a7eover regu)ations is investor
protection.

,%. As per 0ection %A&*$ of the 012I Act3 /ith effect from Octo*er ,93 ,!!,3 the Noticee is
)ia*)e to a pena)t( of one )a7h rupees for each da( during /hich such fai)ure continues or
one crore rupees3 /hichever is )ess. Prior to the same3 the Noticee is )ia*)e to a pena)t(
not e:ceeding five thousand rupees for ever( da( during /hich such fai)ure continues.
#urther3 under 0ection %4I of the 012I Act3 the adjudicating officer has to give due
regard to certain factors /hich have *een stated as a*ove /hi)e adjudging the 5uantum
of pena)t(. It is noted that no 5uantifia*)e figures are avai)a*)e to assess the
disproportionate gain or unfair advantage made as a resu)t of such non4comp)iance *(
the Noticee. #urther from the materia) avai)a*)e on record3 it is not possi*)e to ascertain
the e:act monetar( )oss to the investors on account of non4comp)iance *( the Noticee.
8o/ever3 I note that the 8onH*)e 0ecurities Appe))ate 6ri*una) &0A6$ in the matter of
@oma) Nahata ;s. 012I &Date of judgment4 Aanuar( ,"3 ,!%?$ has o*served thatB
G$rgument that no in#estor has suffered on account of non disclosure and that the $=
has not considered the mitigating factors set out under Section 15% of SE98 $ct, 199( is
without any merit +ecause firstly penalty for non compliance of S$ST )egulations, 199'
and "8T )egulations, 199( is not dependent upon the in#estors actually suffering on
account of such non disclosure.F
In vie/ of the same3 the argument put forth *( the Noticee that due to such a))eged
)apse no )oss or damage /as caused to the pu*)ic shareho)ders in genera) or an( other
person3 as the Compan( did not have a significant num*er of pu*)ic shareho)ders and
a)so the shares /ere not traded is not re)evant for the given case.

,,. In addition to the aforesaid3 I am a)so inc)ined to consider the fo))o/ing mitigating
factors /hi)e adjudging the 5uantum of pena)t(B a$ the paid4up capita)/ mar7et
capita)iDation of the compan( at the re)evant point of timeL *$ the trading vo)umes of
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Adjudication in the matter of M/s. MD Overseas Limited Page 1@ of 17

Noticee's shares on the 1:changes during the re)evant periodL c$ the changes in
promoters shareho)ding3 if an(3 during the re)evant periodL and d$ the num*er of
occasions in the instant proceeding that the Noticee has vio)ated the re)evant provisions
of the 6a7eover +egu)ations.

,-. #rom the su*missions made *( the Noticee3 I note that the share capita) of the Noticee
/as 93993,!! e5uit( share of +s. %!/4 each aggregating +s.9939,3!!!/4. I a)so note from
the su*missions made that from %99. to ,!%%3 ...C of the share capita) of the
Noticee /as he)d *( the promoter and promoter group and %?.%C /as he)d *( the
pu*)ic and there /as no change in the promoter shareho)ding during the entire period. I
note from the )etter of the D01 dated Au)( "3 ,!%% that the shares of the compan( /ere
)ast traded on Au)( 3 %993 thus3 there /as no trading in the shares of the compan(
during the entire period of non4comp)iance. 8o/ever3 I further note that the trading in
e5uit( shares of the Noticee /as suspended *( D01 from Aanuar( !93 ,!!, due to non4
pa(ment of )isting fees. 6hus3 I note that it /as due to de)in5uenc( on the part of the
Noticee /ith respect to pa(ment of )isting fees of the 1:change3 /hich resu)ted in
suspension of trading in Noticee's shares on D013 and thus3 cannot support the Noticee's
case for non4disc)osure under +egu)ation .&-$ of the 6a7eover +egu)ations. I find that
the Noticee had not made the disc)osure to the e:change under the provisions of
+egu)ation .&-$ of the 6a7eover +egu)ations for fourteen &%?$ consecutive financia) (ears
from %99"49. to ,!%!4%%.

,?. I find that the Noticee have further su*mitted that the 6a7eover +egu)ations3 ,!%% has
done a/a( /ith the re5uirement of ma7ing disc)osure of promoter share ho)ding as on
record date *( a compan(. It is pertinent to note here that under the o)d 6a7eover
+egu)ations3 %99" persons having contro)/ su*stantia) ho)ding and the promoters of the
Compan( under +egu)ation .&%$ and .&,$ of the 6a7eover +egu)ations /ere re5uired to
ma7e (ear)( disc)osure to the compan(3 in respect of their ho)dings as on -%
st
March.
6he compan(3 in turn3 /as re5uired to disc)ose the same to the stoc7 1:changes under
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Adjudication in the matter of M/s. MD Overseas Limited Page 14 of 17

+egu)ation .&-$ of the 6a7eover +egu)ations. On the other hand3 under the ne/
6a7eover +egu)ations3 ,!%%! the disc)osure to the compan( and the stoc7 1:changes
have to *e done *( the persons having su*stantia) ho)ding and the promoters
themse)ves under +egu)ation -!. 6hus3 irrespective of /hether disc)osure to the stoc7
1:change is made *( the compan( or the promoters themse)ves3 under *oth the o)d
6a7eover +egu)ations3 %99" and the ne/ 6a7eover +egu)ations3 ,!%%3 the intent of the
)a/ remains the same3 to disseminate to investors so as to enhance confidence and
informed participation *( investors in secondar( securities mar7et. 6his3 in turn3
enhances the depth3 )i5uidit( and efficienc( of the securities mar7ets. 8ence the
inference dra/n *( the Noticee that the ne/ 6a7eover +egu)ations3 ,!%% has done
a/a( /ith the re5uirement of ma7ing disc)osure of promoter share ho)ding as on record
date *( a compan( at present is incorrect.

,. 6he Noticee3 I find3 vide its )etter dated August ,-3 ,!%? has further re)ied upon the
fo))o/ing judgments of the 8onH*)e 0A6 judgments /hi)e re5uesting to ta7e a )enient
vie/ and impose minimum pena)t( vide its aforesaid )etter>
S./o. S$T =rder.
$= =rder
$d:udication =rder /o. Date 8n the matter of "enalty
4)s.5
1 8on'*)e
0A6 Order
%.9 of ,!%%3 Order dt %..%%.,!%% Aogesh/ar +ijuma)
@arachi/a)a M Ors. ;s
012I
!3!!!
( $= =rder $S?.)A$.$=.32.(&10-15 dt
31.&'.(&10
Shree 9hawani "aper
<ills Bimited
(5,&&&
3 $= =rder $?.$=-15-.(&13 dt (&.&9.(&13 ?amala6shi ,inance
Corporation Btd
5&,&&&
0 $= =rder "9.$=-09.(&1( dt 1(.&'.(&1( Aupta Carpets
8nternational Btd
1,&&,&&&
5 $= =rder C,D.E8B.$=.D)?.$?S.E$D-
3.(93.59-11 dated (3.11.(&11
EdueCal 8nfotainment
Btd
1,&&,&&&

,9. #rom a perusa) of some of the judgments re)ied upon *( the Noticee3 I note that the
facts of that case are different from the facts of the present case. #or instance3 in the
case of Aogesh/ar +ijuma) @arachi/a)a M Ors. ;s 012I referred *( the Noticee3 the
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Adjudication in the matter of M/s. MD Overseas Limited Page 1 of 17

adjudication proceeding /ere initiated against the promoters of M/s Dri))co Meta)
Car*ide Limited for the a))eged vio)ations of regu)ations -&?$3 "&%$ and .&%$ of the
6a7eover +egu)ations3 /hereas the given case pertains to a))eged vio)ation of +egu)ation
.&-$ of the 6a7eover +egu)ations *( the Noticee3 /hich is a compan(. 2esides3 it is
o*served that in the said matter the ac5uisition /as done in the (ear ,!!! and the
ma:imum pena)t( at that point of time /as five thousand per da( *efore amendment of
section %A&*$ of 012I Act in the (ear ,!!,. On the contrar(3 the vio)ation of +egu)ation
of .&-$ in the e:tant matter pertains to the period from %99"49. to ,!%!4%% and the
pena)t( /.e.f. Octo*er ,93 ,!!, is one )a7h rupees for each da( during /hich such
fai)ure continues or one crore rupees3 /hichever is )ess. #urther3 as regards the a))eged
vio)ation of regu)ation .&%$ of 6a7eover +egu)ations in the said case3 it /as he)d that
disc)osures as per regu)ation .&%$ of 6a7eover +egu)ations did not arise in respect of the
promoters of M/s Dri))co Meta) Car*ide Limited3 /hereas3 in the given case it has *een
esta*)ished /ithout dou*t that the Noticee has vio)ated the provisions of +egu)ation
.&-$ of the 6a7eover +egu)ations for the financia) (ears from %99"49. to ,!%!4%%.
0imi)ar)(3 in the case of 0hree 2ha/ani Paper Mi))s Limited3 though the adjudication
proceeding /ere initiated for vio)ation of +egu)ation .&-$ of 6a7eover +egu)ations3 %99"3
the non4comp)iance in the said case had arisen on)( on t/o occasions viD. in %99. and in
,!!% and the de)a(ed comp)iance /as for da(s for the (ear %99. and , da(s for the
(ear ,!!%. Again in this case too3 the ma:imum pena)t( /as five thousand per da(
during the period of said non4comp)iance3 since it /as *efore amendment of section
%A&*$ of 012I Act in the (ear ,!!,. 6hus3 I note that pena)ties )evied for vio)ation of the
provisions of 6a7eover +egu)ations /ou)d *e commensurate /ith the gravit( of the
individua) case and cannot uniform)( *e made app)ica*)e to other cases.

,". #urther3 as regards the matters of M/s. @ama)a7shi #inance Corporation Ltd. and M/s.
Iupta Carpet Internationa) Ltd. referred to *( the Noticee as a*ove3 I note that the
8onH*)e 0A6 in the matter of 8(*rid #inancia) 0ervices Limitted v. 012I &Appea) No.%%9 of
,!%? and Order dated Aune %,3 ,!%?$ had o*served as fo))o/sB
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Adjudication in the matter of M/s. MD Overseas Limited Page 1A of 17

DEE. argument that penalty imposed on appellant is eCcessi#e compared to penalty
imposed in the case of <.s. ?amala6shi ,inance Corporation Btd. 4supra5 and Aupta
Carpet 8nternational Btd. is also without any merit, +ecause, firstly, nothing is +rought on
record to show that facts in that case are similar to the facts in the present case.
Secondly, assuming that eCcessi#e relief is granted +y SE98 in some cases, it does not
mean that in all other cases similar reliefs should +e granted especially when the
)egulations prescri+e stringent action for non compliance of disclosure pro#isions which
are mandatoryE..F
DE.. Since disclosures ha#e not +een made in all the years set out herein a+o#e, it is
e#ident that penalty imposa+le at the rate of )s 1 lac per day would +e )s 1 crore for
each year and therefore imposition of penalty of )s 2 lac for all the 1& years in ;uestion
which effecti#ely comes to less than )s 1 lac per year, cannot +e said to +e unreasona+le
or ar+itrary or eCcessi#eD.

,.. In the matter3 I further a)so note that the 8onH*)e 0A6 in the matter of Ia()ord
Commercia) Compan( Limited v. 012I &Appea) No.9, of ,!%? and Order dated Apri) %!3
,!%?$ had o*served as fo))o/sB
DEE. $rgument that the appellant is a small company and has not #iolated any
pro#isions in the past, that the delay in ma6ing disclosures has neither caused any loss to
in#estors nor the appellant has gained any +enefits on account of delay in ma6ing
disclosures do not merit consideration, +ecause, lia+ility to pay penalty under Section
15$4+5 of SE98 $ct, 199( has to +e computed on the +asis of each day during which the
failure to comply with the regulation has continued and lia+ility to pay such penalty is
not dependent upon the fact as to whether such failure has occurred for the first time or
not. Similarly, fact that no loss has occurred to the in#estors or that the appellant has
not gained on account of delay in ma6ing disclosures would not +e a ground for the
appellant to escape penalty for failure to ma6e disclosure within the stipulated timeE.D

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Adjudication in the matter of M/s. MD Overseas Limited Page 17 of 17

,9. As a )isted compan(3 the Noticee had a responsi*i)it( to comp)( /ith the disc)osure
re5uirements in accordance /ith their spirit3 intention and purpose so that the investors
cou)d ta7e a decision /hether to *u(3 se))3 or ho)d the Noticee's securities. Non4
comp)iance /ith disc)osure re5uirements *( a )isted compan( undermines the
regu)ator( o*jectives and jeopardiDes the achievement of the under)(ing po)ic( goa)s.

ORDER

-!. After ta7ing into consideration a)) the facts and circumstances of the case3 I impose a
pena)t( of R* 7!00!000/- $R<7,,* S,+,8 #.:6* 48=9) under 0ection % A&*$ on the
N41/5,, (/*. (D O+,-*,.* #/0/1,2 /hich /i)) *e commensurate /ith the vio)ations
committed *( the Noticee.

-%. 6he Noticee sha)) pa( the said amount of pena)t( *( /a( of demand draft in favour of
N012I 4 Pena)ties +emitta*)e to Iovernment of India<3 pa(a*)e at Mum*ai3 /ithin ?
da(s of receipt of this order. 6he said demand draft shou)d *e for/arded to Mr. ; 0
0undaresan3 Chief Ienera) Manager3 Corporation #inance Department3 012I 2havan3
P)ot No. C O ? A3 NI< 2)oc73 2andra @ur)a Comp)e:3 2andra &1$3 Mum*ai O ?!! !%.

-,. In terms of ru)e 9 of the +u)es3 copies of this order are sent to the Noticee and a)so to
the 0ecurities and 1:change 2oard of India.


D.1,F S,71,0C,- 22! 2014 A8/1. K,8:.-,
%=.5,F (<0C./ A2D<2/5.1/8; OEE/5,-

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