Securities Appellate Tribunal
Sharmila Raj Thackeray & Ors. vs Sebi on 20 December, 2022
Author: Tarun Agarwala
Bench: Tarun Agarwala
BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Date of Decision : 20.12.2022
Appeal No. 165 of 2020
1.Sharmila Raj Thackeray Flat No.1, 3rd Floor, Krishna Kunj, M.B. Raut Road, 76, Shivaji Park Scheme, Dadar (West), Mumbai - 400 028.
2. Swati Sandesh Mayekar 218, Madhusheela, Bandra Band Stand, Bandra (West), Mumbai - 400050.
3. Sandesh Madhukar Mayekar 218, Madhusheela, Bandra Band Stand, Bandra (West), Mumbai - 400050.
4. Shivani Sandesh Mayekar 218, Madhusheela, Bandra Band Stand, Bandra (West), Mumbai - 400050.
5. Sunetra Gangadher Limaye (through her legal heir Swati S. Mayekar) 169/D, Laxmi Niwas, Dr. Ambedkar Road, Dadar (East), Mumbai - 400 014.
6. Rajan Hemchandra Gupte Rajdeep, 143, Lt Dilip Gupte Road, Mahim, Mumbai - 400016.
2
7. Arun Sadashiv Bhide A-3/6, Satya Darshan Society, Malpa Dongri Road No.3, Andheri (East), Mumbai - 400 093.
8. Madhav Gangadhar Natu 20, Avishkar, 3 Mahant Road, Vile Parle (East), Mumbai - 400057.
9. Shilpa Rajan Gupte Rajdeep, 143, Lt. Dilip Gupte Road, Mahim, Mumbai - 400016.
10. Vibha Ajit Vaze 8, 9, Meghdoot, S. H. Paralkar Marg, Shivaji Park, Dadar (West), Mumbai - 400028.
11. Ajit Mahadev Vaze 8, 9, Meghdoot, S.H. Paralkar Marg, Shivaji Park, Dadar (West), Mumbai - 400028.
12. Vidya Vinayak Wagle D-202, Shiv Parvati Society, Chincoli Bunder Road, Malad (West), Mumbai - 400064.
13. Felicila Lobo Genesis Villa, St. Francis Av.
Santacruz (W), Mumbai - 400054.
14. Prodigy Finvest Pvt. Ltd.
169/A, Mayur Niwas, Dr. Ambedkar Road, Dadar (East), Mumbai - 400 014. ..... Appellants Versus
1. Securities & Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, 3 Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. SMC Global Securities Ltd.
11/6B, Shanti Chambers, Pusa Road, New Delhi - 110005.
3. Sunchan Securities Ltd.
(Official Liquidator of Bombay High Court) Bank of India Building, Fort, Mumbai.
4. Sunil Mansinghani 18/4, Navjivan Society, Mori Road, Mahim, Mumbai - 400016.
5. National Stock Exchange of India Ltd. Exchange Plaza, Plot No.C/1, G Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051. ... Respondents Mr. Somasekhar Sundaresan, Advocate with Mr. Abishek Venkatraman, Mr. Mangesh Sawant, Advocates for the Appellants. Mr. Gaurav Joshi, Senior Advocate with Mr. Mihir Mody, Mr. Arnav Misra, Mr. Mayur Jaisingh, Advocates i/b K. Ashar & Co. for the Respondent Nos. 1 (SEBI).
Mr. Prakash Shah, Advocate i/b Prakash Shah & Associates with Mr. Anurag Bansal, Director for the Respondent No. 2 (SMC Global). None for the Respondent Nos. 3 to 4.
4Mr. Rashid Boatwalla, Advocate with Mr. Juan D'Souza, Advocate i/b MKA & Co. for the Respondent Nos. 5. CORAM : Justice Tarun Agarwala, Presiding Officer Ms. Meera Swarup, Technical Member Per : Justice Tarun Agarwala, Presiding Officer (Oral)
1. The present appeal has been filed questioning the communication dated June 20, 2019 issued by the Assistant General Manager of Securities and Exchange Board of India (hereinafter referred to as 'SEBI') disposing of the appellants letters dated October 17, 2018, November 15, 2018, November 22, 2018, December 12, 2018, May 16, 2019 and May 21, 2019 in the matter relating to SMC Global Securities Ltd. (hereinafter referred to as 'SMC Global').
2. The facts leading to the filing of the present appeal is, that the appellants are investors and invested their securities through the broker, namely, Sunchan Securities Ltd. (hereinafter referred to as 'Sunchan'). The appellants are complainants alleging that SMC Global who is a Clearing Member had wrongly used the securities 5 belonging to the investors (which includes the appellants) and all the clients of its trading member Sunchan.
3. It transpires that the certificate of registration of Sunchan was cancelled by the respondent SEBI on December 8, 2010. Sunchan has gone into liquidation and an Official Liquidator has been appointed by the Hon'ble Bombay High Court. The Whole Time Member (hereinafter referred to as 'WTM') passed an order dated August 2, 2013 against SMC Global prohibiting them from taking up new contracts for a period of three months. This order was challenged by SMC Global before this Tribunal which appeal was dismissed by an order dated January 31, 2014. SEBI passed another order dated April 23, 2014 against the trading member Sunchan directing them to replenish the Investor Protection Fund of National Stock Exchange Board of India (hereinafter referred to as 'NSE') to the extent of Rs. 2.85 crores which was the amount disbursed from NSE towards the claims of investors of Sunchan as a stockbroker.
4. After more than two and half years of the passing of the order dated August 2, 2013, the appellants filed an appeal No. 182 of 2016 before this Tribunal seeking modification of the order dated August 2, 2013. It was urged that the order is incorrect and debarment of 6 three months should be substituted by an order of disgorgement since the clearing member SMC Global had made wrongful gains in collusion with the trading member Sunchan by using the securities belonging to the investors of the clients of Sunchan. This Tribunal by an order dated June 16, 2016 permitted the appellants to withdraw the appeal with liberty to move a representation for redressal of their grievance before SEBI.
5. Pursuant to the order of this Tribunal dated June 16, 2016, the appellants filed a representation which was considered and disposed of by SEBI by an order dated August 9, 2016 directing NSE to consider the complaints of the appellants afresh and decide their claims within two months. This order was again challenged by the appellants by filing Appeal No. 310 of 2016 which was withdrawn by them with liberty to pursue the remedy before NSE. The said appeal was accordingly dismissed as withdrawn by an order dated October 24, 2016.
6. Pursuant to the direction of SEBI dated August 9, 2016, NSE decided the matter by an order dated February 3, 2017 holding that the claims of the appellants are inadmissible. The appellants filed a review which was also rejected by an order dated June 30, 2017. 7 NSE while disposing of the review application stated that the jurisdiction of the Committee is restricted to deciding the claims against the defaulters / expelled members and the issue of disgorgement from SMC Global cannot be considered.
7. Thereafter, Misc. Application No. 25 of 2020 was filed in Appeal No. 310 of 2016 for recall of the order dated October 24, 2016. This application was rejected by the Tribunal by an order dated September 24, 2021. We also find that the appellants filed Appeal No. 118 of 2020 questioning the order dated February 3, 2017 passed by NSE rejecting the claim of the appellants. This appeal was also dismissed by this Tribunal by an order dated September 24, 2021. Thus, the claim of the appellants seeking refund of its investment from its trading member Sunchan was dismissed and the appeal also was dismissed. The order dated August 2, 2013 against SMC Global also attained finality and the appeal filed by the appellants against the said order was also withdrawn with liberty to make a representation. The representation was also disposed of by an order dated August 9, 2016 directing NSE to reconsider the complaint afresh which was decided by NSE on February 3, 2017 and review was rejected on June 30, 2017. The 8 appeal against the order of February 3, 2017 was rejected by this Tribunal on September 24, 2021. Thus, the matter come to an end finally and conclusively.
8. It transpires that certain letters were written by the appellants on October 17, 2018, November 15, 2018, November 22, 2018, December 12, 2018, December 16, 2018 and May 21, 2019 to SEBI in relation to the matter against SMC Global. These letters were disposed of by the impugned communication dated June 20, 2019. We have perused the memo of appeal and we find that no such assertion has been made in any paragraph of the memo of appeal with regard to the contents of the aforesaid letters.
9. The learned counsel for the appellants tried to assert that issue of disgorgement from SMC Global was raised by the appellants in Appeal No. 182 of 2016 wherein the appellants were permitted to withdraw the appeal with liberty to move a representation before SEBI with regard to disgorgement. This disgorgement was, in fact, a reinstitution of the securities of the appellants which has been alleged to have been misused by SMC Global and consequently, SEBI while disposing of the representation had directed NSE to reconsider the claim of the appellants. The effect of the appellants representation 9 relating to disgorgement was nothing else but reinstitution of its shares / securities from SMC Global. This claim was rejected by NSE and the review was also rejected. The appeal filed by the appellants has also been rejected by this Tribunal.
10. Thus, the contention of the appellants that the question of disgorgement has nowhere been considered by the respondent at any stage is patently erroneous.
11. We are further of the opinion that the matter reached finality in 2017 when NSE decided the representation holding that the claim of the appellants was inadmissible. This order of NSE has become final. Subsequent letters written by the appellants presumably on the same subject to SEBI which were disposed of by the impugned communication does not entitle the appellants to re-agitate the issue again on an issue which had attained finality.
12. Before parting, we may observe that this Tribunal in its order of June 16, 2016 in Appeal No. 182 of 2016 made the following observations :-
"5. Jurisdiction of this Tribunal u/s. 15T of the Securities and Exchange Board of India Act, 1992 is restricted to confirm, modify or setting aside the order appealed 10 against and does not extend to enhancing or substituting the order passed by SEBI."
13. The Hon'ble Supreme Court in SEBI vs. Sunil Krishna Khaitan and Ors. [2022 SCC OnLine SC 862] held as under :-
"90. The appeal before the Appellate Tribunal under Section 15T, is the first appeal against the decision of the Board or the adjudicating officer. First appeal is a continuation or is con-terminus with the proceedings of the original adjudicating authority. The first appeal is a valuable right of the party aggrieved, and all questions of fact and law decided by the Board or the adjudicating authority, including exercise of discretion whether within the law, are open for full consideration and examination. The Appellate Tribunal, in the absence of any limit, has plenary powers in disposing of an appeal. It can do what the Board /authorities can do and also direct them to do what they have failed to do. The position as to the power of the Appellate Tribunal has been appropriately summarised in Swedish Match (supra), wherein it has been held :
"84. It may be true that the Board in its impugned order dated 4-6-2022 proceeded on a wrong premise that having regard to the proviso appended to Regulation 12, Regulation 12 would be attracted. But SAT, in our opinion, rightly construed the provisions of Regulations 11 and 12 in arriving at a finding that Regulation 11 would be attracted and Regulation 12 would not be. The Tribunal was entitled to take a different view of the matter from that of the Board with a view to sustain the ultimate result in the appeal in exercise of its appellate power. Such a power in the appellate court / tribunal is akin to or analogous to the principles contained in Order 41 Rule 33 of the Code of Civil Procedure. Even otherwise, before us the judgment of the Tribunal is in question, this Court is required to consider the 11 correctness or otherwise of the Tribunal. In any event, the reasoning of the Tribunal shall prevail over the Board."
14. The Hon'ble Supreme Court clearly held that the Appellate Tribunal has plenary powers and that it can do what the Board or the authorities can do and also direct them what they have failed to do. In view of the said decision, the observation made by this Tribunal is per incurium.
15. For the reasons stated aforesaid, the appeal is a misuse of the process of the court. The appeal lacks merit and is dismissed with no order as to costs.
16. This order will be digitally signed by the Private Secretary on behalf of the bench and all concerned parties are directed to act on the digitally signed copy of this order. Certified copy of this order is also available from the Registry on payment of usual charges.
Justice Tarun Agarwala Presiding Officer Ms. Meera Swarup RAJALA Digitally signed by KSHMI RAJALAKSHMI HARISH NAIR Technical Member 20.12.2022 HARISH Date:
2022.12.26 NAIR 15:42:00 +05'30' PTM