The regulator had in May levied the fine on NHAI as it did not submit the financial results on time for the half-year ended September 30, 2018, and March 31, 2019, as required under theLODR (Listing Obligations and Disclosure Requirement) Regulations.
National Highways Authority of India (NHAI) is listed on BSE and NSE in pursuance of a listing agreement for debt securities and, therefore, is subject to the provisions of the LODR Regulations.
Under the LODR Regulations, an entity is required to file the unaudited half-yearly financial results within 45 days from the end of the half financial year.
Following the Sebi's order, NHAI moved the tribunal urging the delay in filing the unaudited financial results be condoned.
In an order passed on August 27, the tribunal said, "Even though there has been a violation of ...the LODR Regulations but in the peculiar facts and circumstances of the present case which should not be treated as a precedent for other matters, we are of the opinion that the imposition of penalty of Rs 7 lakh in the given circumstances was harsh and excessive".
"Thus, the imposition of Rs 7 lakh upon the Appellant (NHAI) cannot be sustained and is substituted with a warning," it added.
The tribunal noted that NHAI is governed under the NHAI Act, which warrants involvement of a large number of members who are highly ranked officials who are appointed by the government, who simultaneously discharge their duties under various other portfolios.
"It thus becomes slightly tedious and cumbersome to ensure that all the members of the board meeting come together under one roof and get the audited or unaudited financial results approved before the stipulated period," it added.
At times, it is beyond the control of the officers of NHAI to enforce strict compliance of the Sebi's norms, SAT noted.
According to the tribunal, Sebi should have taken this factor into account while considering the application for extension of time to file the financial results.
"The finding of the respondent (Sebi) that there was a repeated failure on the part of the Appellant on seven occasions for not filing the financial results for the financial years 2015-2016 to 2018-2019 cannot be taken into consideration as a ground for imposition of penalty of Rs 7 lakhs in as much as the show cause notice was only confined for violation of...the LODR Regulations for non-filing of the unaudited half yearly financial results for the year ending 30th September, 2018 and 31st March, 2019," the tribunal said.
Sebi's Adjudicating Officer could have taken into consideration the mitigating circumstances while considering the imposition of penalty, the tribunal said.
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