The Securities Appellate Tribunal (SAT) has upheld two orders of SEBI imposing a penalty of ₹2 crore on NDTV and ₹20 lakh on the company and the directors of the company. The market regulator had imposed the fines for failing to furnish information on time and failing to comply with listing conditions.
In 2015, the Securities and Exchange Board of India (SEBI) had imposed a fine of ₹2 crore on New Delhi Television for late disclosure of the fact that the company had received a tax demand of ₹450 crore from the income tax department. I-T department had raised the demand after assessing the income of NDTV for the assessment at ₹833.33 for the assessment year 2009-10, against the loss of ₹64.83 declared by the company in its return.
NDTV had received the tax demand in February 2014, but it didn’t inform the stock exchange about the same, thereby violating listing norms of exchange. The Exchanges came to know about the fact three months later, only after the company disclosed it in its annual report. Therefore, SEBI had imposed a fine of ₹2 crore on the company in 2015, as listed companies are required to disclose any “material event” immediately. Of this, ₹25 lakh was imposed for failing to furnish information on time, and ₹1.75 crore fine was imposed for failing to comply with listing conditions
In 2018, SEBI had imposed an additional penalty of ₹10 on NDTV, ₹3 lakhs each of the 3 directors, and ₹3 lakh on the compliance officer Anoop Singh Juneja. Juneja was fined ₹2 lakh for violation of listing norms, and ₹1 lakh for violation disclosure practices. This additional fine on NDTV was imposed under the prevention of insider trading guidelines, while the directors were fined for violating the listing agreement. The three directors fined by SEBI are Prannoy Roy, Radhika Roy and Vikramaditya Chandra. NDTV had filed an appeal with the SAT against the SEBI order in 2018.
The SAT found that NDTV indeed violated clause 36 of the listing agreement by not disclosing the tax demand immediately. The Tribunal ruled that ‘material events’ have to be reported immediately as they have ‘material impact’. Justifying the penalty of ₹25 lakhs for non-disclosure, the SAT said that the AO could have even imposed a penalty of ₹1 crore, as it is a serious violation. The order also said that the ₹1.75 crore penalty for violating listing norms is justified. The SAT order states, “In our opinion, considering the material event which was not disclosed we are of the opinion, that the penalty imposed is just and proper in the circumstances of the case”.
SAT also upheld the additional penalty imposed on NDTV and the personal penalty imposed on three directors in 2018. The order states that the Directors cannot escape their liability of the penalty imposed, because the decision to not disclose the tax demand was a conscious decision taken by the company.
But the SAT said that imposition of the penalty of ₹2 lakh on compliance officer Anoop Singh Juneja was unjustified. The order states that the officer works under the direction of the board of directors, and the officer is not responsible for complying with the listing agreement. But the officer is liable for Corporate Disclosure Practices, and therefore the penalty of ₹1 lakh was upheld.
The full SAT order can be seen below.