Securities Appellate Tribunal
Mr. Kiran Kulkarni vs Sebi on 29 September, 2021
Author: Tarun Agarwala
Bench: Tarun Agarwala
BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Date of Decision: 29.09.2021
Misc. Application No. 851 of 2021
(Delay Application)
And
Appeal No. 609 of 2021
Mr. Kiran Kulkarni
503, Konark Classic,
85 Hill Road, Bandra West,
Mumbai-400 050. ...Appellant
Versus
Securities and Exchange Board of India,
SEBI Bhavan, Plot No. C-4A, G-Block,
Bandra-Kurla Complex, Bandra (East),
Mumbai- 400 051 ...Respondent
WITH
Misc. Application No. 886 of 2021
(Delay Application)
And
Appeal No. 610 of 2021
Mr. Pankaj Kumar
A - 903, Lake Castle, Cliff
Avenue, Hiranandani
Gardens, Powai,
Mumbai- 400 076. ...Appellant
Versus
Securities and Exchange Board of India,
SEBI Bhavan, Plot No. C-4A, G-Block,
Bandra-Kurla Complex, Bandra (East),
Mumbai- 400 051 ...Respondent
2
Mr. Joby Mathew, Advocate i/b Joby Mathew and Associates
for the Appellants.
Mr. Akash Rebello, Advocate with Mr. Nishit Dhruva,
Mr. Hridhay Khurana and Mr. Yash Garach, Advocates i/b
MDP & Partners for the Respondent.
CORAM: Justice Tarun Agarwala, Presiding Officer
Justice M. T. Joshi, Judicial Member
Per: Justice Tarun Agarwala, Presiding Officer (Oral)
1.There is a delay in the filing of the appeals. For the reasons stated in the applications the delay in the filing of the appeals are condoned. The applications are allowed.
2. Both the appeals are against a common order and are being taken up together. The appeals are filed against the order dated April 19, 2021 passed by the Whole Time Member ("WTM" for convenience) of the Securities and Exchange Board of India ("SEBI" for convenience) under Section 11 and 11B of the SEBI Act restraining the appellants from buying, selling or otherwise dealing with securities including mutual funds, in any manner, for a period of two years from the date of the impugned order.
3
3. The facts leading to the filing of the present appeal is, that the appellants are directors of the Company. The Board of the Directors of the Company in its Board meetings dated November 27, 2012 and December 03, 2012 approved buy-back of shares to the extent of 25% of the paid-up capital at a price of Rs. 75/- per share and proposed a dividend of Rs. 2/- per share. These announcements for reasons best known to the Company and its directors remained unexecuted. On this basis, a show cause notice was issued and, after considering the reply, the WTM came to the conclusion that the Company had no intention of fulfilling the said obligations and therefore the announcements were made with the intention to artificially influence the price of the scrip and that these announcements were fraudulent in nature with intention to artificially inflate the price of the scrip of the company.
4. We have heard Shri Joby Mathew, the learned counsel for the appellants and Shri Akash Rebello, the learned counsel for the respondent.
5. The learned counsel for the appellants contended that the respondent has failed to appreciate that at the time when the Company had made the announcements regarding buy-back of 4 shares and dividend there was no reason to apprehend any shortage of funds to meet the expenses relating to the same. It was contended that the announcement for the dividend came pursuant to the profit earned by the company for the half year ending September 2012 but at the end of the financial year due to reasons beyond the control of the Company there was shortage of funds and consequently the buy-back process and the payment of dividend could not be executed. It was thus contended that the appellants had genuine reasons not to implement the announcements and therefore this aspect was not properly considered by the WTM while passing the impugned order.
6. Having heard the learned counsel for the appellants, we find that admittedly the announcement of buy-back of shares and payment of dividend was not executed by the Company. There was failure on the part of the Company and its directors in not implementing the announcements so made by them through their Board meetings. The contention that the Company suffered losses and got embroiled in litigation cannot be a reason for not implementing the announcements. If the Company had good intention and they were unable to implement their announcements then they should have taken 5 immediate steps to withdraw those announcements but the same was not done and consequently the WTM rightly came to the conclusion that the appellants had no intention to implement the announcements. We are also in agreement that failure to implement the announcements was a fraud played by the Company on the investors.
7. For the reasons stated aforesaid, we do not find any merit in the appeals and are dismissed at the admission stage itself without calling for a reply.
8. The present matters were heard through video conference due to Covid-19 pandemic. At this stage it is not possible to sign a copy of this order nor a certified copy of this order could be issued by the Registry. In these circumstances, 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. Parties will act on production of a digitally signed copy sent by fax and/or email.
Justice Tarun Agarwala Presiding Officer Justice M. T. Joshi RAJALA Judicial Member 29.09.2021 KSHMI Digitally signed by RAJALAKSHMI H NAIR Date: 2021.10.01 PK 16:14:54 +05'30' H NAIR