BEFORE THE SECURITIES APPELLATE TRIBUNAL

MUMBAI

Date of Decision: 06.01.2023

Appeal No. 1044 of 2022

IFGL Refractories Limited

Sector ‘B’ Kalunga Industrial Estate,

PO: Kalunga 770 031,

Dist: Sundergarh, Odisha

…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

Mr. Nitin Jain, Advocate with Mr. S. K. Singhi and Mr. Ankur

Singhi, Advocates i/b S. K. Singhi & Partners, LLP for the

Appellant.

Mr. Sumit Rai, Advocate with Mr. Ravishekhar Pandey,

Mr. Nishit Dhruva and Ms. Shefali Shankar, Advocates i/b.

MDP & Partners, Advocates for the Respondent.

CORAM: Justice Tarun Agarwala, Presiding Officer

Ms. Meera Swarup, Technical Member

Per: Justice Tarun Agarwala, Presiding Officer (Oral)

1.

The present appeal has been filed against the order of the

Adjudicating Officer (“AO” for convenience) of the Securities

and Exchange Board of India (“SEBI” for convenience) dated

October 18, 2022 imposing a penalty of Rs. 5 lakhs for violation

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of Section 23E of the Securities Contracts (Regulation) Act,

1956 (“SCR Act” for convenience).

2.

The facts leading to the filing of the present appeal is, that

the SEBI conducted an examination of the appellant-Company

to ascertain whether they were in non-compliance of SEBI

Circular dated October 18, 2019 and the provisions of the SEBI

(Listing Obligations and Disclosure requirements) Regulations,

2015 (“LODR Regulations” for convenience).

3.

Based on the investigation a show cause notice dated June

23, 2022 was issued calling upon the appellant to show cause as

to why an enquiry should not be held and penalty should not be

imposed under Section 23E of the SCR Act read with Clause

2(i) of the Listing Agreement for the violations specified in the

show cause notice.

4.

The show cause notice basically alleged that the appellant

had violated the provisions of the SEBI Circular dated October

18, 2019 along with Clause 6 C (I) of the SEBI Circular and

Regulation 4(1)(e) of the LODR Regulations.

5.

The AO after considering the reply and the material

evidence on record held that the appellant had violated SEBI’s

Circular dated October 18, 2019 and Regulation 4(1)(e) of the

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LODR Regulations and accordingly imposed a penalty of Rs. 5

lakhs under Section 23E of the SCR Act.

6.

We have heard Shri Nitin Jain, the learned counsel for the

appellant and Shri Sumit Rai, the learned counsel for the

respondent.

7.

Before we proceed further it would be necessary to extract

the provision of the 23E of the SCR Act is which extracted

hereunder:-

“Penalty for failure to comply with listing

conditions or delisting conditions or grounds.

8.

A perusal of the aforesaid provision indicates that a

penalty can be imposed where the company fails to comply with

the listing conditions or delisting conditions. In Suzlon Energy

Ltd. & Anr. vs. SEBI in Appeal No. 201 of 2018 dated May 03,

2021 this Tribunal had held that penalty under 23E of the SCR

Act cannot be imposed for the violation of the listing conditions

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in as much as Section 23E applies for non-compliance of listing

conditions or delisting conditions of a Company to be listed on

the stock exchange and has nothing to do with the violation of

the listing agreement. This judgement has not been set aside by

a higher Court and is therefore binding on the sub-ordinate

authorities, namely, the AO of SEBI in the instant case.

9.

In the instant case, the violation, if any, committed by the

appellant is of the Circular and has nothing to do with the

violation of the listing agreement or the listing conditions under

23E of the SCR Act. The imposition of penalty under Section

23E is patently erroneous, perverse and has been passed without

any application of mind.

10.In this regard, we find that the appellant had placed

reliance upon