Capital market regulator Sebi has rejected a plea by Alka India promoters to waive off interest imposed on them for delay in paying the penalties in a matter related to fraudulent trade practices in the company's shares.
The Securities and Exchange Board of India (Sebi) had initiated attachment proceedings against Alka India promoters -- Ashok R Panchariya, Shantadevi Panchariya, Ramswaroop Panchariya, Saritadevi Panchariya and Radhadevi Satish Panchariya -- to recover fines of Rs 25 lakh imposed on them on November 13, 2009.
Along with the fines, the individuals were also liable to pay an interest of about Rs 13.67 lakh to Sebi which is calculated from the date of adjudication order (November 13, 2009) till the date of payment of the penalty (June 3, 2014).
Following the recovery notice, the individuals had paid the penalty amount to Sebi but had requested the regulator to waive off the interests levied on the fines and not to proceed further in the attachment proceedings.
"The defaulters like noticees, in spite of having sufficient means to pay, wait till Sebi initiates action for recovery of dues and thereafter contend that they need not pay interest for their default," Sebi said in the order dated August 19.
"If interest is not charged on such wilful defaulters, it will be an incentive for them to commit default and pay penalties imposed by the regulator after many years and that too after initiating recovery proceedings and thereby enjoy benefit/interest on the dues owed to the public exchequer," it added.
It also noted that the individuals had failed to pay the penalty even after their appeals were disposed off by the Securities Appellate Tribunal and the Supreme Court in 2010.
Accordingly, the capital market regulator said Ashok Panchariya and others "are liable to pay interest from the date of adjudication order till the date of payment of the penalty, along with the costs, expenses".
"The dues to Sebi have been worked out as simple interest on Rs 25 lakh at 12 per cent from November 13, 2009 till June 3, 2014 (1,663 days) is Rs 13,66,849 in addition to Rs 1,000 costs, charges and expenses incurred in connection with the recovery proceedings," Sebi said.
As per Sebi norms, entities are liable to pay interest from the date of adjudication order till the date of payment of the penalty, along with the costs and other expenses.
In its November 2009 order, Sebi had found that the promoters had transacted in shares of Alka India in such a manner that led to creation in artificial volumes in the firm's scrip and was designed to create a false market leading to significant price movement in the scrip.
