Securities Appellate Tribunal
M/S. Amadhi Investments Limited vs Sebi on 3 August, 2011
BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Appeal No.186 of 2010
Date of decision: 3.8.2011
M/s. Amadhi Investments Limited
1st Floor, Shop No.2, 163,
Patel Vyas Opposite Memnagar Petrol Pump
Near Kodiyar Mata Mandir, Memnagar,
Ahmedabad - 38005. ..... Appellant
Versus
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A,
G - Block, Bandra Kurla Complex,
Mumbai - 400 051. ......Respondent
Mr. Somasekhar Sundaresan, Advocate with Mr. Paras Parekh and Ms. Anamika Dubey, Advocates for the Appellant.
Mr. Kumar Desai, Advocate with Ms. Harshada Nagare, Advocate for the Respondent. CORAM : Justice N.K. Sodhi, Presiding Officer P.K. Malhotra, Member S.S.N. Moorthy, Member Per : Justice N.K. Sodhi, Presiding Officer It is not necessary to state the facts in detail as we are remanding the case to the Securities and Exchange Board of India (for short the Board) for a fresh trial. This appeal is also an offshoot of the Initial Public Offerings (IPO) scam that was unearthed by the Board. The Board found that the scam had been perpetrated by certain entities that opened many demat accounts in fictitious/benami names and these entities cornered/acquired the shares of those companies allotted in the IPOs by making large number of applications of small value so as to make them eligible for allotment under the retail category. The strategy adopted was that subsequent to the receipt of the IPO allotment, these fictitious/benami allottees transferred the shares of their principals who have been described as key operators who controlled their accounts and who, in turn, transferred most of the shares to the financiers who had made available funds for executing the game plan. In view of the booming market, the key operators in some 2 cases and the financiers in most of the cases sold most of the shares on the first day of listing or soon thereafter thereby making a windfall gain of the price difference between the issue price and the listing/sale price. The appellant before us is alleged to have played the role of a financier by financing some of the transactions of one of the key operators namely M/s. Sugandh Estates and Investment Pvt. Ltd. (for short Sugandh). The show cause notice dated December 16, 2008 issued to the appellant alleges that it had financed the transactions of Sugandh in 3 different IPOs of IDFC, Sasken Communications and FCS Software. It is pertinent to mention here that the Board had initiated proceedings against Sugandh also under sections 11 and 11B of the Securities and Exchange Board of India Act, 1992 (for short the Act) and also adjudication proceedings under Chapter IVA of the Act for imposition of monetary penalties for having played the role of a key operator in the scam. On receipt of the two show cause notices, Sugandh filed its replies and thereafter went in consent proceedings by making an application for a consent order in terms of the circular dated April 20, 2007 issued by the Board. By order dated 10.2.2009 two whole time members of the Board accepted the recommendations of the High Powered Committee and accepted the revised terms as offered by Sugandh and disposed of all the pending proceedings against it in terms of the directions contained therein. The consent order is without denial or admission of the guilt.
2. As already stated, the appellant had also received a show cause notice dated December 16, 2008 and it asked for inspection of the records available with the Board. The grievance of the appellant is that only partial inspection of the record was allowed in which the documents which the Board had collected from the appellant during the course of the investigations had been made available and no other record was allowed to be inspected. The appellant then filed a detailed application dated May 15, 2009 with a request to the Board to furnish some documents including the statements and replies, if any, given by any representative of Sugandh and also a copy of the ledger account of the appellant as maintained by Sugandh in its books of accounts. Copies of demat statements of Sugandh showing transactions in the scrips of IDFC, Sasken Communications and FCS Software. Copies of several other documents were also sought which were declined. The appellant claims that since the relevant documents were not made available, it could 3 not file its reply to the show cause notice. The whole time member by his order of April 6, 2010 found the appellant guilty of the charges levelled against it. The appellant has been found to have violated section 12 A of the Act and Regulations 3 and 4(1) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003. The appellant has been restrained from dealing in the securities market for a period of one year from the date of the order and has also been directed to disgorge the unlawful gain of ` 98,77,166 including interest which it is said to have made as a result of having financed the transactions of Sugandh in the aforesaid 3 IPOs. Hence this appeal.
3. We have heard the learned counsel for the parties. The primary grievance of the appellant is that it was not furnished with the relevant documents nor was it allowed to inspect the records which prevented it from filing a reply to the show cause notice. I find merit in this contention. As already noticed, the appellant is said to have financed the transactions of Sugandh in the 3 IPOs. It wanted copies of the statements, if any, recorded on behalf of Sugandh and also the replies filed by it to the show cause notices issued to it to know what stand it had taken qua the allegations levelled against it. Similarly, the ledger account of the appellant that was maintained by Sugandh in its books of account was relevant and so also the demat statements of Sugandh showing the transactions in the 3 scrips for which the appellant is said to have financed it to corner the shares. Since these documents were not furnished to the appellant nor was it allowed full inspection of the record, I am clearly of the view that the principles of natural justice were grossly violated and the appellant was prevented from filing a proper reply to the show cause notice. The application filed by the appellant for the supply of documents has been rejected by the whole time member primarily on the ground that most of the documents copies of which were sought by the appellant were not being relied upon by the Board in the show cause notice. I do not find any merit in this ground of rejection. Documents which are relevant for the purpose of preparing the defence ought to be furnished to the delinquent irrespective of the fact whether they are being relied upon by the Board. The learned counsel for the respondent strenuously argued that the documents on which the Board does not place reliance are not required to be furnished to the delinquent and he cited our recent decision in Price Waterhouse vs. Securities and 4 Exchange Board of India Appeal no.8 of 2011 decided on June 1, 2011 wherein one of us (Presiding Officer) observed as under:-
"During the course of these investigations the Board has collected a plethora of documents/material and recorded statements of very large number of persons and basing itself on a part of that material and relying on some of the statements recorded, it has issued the show cause notices levelling very serious charges against the appellants. The appellants have a lurking fear that the Board has selectively picked up that material and relied upon those statements which go against the former and left out the rest which could support the appellants........................................... ......................................................................................... I am also of the view that fairness demands that the entire material collected during the course of investigations should be made available for inspection to the person whose conduct is in question. Whether it helps him or not is irrelevant. Equally immaterial is the fact that the authority is or is not relying upon the same. The authority may not rely upon it but the delinquent could in support of his case. The reason is that every enquiry has to conform to the basic rules of natural justice and one of the elementary principles is that every action must be fair, just and reasonable. Withholding evidence whether exculpatory or incriminatory is neither fair nor just. In Kashinath Dikshita v. Union of India AIR 1986 S.C. 2118 the Supreme Court in similar circumstances very aptly observed in para 9 of their order as under:
"If only the disciplinary authority had asked itself the question : "What is the harm in making available the material?" and weighed the pros and cons, the disciplinary authority could not reasonably have adopted such a rigid and adamant attitude. On the one hand there was the risk of the time and effort invested in the departmental enquiry being wasted if the Courts came to the conclusion that failure to supply these materials would be tantamount to denial of reasonable opportunity to the appellant to defend himself. On the other hand by making available the copies of the documents and statements the disciplinary authority was not running any risk. There was nothing confidential or privileged in it. It is not even the case of the respondent that there was involved any consideration of security of State or privilege."
The aforesaid observations apply with full force to the case in hand. I wonder what prejudice would be caused to the Board if the entire material collected by it is shown to the appellants. It could only advance the cause of justice. The purpose of the enquiry which the Board is conducting, like any other enquiry, is to reach at the truth and in pursuit of this purpose evidence which is oral and documentary has been collected. It is possible that the whole evidence is against the appellants. Equally, it may be that the evidence is partly in their favour and the rest of it is overwhelmingly against them. Some of it may even seem irrelevant to the Board. Yet, the issue is whether the Board can sift and select the material to be provided to the appellants and base the show cause notice on that and withhold the rest on the plea that it is not relying on the same. I am of the firm view that the Board is not entitled to select and supply as that would be most unfair and unjust. In the very nature of things, the Board would rely upon only the material that supports its case against the appellants and not on the one that supports them and if this position is accepted as correct, the Board might succeed but the truth shall be sacrificed and justice shall be the casualty. Such a course shall be unjust and unfair and I cannot persuade myself to uphold it. As already observed, the Board is under a duty to find 5 the truth and if it is permitted to keep back any material, the truth may not be found resulting in injustice. In Regina v. Leyland Justices, Ex parte Hawthorn (1979) Q.B. 283, the applicant was the driver of a car which collided with another car being driven in the opposite direction. Two witnesses gave statements to the police, but those statements were not disclosed to the applicant, who did not know of the existence of the witnesses. He was charged with driving without due care and attention, contrary to section 3 of the Road Traffic Act 1972. The prosecution did not call the witnesses to give evidence and the applicant was convicted. His insurers then received the police report on the accident which referred to the statements of those witnesses. On an application for an order of certiorari to quash the conviction, Lord Widgery C.J. of the Divisional Court with whom May and Tudor Evans JJ concurred, held that there was a clear denial of natural justice to a defendant which had deprived him of a fair trial and certiorari was the appropriate remedy even when it was the prosecution and not the tribunal which had erred by failing to observe the rules of natural justice. The learned Judges held that when a defendant was deprived of the elementary right to be notified of material witnesses known to the police, certiorari should issue to quash the conviction. This view was followed in R v. Blundeston Prison Board of Visitors, ex parte Fox-Taylor (1982) 1 All ER 646 where, as a result of a fight with a fellow prisoner, the applicant was charged with an offence against discipline and brought before the board of visitors of the prison. He denied that he was guilty of the charge. He gave evidence in his defence but called no witnesses to support his account of what had happened because he was unaware that there were any. After hearing evidence from the other prisoner involved in the fight and the prison officer in charge of the case, the board found the applicant guilty and, in consequence, he lost 90 days' remission. The applicant subsequently discovered that another prisoner had witnessed the fight and that, prior to the hearing before the board of visitors, that prisoner had reported the fact to the prison officer in charge of the case. The prison authorities never brought the existence of the other prisoner as a potential witness to the attention of the applicant or the board of visitors. The applicant applied to the court for an order of certiorari to quash the board's decision contending that because he had been denied the opportunity of having a witness who could have given evidence in support of his defence, there had been a breach of the rules of natural justice. Upholding the plea of the applicant, Phillips J of the Queen's Bench Division held that where there was an inquiry by a board of visitors, the prison authorities were under a duty to take such steps as were reasonably practicable in the circumstances to see that the names of potential witnesses were brought to the attention of the board so that the board could make a full and fair investigation. Since there was no reason why the board should not have been informed of the witness's existence and since the inaction of the prison authorities had substantially prejudiced the applicant by depriving him of an opportunity of calling the witness and thereby caused him to lose 90 days' remission, there had been a breach of the rules of natural justice. The view taken in the aforesaid cases including that of the Supreme Court in Kashinath Dikshita's case (supra) supports the submissions made on behalf of the appellants. Moreover, Board is a statutory authority and it is 'State' as defined in Article 12 of the Constitution and its actions must conform to Part III thereof which can be tested on the touchstone of Article 14. It cannot act arbitrarily and its actions must be just and fair. I cannot agree with the learned Advocate General that since no request had been made on behalf of the appellants, they are not entitled to have access to the entire material. How could they make such a request when they were not aware of the material that was collected by the Board behind their back during the course of the investigations. The rules of natural justice would have been met if the Board had allowed them full access to the material collected by it during the course of the investigations while giving them inspection leaving it to 6 them to use that material in whatever manner they wanted to. In this view of the matter, I hold that the Board was not justified in allowing partial inspection of the material to the appellants and that they should have been given access to the entire material collected during the investigations. Not having done this, the principles of natural justice have been violated." These observations fully apply to the case in hand. It must be remembered that gone are the days when public bodies and statutory regulators could work in the cover of darkness and keep back certain documents from the delinquents for different technical reasons. Today we are in an era where the Right to Information Act is in place and the need of the hour is that public bodies and statutory regulators function transparently in the open gauge of all concerned. Sunlight is the best disinfectant and public faith in these statutory bodies would be further strengthened if they function transparently. There is nothing confidential or privileged in the documents sought for. This is not a case involving security of state. The Board must allow full inspection of the record. Since we are accepting the plea that there has been violation of the principles of natural justice, it is not necessary for us to examine the other contentions raised by the learned counsel for the parties which are kept open.
In the result, the appeal is allowed and the impugned order set aside. The case is remanded to the Board with a direction that the appellant be allowed complete inspection of the records pertaining to the charge levelled against it in the show cause notice and thereafter allow the appellant to file its reply and proceed further in accordance with law. The matter is quite old and, therefore, it would be appreciated if the proceedings are expedited and concluded at the earliest. There is no order as to costs.
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Justice N.K.Sodhi Presiding Officer 3.8.2011 RHN 7 Per : P. K. Malhotra, (for self and S. S. N. Moorthy) We have the privilege of going through the order prepared by learned Presiding Officer and we agree with him that the case be remanded to the Board because non furnishing of certain documents to the appellant has resulted in violation of principles of natural justice and the appellant was prevented from filing a proper reply to the show cause notice. However, with due respect, we are unable to persuade ourselves for issue of a direction to the Board that the appellant be allowed complete inspection of the records. In a recent order of this Tribunal in the case of Price Waterhouse, referred to above, we have observed that it is elementary principle of law that a person who is required to answer the charge must know not only the accusation but also the testimony by which the accusation is supported. We have also observed that he must be given a fair chance to hear the evidence in support of the charge and to put such relevant questions by way of cross-examination as he desires. He should also be given a chance to rebut the evidence laid against him. The foundation of a show cause notice is the statements of witnesses which are referred to and relied upon in the show cause notice and in case the delinquent is not allowed copies of the statements and cross-examination of the witnesses relied upon in the show cause notice, it will lead to gross violation of principles of natural justice. On the issue whether the delinquent should be allowed inspection of all the material that might have been collected during the course of investigation but not relied upon in the show cause notice, we have observed as under:-
"16. We have given our thoughtful consideration to the prayer made by the appellants. After hearing both the parties and perusing the record, we are inclined to agree with learned Advocate General that in the facts and circumstances of this case, it is not appropriate nor it is the requirement of principles of natural justice that appellant should be allowed inspection of all the material that might have been collected during the course of investigation but has not been relied upon in the show cause notice. In the case law discussed above, it has been abundantly made clear that what particular rule of natural justice should apply to a given case must depend to a great extent on the facts and circumstances of the case, the framework of the law under which the inquiry is held and the constitution of the Tribunal or body of persons appointed for the purpose. There is no provision in the Act that all material collected during the course of investigation should be made available to the appellant. Mr. Janak Dwarkadas is right when he argues that this case is sui generis. As per promoter's own admission, the accounts were manipulated / forged for a number of years. A fraud of worst kind was perpetrated in the affairs of a listed company which had international ramifications. The shares of Satyam are listed in the stock exchanges outside the country also. It is a 8 matter of record that even the Government had to intervene and handover the affairs of Satyam to a Board constituted by the Central Government to ensure that country's international reputation is not adversely affected. It is also a matter of record that many government agencies including the Central Bureau of Investigation, Enforcement Directorate and the Income Tax Department are investigating into the affairs of Satyam to see what kind of violation of law has been committed so that appropriate action can be taken against persons involved in the fraud. The present show cause notice has been issued by the Board on the basis of evidence collected by it which prima-facie shows that there might have been complicity of the auditors in manipulation of accounts and they might have aided and abetted the company in making such a large scale manipulation and that too for a number of years. If any material collected during the course of investigation has not been relied upon in the show cause notice, it will not deprive the appellant to produce its defence before the Board to show that it was not a party to the fraud. In our this view, we are supported by the judgment of the Supreme Court in the case of Natwar Singh vs Director of Enforcement (2010) 13 SCC 255 where the Apex Court has observed that even the principles of natural justice do not require supply of documents upon which no reliance has been placed by the authority to set the law into motion. Supply of relied on documents based on which the law has been set into motion would meet the requirements of the principles of natural justice. The situation may be different in a criminal case where the investigation report is placed before the court and the accused person asks for copy of the material collected during the course of investigation. This is not so here. In the facts and circumstances of the present case, we are of the considered view that the appellants are not entitled to the material collected during the course of investigation by the Board which has not been relied upon in the show cause notice. This prayer of the appellants is, therefore, rejected."
2. For the reasons given hereunder, we are of the considered view that the legal position discussed above squarely applies to the facts of the present case also. Let us now look at the facts. The appellant received a show cause notice dated December 16, 2008 and it asked for inspection of records available with the Board. As noted in the earlier part of this order, the appellant was allowed partial inspection of the record. The appellant then filed a detailed application dated May 15, 2009 furnishing a list of additional documents intended to be inspected. It was also stated that the list was not exhaustive but only illustrative and inspection of the following documents was sought:-
"1. Statement and replies, if any given by any representative of M/s Sugandh Estate and Investments Pvt. Ltd since investigation in the IPO of IDFC, Sasken Communication and FCS Software etc.
2. Order including Consent Order, if any passed against M/s Sugandh Estate and Investments Pvt. Ltd.
3. A copy of the ledger account of M/s Amadhi, furnished by M/s Sugandh Estate and Investments Pvt. Ltd from its books of accounts.
4. Copy of all Demat statement of M/s Sugandh Estate and Investments Pvt. Ltd showing transaction of IDFC, Sasken Communication and FCS Software.9
5. Copy of all Bank statement of M/s Sugandh Estate and Investments Pvt. Ltd showing transaction of IDFC, Sasken Communication and FCS Software.
6. Copy of Documents, Statements, Reports, communication or any other materials showing and establishing that M/s Sugandh Estate and Investments Pvt. Ltd acted as key operators and cornered shares in various IPO's including IDFC, Sasken Communication and FCS Software in concert with noticee.
7. Copy of Documents, Statements, Reports, communication or any other materials relating to the subscription and allotment of those cornered shares in retail category and role of RTA.
8. Copy of Order, if any, passed till date, Documents, Statements, Reports, communication or any other materials relating to the Karvy Group.
9. Copy of Documents, Statements, Reports, communication or any other materials relating to the observations that "the noticee has defrauded the ...... and standing as ultimate beneficiary in connection with the IPO of above mentioned companies."
10. Copy of Documents, Statements, Reports, communication, extracts or any other materials relating to reference if any received from various Government agencies like RBI, SFIO, Parliamentary Standing Committee and other agencies indicating our role or involving our name therein.
11. Copy of Documents, Statements, Reports, communication or any other materials relating to the basis on which logical conclusion, claimed to have been arrived at by the Board."
Since inspection of these documents was not allowed the appellant chose not to appear before the whole time member and the whole time member passed the impugned order on merits after considering the show cause notice, the submissions of the appellant and other material on record. In the said order, he has also dealt with the letter dated May 15, 2009 and rejected request of the appellant for inspection of additional documents observing as under:-
"4.1 Amadhi submitted that without inspection of the additional documents listed in its letter dated May 15, 2009, it is handicapped to defend itself. The said letter was perused. It was observed that Amadhi was asking for documents which in the opinion of Mr. Kharidia could have been relied upon by SEBI to determine its role. Vide letter dated February 24, 2010 stated that the list of documents stated in the letter dated May 15, 2009 was merely illustrative and it might seek further documents. The list was perused. The first item listed the statements, if any, of SEIPL. The presenting officer stated that SEBI was not relying on such statements for the charge. The second item listed consent order passed by SEBI against SEIPL. The presenting officer responded that SEBI was not relying on such order for the charge. Besides, the consent orders are available in public domain. A perusal of the other additional documents sought for inspection indicated that these were either available 10 in public domain, or not being relied upon by SEBI for the charge or have no bearing on the matter in hand. For example, Amadhi has sought documents relating to any reference received from parliamentary standing committee indicating its role. The presenting officer clarified that the charge relies mostly on demat and bank statements of Amadhi which establish the flow of funds and securities between Amadhi and the KO and these have already been provided. I agreed with the presenting officer. I found that Amadhi attempting to use SEBI to gather even those documents which it did not need for its defence, with the sole aim of delaying the disposal of the proceedings. SEBI cannot be obliged to provide the documents which have no bearing on the matter or which, in the opinion of Mr. Kharidia, could have been relied by SEBI. Moreover, there was no dispute about the transactions. Hence the demand for inspection of additional documents was rejected."
3. It is settled legal position that an authority holding an inquiry resulting in civil consequences should conduct inquiry in accordance with the procedure laid down in the rules. In case no rules are laid down for conducting an inquiry, the authority is required to follow the principles of natural justice. The present proceedings against the appellant were initiated under Sections 11 and 11B of the Act. While the Central Government has framed rules, namely, the Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 for conducting adjudication proceedings under Chapter VIA of the Act, no such rules have been framed for exercise of the powers by the Board under Sections 11 or 11B of the Act. The only requirement under the Act for exercising these powers is that before or after passing such order, the Board is required to give an opportunity of hearing. Needless to say that such opportunity of hearing cannot be an empty formality but an effective opportunity following the principles of natural justice. Do the rules of natural justice require that an authority must allow inspection of all the material in its possession which is not even referred to or relied upon in an inquiry against the delinquent? We are of the considered view that the answer to this issue has to be in the negative. It needs no over emphasis that the aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. In a catena of cases the Apex Court has observed that what particular rule of natural justice should apply to a given case must depend to a great extent on the facts and circumstances of that case, the framework of the law under which the enquiry is held and the constitution of Tribunal or body of persons appointed for that purpose. It has also been held by the Apex Court that while applying the principles of natural justice it must be borne in mind that they are not immutable but flexible and they 11 are not cast in a rigid mould and they cannot be put in legal straight jacket. Whether the requirements of natural justice have been complied with or not has to be considered in the context of the facts and circumstances of a particular case. (See Ravi. S. Naik vs. Union of India AIR 1994 SC 1558). In the case of Natwar Singh vs. Director of Enforcement (2010) 13 SCC 255 the Hon'ble Supreme Court has observed that "the principles of natural justice are not intended to operate as roadblocks to obstruct statutory inquiries. Duty of adequate disclosure is only an additional procedural safeguard in order to ensure the attainment of fairness and it has its own limitations. The extent of its applicability depends on the statutory framework." (emphasis supplied) In this case the issue before the Supreme Court was whether a noticee served with show cause notice under Rule 4(1) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 is entitled to demand furnishing of all the documents in possession of the adjudicating authority including those documents upon which no reliance has been placed to issue a notice requiring him to show cause why an enquiry should not be held against him. This is how the Court has answered the issue:-
"In this regard, the learned Senior Counsel for the appellant pressed into service the doctrine of duty of adequate disclosure which according to him is an essential part of the principles of natural justice and doctrine of fairness. A bare reading of the provisions of the Act and the Rules do not support the plea taken by the appellants in this regard. Even the principles of natural justice do not require supply of documents upon which no reliance has been placed by the authority to set the law into motion. Supply of relied on documents based on which the law has been set into motion would meet the requirements of the principles of natural justice. No court can compel the authority to deviate from the statute and exercise the power in altogether a different manner than the prescribed one."
In the case in hand, in the absence of any rules for conducting inquiry for exercise of powers under Sections 11 & 11B of the Act, the Board is only required to conduct the inquiry in accordance with the principles of natural justice. The appellant is said to have financed the transactions of Sugandh in 3 IPOs namely IDFC, Sasken Communication and FCS Software. The details of finance alleged to have been provided by the appellant to Sugandh and shares received by the appellant from Sugandh are also given. Admittedly, proceedings were initiated by the Board against Sugandh also which were disposed of in terms of the consent order passed by the Board. Since the charge against the appellant is of financing the IPO transactions entered into by Sugandh, surely the 12 material available with the Board relating to Sugandh which is the basis of the charge against the appellant is relevant for the appellant to enable it to prepare its defence. The Board cannot deny inspection of such material to the appellant. Since the allegation against the appellant in the show cause notice is of acting as a financier of Sugandh, we are of the considered view that documents relating to Sugandh were necessary for the appellant to prepare its defence. Not allowing inspection of these documents, if available with the Board, has deprived the appellant in making a proper representation. During the course of hearing, the respondent was asked to file an affidavit as to whether statement of any representative of Sugandh was recorded during investigation or at any stage of the proceedings. In the affidavit filed on August 1, 2011, it is stated that statement of any representative of Sugandh was not recorded by the Board in the proceedings against it. The Board has also stated that consent order passed by the Board in the case of Sugandh is also in public domain. Learned counsel for the appellant, therefore, has not insisted for allowing inspection of the said consent order. However, in respect of other documents at serial nos. 3 to 6, we find that all these documents relate to transactions by Sugandh in relations to three IPOs. Denial of inspection of these documents to the appellant, in our opinion, has prevented it from making effective defence in respect of the charge. However, we fail to understand how the appellant has been deprived of making a proper representation in refusing inspection of documents referred to at serial nos. 7 to 11 of the said letter. None of these documents have been referred to or relied upon either in the show cause notice or in the impugned order. If any material collected during the course of investigation has not been relied upon in the show cause notice, it will not deprive the appellant to present his case before the Board. We have no hesitation in holding that the whole time member was right in observing that inspection of these documents was asked for with the sole aim of delaying the disposal of the proceedings and that the Board is not obliged to provide inspection of these documents.
4. We are, therefore, of the considered view that the appellant is not entitled to inspection of complete records pertaining to the case. In fact, no such prayer was made to the Board and no such prayer has been made in the appeal. The argument of learned counsel for the appellant was that the principles of natural justice have been violated as 13 the Board has not allowed inspection of all the documents as requested by the appellant and more particularly those mentioned in the letter dated May 15, 2009.
For the reasons recorded above, we allow the appeal and set aside the impugned order. The case is remanded to the Board with a direction that the appellant be allowed inspection of (i) replies, if any, given by the representative of Sugandh relating to investigation in the IPO of IDFC, Sasken Communication and FCS Software Ltd. and (ii) documents referred to at serial nos. 3 to 6 of the letter dated May 15, 2009 of the appellant and thereafter allow the appellant to file its reply and proceed further in accordance with law.
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P. K. Malhotra Member Sd/-
S. S. N. Moorthy Member Order of the Tribunal:
The appeal is allowed and the impugned order set aside. The case is remanded to the Board with a direction that the appellant be allowed inspection of (i) replies, if any, given by representative of Sugandh relating to investigation in the IPOs of IDFC, Sasken Communication and FCS Software Ltd. and (ii) documents referred to at serial nos. 3 to 6 of appellant's letter dated May 15, 2009 and thereafter allow the appellant to file its reply and proceed further in accordance with law. The matter is quite old and, therefore, it would be appreciated if the proceedings are expedited and concluded at the earliest.
There is no order as to costs.
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Justice N. K. Sodhi Presiding Officer Sd/-
P. K. Malhotra Member Sd/-
S. S. N. Moorthy Member 3.8.2011 Prepared & Compared by ptm