Securities Appellate Tribunal
Mr. Bharatbhai Baldevbhai Shah & Others vs Sebi on 6 October, 2009
BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Appeal No.142 of 2008
Date of Decision: 6.10.2009
1.Mr. Bharatbhai Baldevbhai Shah D-10, Bijal Apartment, Panchwai, Ellisbridge, Ahmedabad.
2. Mr. Ashwin C. Thaker No.723, Janta Nagar, Ramol Road, Ahmedabad.
3. Mrs. Nilaben Sureshchandra Parekh No.6 Abhisa Jni Society, Khanpur, Ahmedabad.
4. Mr. Sureshchandra V. Parekh No.6 Abhisa Jni Society, Khanpur, Ahmedabad.
5. Mr. Somabhai Jordas Patel 12-B Ananddham Co-op Hsg Society Near Kiran Park Navawadaj Ahmedabad.
6. Mrs. Padmaben Chimanlal Panchal No.88-Ramwadi Co-op Hsg. Society Opp. Shantaram Hall, Nirnaynagar, Ahmedabad.
7. Mr. Shah Sudhirbhai Gunvantlal No.12-Shreeji Krupa Near Jain Temple, Maninagar Ahmedabad.
8. Mrs. Bharti Sudhirchandr Shah No.12-Shreeji Krupa Near Jain Temple, Maninagar Ahmedabad.
9. Mr. Atul Dashrathlal Shah 13-Satyam Apartment Jagabai Park, Maninagar, Ahmedabad.
10. Mrs. Mina Atulkumar Shah 13-Satyam Apartment Jagabai Park, Maninagar, Ahmedabad.
11. Mr. Rakesh Mayabhai Shah C/5 Prathana Apartment, Opp. Ankur School, Fateh Nagar, Paldi, Ahmedabad.
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12. Mr. Mayabhai Sarabhai Shah C/5 Prathana Apartment, Opp. Ankur School, Fateh Nagar, Paldi, Ahmedabad.
13. Ms. Bhamini Mayabhai Shah C/5 Prathana Apartment, Opp. Ankur School, Fateh Nagar, Paldi, Ahmedabad.
14. Mr. Harshvadan Nagindas Chudger B/83 Pruthvi Tower Jodhpur Char Rasta Satelite Ahmedabad
15. Mr. Vipul B. Tankaria Bhulabhai Park, Gitamandir Road, Opp. Bank of Baroda, Kankaria Road, Ahmedabad. ........Appellants Versus
1. Securities and Exchange Board of India Plot No.C4-A, 'G' Block, Bandra Kurla Complex, Bandra (East), Mumbai.
2. Darpan Garden Exports Private Ltd.
4 Synagouge Street, 9th Floor, Room No.909, P.S. Burrabazar, Kolkata, West Bengal.
3. Jalco Financial Services Pvt. Ltd.
G-28, Ground Floor, Kalkaji, New Delhi.
4. Pathik Merchandise Pvt. Ltd.
27 Natore Colony, Kolkata, West Bengal.
5. Wilful Finance and Investment Co. Pvt. Ltd. G-28, Ground Floor, Kalkaji, New Delhi. .......Respondents Mr. Zal T. Andhyarujina, Advocate for Appellants. Mr. Kumar Desai, Advocate with Ms. Harshada Nagare, Advocate for Respondent No.1. Mr. Vinay Chauhan, Advocate for Respondents no.2, 3 and 5. None for Respondent no.4.
CORAM : Justice N.K. Sodhi, Presiding Officer Samar Ray, Member Per : Justice N.K. Sodhi, Presiding Officer (Oral) Whether the appellants are persons aggrieved within the meaning of section 15T of the Securities and Exchange Board of India Act, 1992 (hereinafter called the Act) is the primary question which arises for our consideration in this appeal. 3
2. GHCL Ltd. (hereinafter called the company) is a public limited company whose shares are listed on the National Stock Exchange of India Ltd., the Bombay Stock Exchange Ltd., Mumbai and the Ahmedabad Stock Exchange Ltd. The appellants are shareholders of the company and they hold very small number of shares each. The Securities and Exchange Board of India (for short the Board) ordered investigations into the trading in the scrip of the company and pending investigations, it issued directions among others, to the JALCO Group of companies and its associate entities including Respondents no.2 to 5 and its associate entities restraining them from buying, selling or dealing in the shares of the company directly or indirectly. This order was an ex-parte order passed on April 25, 2007 under sections 11(4) and 11B of the Act. Respondents no. 2 to 5 alongwith others were subsequently given a personal hearing by the whole time member of the Board. Investigations have since been completed and by order dated October 22, 2008, adjudication proceedings have been initiated, among others, against Respondents no. 2 to 5 which are pending. Since adjudication proceedings have been initiated, the earlier directions issued under sections 11(4) and 11B of the Act were revoked by order dated 4.11.2008. It is against this order that the present appeal has been filed.
3. We have heard the learned counsel for the parties and are inclined to uphold the preliminary objection raised on behalf of the Board. At the outset, the learned counsel for the Board argued that the appellants are not persons who can be said to be aggrieved by the impugned order and, therefore, the appeal was not maintainable under section 15T of the Act. The relevant part of section 15T reads as under:-
"Appeal to the Securities Appellate Tribunal - (1) Save as provided in sub-section (2), any person aggrieved-
(a) by an order of the Board ...........................
(b) by an order made by an adjudicating officer under this Act, may prefer an appeal to a Securities Appellate Tribunal having jurisdiction in the matter.
(2) to (6) .................................................."
A reading of the aforesaid provision makes it clear that only a "person aggrieved" could file an appeal against an order passed by the Board. Although the words "person aggrieved" have not been defined in the Act, they have a specific connotation and are well understood by courts and tribunals. In Jasbhai Motibhai Desai vs. Roshan Kumar and others AIR 1976 SC 578, the learned judges of the Supreme Court were examining 4 the question of locus standi of the appellants therein and laid down tests to distinguish between persons aggrieved and strangers and busy body of meddlesome interlopers. Persons in the last category were said to be those who interfere in things which do not concern them and act in the name of Pro Bono Publico though they have no interest of the public or even of their own to protect. The learned judges further observed that the distinction between persons aggrieved and strangers was real and laid down the following broad tests in this regard:-
"Whether the applicant is a person whose legal right has been infringed? Has he suffered a legal wrong or injury, in the sense, that his interest, recognised by law, has been prejudicially and directly affected by the act or omission of the authority, complained of? Is he a person who has suffered a legal grievance, a person "against whom a decision has been pronounced which has wrongfully deprived him of something or wrongfully refused him something, or wrongfully affected his title to something? Has he a special and substantial grievance of his own beyond some grievance or inconvenience suffered by him in common with the rest of the public? Was he entitled to object and be heard by the authority before it took the impugned action? If so, was he prejudicially affected in the exercise of that right by the act of usurpation of jurisdiction on the part of the authority? Is the statute, in context of which the scope of the words "person aggrieved" is being considered, a social welfare measure designated to lay down ethical or professional standards of conduct for the community? Or is it a statute dealing with private rights of particular individuals?"
When we apply the aforesaid tests to the facts of the present case, our answer to each test is in the negative. As already observed, the appellants are small shareholders of the company and whatever rights they may have qua the company, they are not concerned with the action sought to be taken by the Board against the erring market players. While ordering investigations, the Board felt that some of the delinquent entities like Respondents no.2 to 5 ought to be restrained from accessing the capital market till such time the investigations are over and subsequently on the completion of the investigations it was of the view that adjudication proceedings should be initiated against them. The Board was fully justified in taking such a view keeping in view the facts as they emerged from the investigations. The appellants cannot be allowed to interfere with such regulatory matters which is the function and duty of the Board and fall within its exclusive domain. They cannot be said to be aggrieved by the impugned order by which the earlier directions restraining Respondents no.2 to 5 from accessing the securities market were withdrawn. They can only be termed as busy body of meddlesome interlopers who are wanting to interfere in matters which do not concern them. 5 Howsoever liberal meaning we may assign to the words "person aggrieved", the appellants cannot fall within this expression having regard to the fact that the Board while taking disciplinary proceedings against the so called delinquent entities deals with their private rights and with particular individuals/entities and strangers like the appellants have no concern with such proceedings. The appellants could be aggrieved by the impugned order only if that order is materially adverse to them. They are required to establish that they have been denied or deprived of something to which they are legally entitled in order to make them persons aggrieved or they may have to show that a legal burden is imposed on them. We do not think that the appellants satisfy these tests. In Jasbhai Motibhai Desai's case (supra), their Lordships held that the proprietor of a cinema theatre holding a license for exhibiting films was not entitled to invoke the jurisdiction of the High Court to challenge a no objection certificate granted in favour of a rival in the trade. In this view of the matter, we have no hesitation in upholding the preliminary objection raised on behalf of the Board which we hereby do.
4. Before concluding, we may notice the judgments relied upon by the learned counsel for the appellants. He cited Bar Council of Maharashtra vs. M.V. Dabholkar and Others (1975) 2 SCC 702 to contend that the words "person aggrieved" should be given a wide meaning so as to entitle the appellants to maintain the present appeal. We have carefully gone through this judgment and find that it does not advance the case of the appellants. Their Lordships observed that the meaning of the words "person aggrieved"
vary according to the context of the statute and in the background of statutes which do not deal with property rights but deal with professional conduct and morality, the aforesaid words must get a liberal interpretation. In that case the learned judges were dealing with the Advocates Act, 1961 wherein the role of the Bar Council was compared to the role of the guardian in professional ethics. In this context, their Lordships made the following observations:-
"The words "person aggrieved" in sections 37 and 38 of the Act are of wide import and should not be subjected to a restricted interpretation of possession or denial of legal rights or burdens of financial interests. The test is whether the words "person aggrieved" include "a person who has a genuine grievance because an order has been made which prejudicially affects his interests". It has, therefore, to be found out whether the Bar Council has a grievance in respect of an order or decision affecting the professional conduct and etiquette."6
Even on the basis of the aforesaid observations which were made in the context of a different statute, the appellants do not satisfy the tests laid down therein because the impugned order does not prejudicially affect their interest. This case does not really support the appellants. Reference was then made to a decision of this Tribunal in Ramprasad Somani vs. Chairman, Securities and Exchange Board of India Appeal no.23 of 2002 decided on September 27, 2002. This was an appeal filed by a shareholder of the Bank of Rajasthan Ltd., which was being taken over by the Tayal Group. The appellant made a complaint that the takeover code had been violated and that the Tayal Group had not come out with a public announcement thereby depriving the appellant of his right to exit the bank as a shareholder. The Board after enquiry concluded that there was no violation of the takeover code and that the Tayal group was not required to make a public announcement. On an appeal filed by the appellant, an objection was taken to the maintainability of the appeal on the ground that the appellant therein was not a person aggrieved. The preliminary objection was overruled and the appeal was rightly held to be maintainable. This case has no parallel with the facts of the case before us. The dispute in that case was whether a public announcement was required to be made under the takeover code and the Board found that it was not required to be made. This deprived the appellant of his right to exit as a shareholder and it was rightly held that he was a person aggrieved. This case is different on facts and does not advance the case of the appellants.
For the reasons recorded above, we uphold the preliminary objection raised on behalf of the Board and hold that the present appeal is not maintainable since the appellants are not persons aggrieved by the order impugned herein. There is no order as to costs.
Sd/-
Justice N.K.Sodhi Presiding Officer Sd/-
Samar Ray Member 6.10.2009 Prepared and compared by RHN 7