SAT reduces fine on Jubilant Life Sciences to Rs 5 lakh

The Securities Appellate Tribunal (SAT) on Thursday reduced the penalty on Jubilant Life Sciences to Rs 5 lakh, levied by markets regulator Sebi for violating norms pertaining to price-sensitive information.

The regulator had imposed a fine of Rs 10 lakh on the firm in January 2018 for making delayed disclosure to the exchanges on various instances regarding price-sensitive information.

"We have found that the appellant in... Jubilant Life Sciences would be liable for penalty only on one count i.e. for non-disclosure of the China warning immediately. The penalty accordingly is reduced to Rs 5 lacs," the tribunal said.

Moreover, Sebi had also levied a penalty of Rs 10 lakh each on the promoters -- Jubilant Stock Holding, Shyam Sunder Bhartia and Hari Shankar Bhartia -- as well as the firm's Senior Vice-President Amit Arora for trading in the shares while in possession of unpublished price-sensitive information.

The tribunal has upheld the fine imposed on the promoters and vice-president of the firm.

Sebi in its order passed in January 2018 concluded that Jubilant Life Sciences had violated the listing agreement, while the other four entities had contravened Prohibition of Insider Trading Regulations.

The violations pertain to instances during 2013 and 2014.

The drug firm had announced that one of its manufacturing facility in Quebec, Canada, had been issued a warning letter dated February 20, 2013, by the USFDA. The letter was received by vice-president (operations) of Jubilant HollisterStier (JHS), Canada, on February 22 and the same was informed to Shyam Bhartia, Hari Bhartia and Arora.

However, the company made a delayed announcement about it only on February 27, according to Sebi.

Besides, the USFDA served a warning letter dated November 27, 2013, to a manufacturing facility in Spokane, Washington. An announcement about the warning letter was made to the exchanges only on December 5, 2013, even as it was received by the company on December 1.

In another instance, Sebi had noted that China's commerce ministry on May 28, 2013, announced imposing provisional duties on JHS, as well as on other Indian producers and Japanese producers.

While the Chinese ministry's decision was expected to have an impact on the JHS' business, the company made an announcement about the same only on July 25, 2013, with a delay of around two months, Sebi had said.

Additionally, the drug firm had also received communication on February 25, 2014 from the USFDA, classifying its pharmaceutical manufacturing facility at Montreal, Canada as 'Acceptable'. However, an announcement in this regard was made only on February 27.

However, the tribunal dismissed Sebi's reasoning for levying fine on the firm for disclosure regarding the Washington warning and Canada acceptance letter saying that "in our view, the disclosure was made at the earliest opportune moment by the appellant of the Washington warning".

It said that the firm is liable to pay fine only on one count, for non-disclosure of the China warning immediately.