Adjudication Order in Respect of Ankur J Chaturvedi in The Matter of Brijlaxmi Leasing and Finance Limited

Adjudication Order in respect of Ankur J Chaturvedi in the matter of Brijlaxmi Leasing and Finance Limited
Page 1 of 10 August 28, 2014

BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

ADJUDICATION ORDER NO. JJ/AM/AO121/2014

UNDER SECTION 15-I OF SECURITIES AND EXCHANGE BOARD OF INDIA
ACT, 1992 READ WITH RULE 5 OF SEBI (PROCEDURE FOR HOLDING
INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES,
1995

In respect of:
Mr. Ankur J Chaturvedi
(PAN ABFPC1081P)
In the Matter of: Brijlaxmi Leasing and Finance Limited

BACKGROUND

1. Securities and Exchange Board of India (SEBI) conducted an examination
in the scrip of Brijlaxmi Leasing and Finance Limited (Company). The
shares of the Company are listed on BSE Limited (BSE).

2. It was observed that Ankur J Chaturvedi (Noticee) was a Promoter &
Director of the Company. It was also observed that on January 09, 2013
the Noticee purchased 46,437 shares of the Company. It was further
observed that on January 29, 2013 the Noticee purchased 45,000 shares
of the Company and on the same day, sold 45,032 shares of the Company.

3. It was observed that on January 09, 2013 the Noticee purchased more
than 25,000 shares of the Company and on January 29, 2013 the Noticee
purchased and also sold more than 25,000 shares of the Company.
However, the Noticee did not make the necessary disclosures under
provisions of SEBI (Prohibition of Insider Trading) Regulations, 1992
(PIT Regulations) with respect to the aforementioned transactions. It
was also observed that even though on January 09, 2013 the Noticee
purchased 46,437 shares and on January 29, 2013 the Noticee purchased
45,000 shares; the Noticee sold 45,032 shares on January 29, 2013
thereby entering into an opposite transaction in violation of the
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restrictions under provisions of the Model Code of Conduct for
Prevention of Insider Trading for Listed Companies.

4. The undersigned was appointed as the Adjudicating Officer vide order
dated May 09, 2014 and the said appointment was conveyed vide
proceedings of the Whole Time Member dated May 27, 2014 to inquire
and adjudge under Section 15A(b) and Section 15HB of the SEBI Act,
1992, the alleged violations of provisions of Regulation 13(4) and 13(4A)
read with 13 (5) of PIT Regulations and Clause 4.2 of Schedule I (Model
Code of Conduct) under Regulation 12(1) of PIT Regulations committed
by the Noticee.

SHOW CAUSE NOTICE, HEARING & REPLY

5. Show Cause Notice (SCN) in terms of the provisions of Rule 4(1) of SEBI
(Procedure for Holding Inquiry and Imposing Penalties by Adjudicating
Officer) Rules, 1995 (Adjudication Rules) was issued to the Noticee on
June 16, 2014, calling upon the Noticee to show cause why an inquiry
should not be held against him under Rule 4(3) of the Adjudication Rules
and penalty be not imposed under Section 15A(b) and Section 15HB of
the SEBI Act, 1992 for the alleged violations.

6. The aforesaid SCN was duly delivered to the Noticee on June 23, 2014.
Vide letter dated July 07, 2014 the Noticee acknowledged receipt of the
SCN and requested for at-least 3 weeks time for making submissions.
Vide Notice dated July 18, 2014 the Noticee was granted time till August
07, 2014 for submission of reply and the Noticee was also granted an
opportunity of personal hearing on August 07, 2014. Vide letter dated
August 05, 2014 the Noticee expressed his inability to attend the hearing
on scheduled date and requested for further time till August 20, 2014.

7. Vide Notice dated August 08, 2014 the Noticee was given time to submit
his reply till August 20, 2014 and the Noticee was granted another
opportunity of personal hearing on August 22, 2014. Vide letter dated
August 13, 2014 the Noticee submitted his reply and inter alia made the
following submissions:
o I state that I had no intention of suppressing the fact of purchase and
sale of shares and pray that no adverse inference may be drawn from
the alleged failure to make disclosure in prescribed format to the stock

exchange. The disclosure was duly made to the Company in prescribed
format within the laid timelimit. The non disclosure to the Exchange
was an inadvertent error on my end but no malafide intent be derived
therefrom. I submit that I had no mala fide intent to defraud or
otherwise. Also, the act of sale of shares on January 29, 2013 was an
inadvertent error on my end. Neither has the purported transactions
led to any price manipulation or market change. The prices of the said
shares were Rs. 0.35 to Rs. 0.39 during the periods prior of my
acquisition.
o I have not made any profits by acquiring the said shares nor did I have
any intent to manipulate the shares or seek additional voting rights or
control of the target company. Without prejudice to the above due to
inadvertent error the form was not filed with the Stock Exchange. It is
in fitness of things to assume that once disclosure is made presumption
of receipt thereof is admitted and acknowledged by the company. I
most humbly pray that in light of the above, the alleged violation of the
provision of Regulations 13(4) and 13(4A) and violation of Model Code
of Conduct may be viewed leniently and inadvertent lapse be condoned.
o I most respectfully submit that neither have I caused any loss to any
investor nor have I made any wrongful; gains to the detriment of other
shareholders. There are no investor Complaints. Further I state that the
lapse is not repetitive in nature. I submit that these facts call for a
lenient view in terms of application of criteria under section 15J of the
SEBI Act, 1992. Neither was any heavy price movement of shares or of
volume traded on exchange observed during the said period that can
deduce any malafide intention behind the transactions.
o In light of the above I most humbly pray that my act of omission of
making disclosure under Regulations 13(4) and 13(4A) of PIT
Regulations may be viewed leniently. Also, the act of sale of shares
bought in the beginning of January, 2013 in the end of January, 2013
was an inadvertent error and the same be condoned. Also, no profit has
been made from the transactions. The orders have been placed at the
price prevailing in the market price and no undue inference be drawn
from the same. Thereby neither have I made any profits nor loss from
the purported transactions.

8. On August 22, 2014 Shri Rajesh Khandelwal, Advocate, appeared as
Authorised Representative (AR) on behalf of the Noticee and made the
following submissions:
"We reiterate our submissions made vide letter dated August 13, 2014. We also
submit that the volume in terms of money is hardly of any significance to draw
any adverse inference. Further, the target company has been a loss making
company. No investor compliant is pending against the company. A lenient
view may please be taken."


ISSUES FOR CONSIDERATION

9. After perusal of the material available on record, I have the following
issues for consideration, viz.,
A. Whether the Noticee has violated provisions of Regulation 13(4) &
13(4A) read with 13(5) of PIT Regulations and Clause 4.2 of Schedule
I (Model Code of Conduct for Prevention of Insider Trading for Listed
Companies) under Regulation 12(1) of PIT Regulations?
B. Whether the Noticee is liable for monetary penalty under Section 15
A(b) and Section 15HB of the SEBI Act, 1992?
C. What quantum of monetary penalty should be imposed on the Noticee
taking into consideration the factors mentioned in Section 15J of the
SEBI Act, 1992?

FINDINGS

10. On perusal of the material available on record and giving regard to the
facts and circumstances of the case, I record my findings hereunder.

ISSUE 1: Whether the Noticee has violated provisions of Regulation
13(4) & 13(4A) read with 13(5) of PIT Regulations and Clause 4.2 of
Schedule I (Model Code of Conduct for Prevention of Insider Trading
for Listed Companies) under Regulation 12(1) of PIT Regulations?

11. The aforesaid provisions of PIT Regulations read as under:
Securities and Exchange Board of India (Prohibition of Insider Trading)
Regulations, 1992

Disclosure of interest or holding in listed companies by certain persons
Continual disclosure.
13 (4) Any person who is a director or officer of a listed company, shall disclose
to the company and the stock exchange where the securities are listed in Form
D, the total number of shares or voting rights held and change in shareholding
or voting rights, if there has been a change in such holdings of such person and
his dependents (as defined by the company) from the last disclosure made
under sub-regulation (2) or under this subregulation, and the change exceeds
Rs. 5 lakh in value or 25,000 shares or 1% of total shareholding or voting
rights, whichever is lower.
13 (4A) Any person who is a promoter or part of promoter group of a listed
company, shall disclose to the company and the stock exchange where the
securities are listed in Form D, the total number of shares or voting rights held
and change in shareholding or voting rights, if there has been a change in such
holdings of such person from the last disclosure made under Listing Agreement
or under sub-regulation (2A) or under this sub-regulation, and the change

exceeds Rs. 5 lakh in value or 25,000 shares or 1% of total shareholding or
voting rights, whichever is lower.
13 (5) The disclosure mentioned in sub-regulations (3), (4) and (4A) shall be
made within 2 working days of :
(a) the receipts of intimation of allotment of shares, or
(b) the acquisition or sale of shares or voting rights, as the case may be.

Code of internal procedures and conduct for listed companies and other
entities.
12. (1) All listed companies and organisations associated with securities
markets including :
(a) the intermediaries as mentioned in section 12 of the Act, asset management
company and trustees of mutual funds ;
(b) the self-regulatory organisations recognised or authorised by the Board;
(c) the recognised stock exchanges and clearing house or corporations;
(d) the public financial institutions as defined in section 4A of the Companies
Act, 1956; and
(e) the professional firms such as auditors, accountancy firms, law firms,
analysts, consultants, etc., assisting or advising listed companies,
shall frame a code of internal procedures and conduct as near thereto the
Model Code specified in Schedule I of these Regulations without diluting it in
any manner and ensure compliance of the same.

SCHEDULE I
[Under regulation 12(1)]
PART A
Model Code of Conduct for Prevention of Insider Trading for Listed Companies
Other restrictions
4.2 All directors/ officers/ designated employees who buy or sell any number of
shares of the company shall not enter into an opposite transaction i.e. sell or
buy any number of shares during the next six months following the prior
transaction. All directors/ officers/ designated employees shall also not take
positions in derivative transactions in the shares of the company at any time.

12. From the material available on record, I note that the Noticee, a Promoter
and Director of the Company, had purchased 46,437 shares of the
Company on January 09, 2013. The Noticee, on January 29, 2013,
purchased 45,000 shares and on the same day sold 45,032 shares. The
aforesaid transactions of the Noticee, individually resulted in a change in
shareholding of the Noticee in the Company, exceeding 25,000 shares.
Hence, the Noticee ought to have made the required disclosures to BSE in
Form D, within two working days of acquisition/sale of shares. However,
the Noticee had failed to make the disclosures as required under
provisions of Regulation 13(4) & 13(4A) read with 13(5) of PIT
Regulations. Further, even though on January 09, 2013 the Noticee
purchased 46,437 shares and on January 29, 2013 purchased 45,000
shares; the Noticee sold 45,032 shares on January 29, 2013 thereby

entering into an opposite transaction, i.e., bought and sold shares of the
Company within six months of the following transaction. The aforesaid
sale of 45,032 shares of the Company on January 29, 2013 was in
violation of the restrictions under provisions of Clause 4.2 of the Model
Code of Conduct for Prevention of Insider Trading for Listed Companies
prescribed under Regulation 12(1) of PIT Regulations. The transactions
of the Noticee and the violations committed can be summarized as
follows:
Trade
Date
Buy Qty. Sell Qty.
Provisions of PIT Regulations
violated
9-Jan-13 46437 - 13(4) & 13(4A)
29-Jan-13 45000 45032
13(4) & 13(4A) and 4.2 of Schedule I
(Model code of conduct)

13. Regarding not making the required disclosures, the Noticee in his reply
has submitted that he had no intention of suppressing the fact of
purchase and sale of shares and that disclosure was duly made to the
Company in the prescribed format and time limit. The Noticee has also
submitted that non disclosure to BSE was an inadvertent error. However,
a reading of Regulation 13(4), 13(4A) and 13(5) of PIT Regulations
clearly point out that the person concerned has to make the necessary
disclosers not only to the company but to stock exchanges also within 2
working days of acquisition/sale of shares. The object underlying these
regulations is, therefore, unequivocally to bring more transparency by
dissemination of complete information to the stakeholders not only by
the concerned company but by the individual acquirer/seller as well.
Hence, I hold that the Noticee has failed to make the required disclosures
to BSE for the transactions carried out in the scrip of the Company on
January 09, 2013 and January 29, 2013. Therefore, the Noticee has
violated the provisions of Regulation 13(4) and 13(4A) read with 13(5)
of PIT Regulations.

14. From trading details of the Noticee, I note that the Noticee had bought
and sold shares of the Company and taken opposite positions on January
29, 2013. However, I note that Clause 4.2 of Schedule I of Model Code of
Conduct for Prevention of Insider Trading for Listed Companies clearly
specifies that the directors cannot take opposite position during the next
six months following the prior transaction. I note that the Noticee has
neither denied nor disputed the trades but has, inter alia, submitted that
the act of sale of shares on January 29, 2013 was an inadvertent error on

my end. Neither has the purported transactions led to any price
manipulation or market change. I do not find the reply of the Noticee
satisfactory in this regard and I hold that the same cannot be considered a
plausible reason for transacting in contravention of the provisions of PIT
Regulations. Therefore, I hold that the Noticee has violated Clause 4.2 of
Schedule I of Model Code of Conduct for Prevention of Insider Trading for
Listed Companies [Under Regulation 12(1)] of PIT Regulations.

ISSUE 2: Whether the Noticee is liable for monetary penalty under
Section 15 A(b) and Section 15HB of the SEBI Act, 1992?

15. The provisions of Section 15A(b) and Section 15HB of the SEBI Act, 1992,
read as under:
Penalty for failure to furnish information, return, etc.
15A. If any person, who is required under this Act or any rules or
regulations made thereunder,
(a) .............................
(b) to file any return or furnish any information, books 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 be liable to a penalty of one lakh rupees for each
day during which such failure continues or one crore rupees, whichever
is less.

Penalty for contravention where no separate penalty has been
provided.
15HB. Whoever fails to comply with any provision of this Act, the rules or
the regulations made or directions issued by the Board thereunder for
which no separate penalty has been provided, shall be liable to a penalty
which may extend to one crore rupees.

16. In the matter of SEBI Vs. Shri Ram Mutual Fund [2006] 68 SCL 216 (SC), the
Honble Supreme Court of India has held that In our considered opinion,
penalty is attracted as soon as the contravention of the statutory obligation
as contemplated by the Act and the regulation is established and hence the
intention of the parties committing such violation becomes wholly
irrelevant.

17. As already observed, the Noticee failed to make disclosures as required
under Regulation 13(4) and 13(4A) read with 13(5) of PIT Regulations
for the transactions carried out on January 09, 2013 and January 29,
2013. Therefore, I find that the Noticee is liable for monetary penalty

under Section 15A(b) of the SEBI Act, 1992. Further, the Noticee had
taken opposite positions while transacting in the shares of the Company
which is in absolute violation of provision of Clause 4.2 of the Model Code
of Conduct for Prevention of Insider Trading for Listed Companies
prescribed under Regulation 12(1) of PIT Regulations. Therefore, the
Noticee is also liable for monetary penalty under Section 15HB of the
SEBI Act, 1992.

ISSUE 3: What quantum of monetary penalty should be imposed on the
Noticee taking into consideration the factors mentioned in Section 15J
of the SEBI Act, 1992?

18. While imposing monetary penalty it is important to consider the factors
stipulated in Section 15J of the Act, which reads as under:
15J - Factors to be taken into account by the adjudicating officer
While adjudging quantum of penalty under section 15-I, the
adjudicating officer shall have due regard to the following factors,
namely:-
(a)the amount of disproportionate gain or unfair advantage, wherever
quantifiable, made as a result of the default;
(b)the amount of loss caused to an investor or group of investors as a
result of the default;
(c)the repetitive nature of the default.

19. In the absence of material on record, the amount of disproportionate gain
or unfair advantage made as a result of the default and the amount of loss
caused to the investors due to the said default cannot be quantified. The
Noticee, in its reply, has submitted that he has neither caused any loss to
any investor nor has he made any wrongful gains to the detriment of
other shareholders. During the course of personal hearing, the AR of the
Noticee has submitted that We also submit that the volume in terms of
money is hardly of any significance to draw any adverse inference. Further,
the target company has been a loss making company. No investor
compliant is pending against the company. However, the fact remains that
the Noticee, who is a Promoter and Director of the Company, transacted
in substantial number of shares of the Company, but failed to fulfill his
duty of making necessary disclosures to the stock exchange. Our entire
securities market stands on disclosure based regime and accurate and
timely disclosures are fundamental in maintaining the integrity of the
securities market. Further, the Noticee, being a director of the Company,
transacted in the shares of the Company and took opposite positions in

contravention of the provisions of PIT Regulations. Hence, the act of the
Noticee was detrimental to the interest of investors in securities market.
Since the Noticee has failed to make the required disclosures to BSE as
specified under PIT Regulations for more than one occasion, the default of
the Noticee can be said to be repetitive.

20. In view of the aforesaid paragraphs, it is now established that the Noticee
has violated the provisions of Regulation 13(4) and 13(4A) read with
13(5) of PIT Regulations for which I find that imposing a penalty of `
5,00,000/- (Rupees Five Lakhs only) on the Noticee would be
commensurate with the violation committed. The Noticee has also
violated provision of Clause 4.2 of the Model Code of Conduct for
Prevention of Insider Trading for Listed Companies prescribed under
Regulation 12(1) of PIT Regulations for which I find that imposing a
penalty of ` 2,00,000/- (Rupees Two Lakhs only) on the Noticee would be
commensurate with the violation committed.

ORDER

21. Considering the facts and circumstances of the case, in terms of the
provisions of SEBI Act, 1992 and Rule 5(1) of the Adjudication Rules, I
hereby impose a penalty of ` 5,00,000/- (Rupees Five Lakhs only) under
Section 15A(b) of the SEBI Act, 1992 for violation of provisions of
Regulation 13(4) and 13(4A) read with 13(5) of PIT Regulations and `
2,00,000/- (Rupees Two Lakhs only) under Section 15HB of the SEBI Act,
1992 for violation of provisions of Clause 4.2 of Schedule I of Model Code
of Conduct for Prevention of Insider Trading for Listed Companies [Under
Regulation 12(1)] of PIT Regulations, i.e., a total penalty of ` 7,00,000/-
(Rupees Seven Lakhs only) on Ankur J Chaturvedi.

22. The penalty shall be paid by way of demand draft drawn in favour of
SEBI Penalties Remittable to Government of India payable at Mumbai
within 45 days of receipt of this Order. The said demand draft shall be
forwarded to the Division Chief, Integrated Surveillance Department,
Securities and Exchange Board of India, Plot No. C4-A, G Block, Bandra
Kurla Complex, Bandra (E), Mumbai 400051.


23. In terms of the provisions of Rule 6 of the SEBI (Procedure for Holding
Inquiry and Imposing Penalties by Adjudicating Officer) Rules 1995,
copies of this Order are being sent to the Noticee and also to Securities
and Exchange Board of India.

Date: August 28, 2014 Jayanta Jash
Place: Mumbai Adjudicating Officer


Adjudication Order in Respect of Ankur J Chaturvedi in The Matter of Brijlaxmi Leasing and Finance Limited

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Adjudication Order in respect of Ankur J Chaturvedi in the matter of Brijlaxmi Leasing and Finance Limited

Page 1 of 10 August 28, 2014

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