Adjudication Order in the respect of Eyelight Events and Promotions Pvt Ltd in the matter of Sanraa Media Ltd

BEFORE THE ADJUDICATING OFFICER
SECURITIES AND EXCHANGE BOARD OF INDIA
[ADJUDICATION ORDER NO. Order/AA/AR/2020-21/9195]

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), 1995.

In respect of
Eyelight Events and Promotions Private Limited (PAN : AABCE4972B)
In the matter of Sanraa Media Ltd

FACTS OF THE CASE

1. The Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’), while conducting an investigation of the GDR issue of Sanraa Media Ltd (hereinafter referred to as ‘Sanraa’), observed that the shareholding of one of the promoters of Sanraa viz. Eyelight Events & Promoters India Pvt. Ltd (hereinafter referred to as ‘Eyelight’/ ‘the Noticee’) had changed by more than 2% during the period from March 31, 2008 to June 30, 2008. However, it is alleged that the noticee had not made the relevant disclosures in this regard to the stock exchange and Sanraa, thereby violating the provision of Regulation 7(1A) of the SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 (hereinafter referred to as ‘SAST Regulations’).

APPOINTMENT OF ADJUDICATING OFFICER

2. Shri Suresh B. Menon was appointed as the Adjudicating Officer, vide communique dated November 23, 2017, under Section 15-I of the SEBI Act read with Rule 3 of the Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as 'Adjudication Rules’) to inquire into and adjudge
Adjudication Order in the respect of Eyelight Events and Promotions Pvt Ltd Page 2 of 9
under the provisions of section 15 A(b) of the SEBI Act, the alleged violation of the relevant provisions of the SAST Regulation by the noticee, wherever applicable. Pursuant to the transfer of Shri Suresh B. Menon to another department, I was appointed as an AO in the present matter vide communique of appointment of AO dated March 25, 2019.

SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING

3. A Show Cause Notice ref. A&E/EAD3/SBM-ASR/4442/8/2018 dated February 12, 2018 (hereinafter referred to as ‘SCN’) was issued to the noticee in terms of Rule 4 of the Adjudication Rules to show cause as to why inquiry should not be initiated and penalty, if any, be not imposed on them under Section 15A(b) of the SEBI Act, for the alleged contravention of the provisions of the SAST Regulations by the noticee. Briefly, the allegations made in the SCN against the noticee is given below:

a. It is observed that Eyelight Events & Promoters India Pvt. Ltd/ Noticee no. 8 is one of the promoter of the Sanraa. It is alleged in the Investigation Report that the shareholding of Noticee no. 8 in Sanraa had reduced from 26,11,600 shares (which is 39.69 % of the pre GDR issue share capital or 9.93% of the post GDR issued share capital of Sanraa) to 16,54,950 shares (which is 6.23% of the post GDR issued share capital) during the period from March 31, 2008 to June 30, 2008. Thus the change in the shareholding of the Noticee no. 8 was more than the threshold limit of 2%, prescribed under Regulation 7(1A) of the SAST Regulations. It is alleged that Noticee no. 8 had failed to make the requisite disclosures. The same has been confirmed by BSE. The detailed allegations pertaining to the failure of the Noticee no. 8 to make disclosures for change of more than 2% in its shareholding in Sanraa has been mentioned in the Investigation Report (pages 5, 6 and 26).

b. Therefore, it is alleged that the Noticee no. 8 has violated the provisions of Regulation 7(1A) of the SAST Regulations.

4. The SCN has alleged that the shareholding of the noticee, which is one of the promoter entities of Sanraa has reduced from 26,11,600 shares (which is 39.69 % of the pre GDR issue share capital or 9.93% of the post GDR issued share capital of Sanraa) to 16,54,950 shares (which is 6.23% of the post GDR issued share capital) during the period from March 31, 2008 to June 30, 2008 (hereinafter referred to as ‘Investigation Period’). The abovementioned change in the shareholding of the Noticee was more than the threshold limit of 2% and thus triggered disclosure requirements as prescribed under Regulation 7(1A) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as ‘SAST Regulations’). However, it was alleged in the SCN that the Noticee failed to comply with the aforementioned disclosure requirements.

5. The SCN issued to the noticee returned undelivered from its address available with SEBI. Pursuant to my appointment as an AO, vide letter dated July 11, 2019, the SCN was once again sent to the noticee and it was also informed about my appointment as AO in the matter. The aforesaid letter along with the SCN also returned undelivered from the address of the noticee. Thereafter, another attempt was made to deliver the hearing notices, for scheduling hearing on August 08, 2019, along with the SCN to the noticee by way of affixture, in terms of rule 7(c) of the Adjudication Rules. However, the attempt to deliver the SCN and hearing notice by way of an affixture also failed.

6. Subsequently, the noticee was granted an opportunity of personal hearing on August 21, 2020 at 01:00 PM vide digitally signed email dated August 10, 2020, and the same was communicated to the noticee on its email id ‘avramani1958@gmail.com’ (obtained from the website of Ministry of Corporate Affairs). In reply, the noticee informed SEBI that it was unaware of the SCN issued against it and requested for the information regarding the same. In reply to its mail, the SCN was reissued to the noticee vide email dated August 12, 2020. Further the noticee was also informed that as per the records available on the website of Ministry of Corporate Affairs, the official email id of the noticee is ‘avramani1958@gmail.com’ and hence the e-mail was sent in such address.

7. The noticee vide its email dated August 14, 2020, requested for four weeks’ time to file its submissions in reply to the SCN. The noticee was granted additional time to submit its reply in the matter vide email dated September 02, 2020. An opportunity of hearing was also granted to the noticee through video conferencing on Webex platform on September 15, 2020. The noticee availed the opportunity of personal hearing on September 15, 2020 and submitted the following: a. Mr. A. Venkatramani became director of the noticee on December 24, 2008. b. The noticee was not the acquirer of the shares of Sanraa Media during the relevant period.
c. The noticee requested for time till September 18, 2020 for making further submissions in the matter.

8. Vide its email dated September 17, 2020, noticee submitted its final reply in the matter and made following submissions.

a. The allegation made against Eyeliglit in the said SCN are contained in paragraph 25 therein; it is stated that there was a reduction in the shareholding of Eyelight in Sanraa Media Limited ("Sanraa" or "the Company") from 9.93% to 6.23% during the period March 31, 2008 to June 30, 2008 i.e. more than 2%. It is alleged that Eyelight had failed to inform the Company about this change in shareholding of more than 2% as required of them under Regulation 7(1 A) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 ("the Takeover Regulations, 1997").

b. It is evident from the said Regulation that it is an acquirer who is required to make a disclosure to the Company and not the seller/transferor.

c. In this case, Eyelight was the transferor and not the acquirer and therefore, there was no obligation cast on Eyelight under Regulation 7(1 A) of the Takoever Regulations, 1997 to disclose or report the reduction in its shareholding to the Company during the period March 31, 2008 to June 30, 2008.

Therefore, the allegation that Eyelight failed to comply with the requirement of Regulation 7(1 A) of the Takeover Regulations, 1997 is erroneous, false and unsustainable.

CONSIDERATION OF ISSUES AND FINDINGS

9. I have carefully perused the SCN, submissions made by the noticee and all the documents/evidence available on record. The issues that arise for consideration in the present case are:

I. Whether the noticee violated the provisions of the Regulation 7(1A) of SAST Regulations 1997?
II. Does the violation, if any, attract monetary penalty under Section 15A(b) of the SEBI Act?
III. If yes, what should be the quantum of penalty?

10. In this regard, it is pertinent to refer to the relevant provisions of the SAST Regulations which read as under SAST Regulations

To read / download the full judgement, find the enclosed file