Securities Appellate Tribunal
Igl Finance Ltd. & Anr. vs Sebi on 5 August, 2021
Author: Tarun Agarwala
Bench: Tarun Agarwala
BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Date of Hearing : 29.06.2021
Date of Decision : 05.08.2021
Misc. Application No. 365 of 2021
And
Appeal No. 256 of 2018
1. IGL Finance Ltd.
Registered Ofice :
A1, Industrial Area, Bazpur Road,
Kashipur, Udham Singh Nagar,
Uttarakhand - 244713.
Head Office :
2B, Sector- 126, Noida
Gautam Budh Nagar,
Uttar Pradesh 201304.
Surya Mahal, 2nd Floor,
5, Burjorji Bharucha Marg, Fort,
Mumbai - 400023.
2. Ms. Smita Bhartia
Residing at S-5, Panchsheel Park,
1st Floor, Opposite Panchsheel Club,
New Delhi - 110 017.
...Appellants
Versus
1. Securities & Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051.
2
2. Mr. Joseph Massey
702, C Wing, Trans Residency,
MIDC Seepz, Off Mahakali Caves Road,
Andheri (E), Mumbai - 400 093.
3. Mr. Shreekant Javalgekar
Flat No. 1002, 10th Flr., Tower III,
The Orchard Residency, LBS Marg,
Behind R City Mall, Ghatkopar (West),
Mumbai - 400 086.
4. Mrs. Asha Shreekant Javalgekar
(Deceased)
Flat No. 1002, 10th Flr., Tower III,
The Orchard Residency, LBS Marg,
Behind R City Mall, Ghatkopar (West),
Mumbai - 400 086.
5. Mr. Paras Ajmera
501, 5th Floor, Sanskruti
North South Road No. 9,
Hatkesh CHSL, JVPD Scheme,
Vile Parle West, Mumbai - 400 056.
6. Mr Anjani Sinha
1405, Panchvati-A, 14th Floor,
Mumbai - 400 072.
7. Mr. Tejal Shah
304, 3rd Floor, 10th Road,
JVPD Scheme, Vile Parle (W),
Mumbai - 400 049.
8. Mr. Mehmood Vaid
A 2/7: 2 Sneh CHS Ltd.,
Plot No. 16, Sector 19A,
Nerul, Navi Mumbai - 400 076. ... Respondents
3
Mr. Ankit Lohia, Advocate i/b Mr. Birrul Ali, Advocate o/b Bellator
Legal for the Appellants.
Mr. Shyam Mehta, Senior Advocate with Mr. Mihir Mody,
Mr. Arnav Misra, Mr. Mayur Jaisingh, Advocates i/b K. Ashar & Co.
for the Respondent Nos. 1.
Mr. Vinay Chauhan, Advocate with Mr. K. C. Jacob, Advocate i/b
Corporate Law Chambers India for the Respondent Nos. 2 & 3.
Mr. Somasekhar Sundaresan, Advocate with Mr. Abishek
Venkatraman, Mr. Joby Mathew, Mr. Anshuman Sugla, Mr. Arihant
Agarwal and Ms. Tanya Gupta, Advocates i/b Joby Mathew and
Associates for the Respondent Nos. 5.
None for the Respondent Nos. 6.
Mr. Vikram Nankani, Senior Advocate i/b Finsec Law Advisors for
the Respondent Nos. 7.
Mr. Somasekhar Sundaresan, Advocate with Mr. Nooruddin Dhilla
and Ms. Anushka Merchant, Advocates i/b Hariani & Co. for the
Respondent Nos. 8.
With
Misc. Application No. 366 of 2021
And
Appeal No. 257 of 2018
1. IGL Finance Ltd.
4
Registered Ofice :
A1, Industrial Area, Bazpur Road,
Kashipur, Udham Singh Nagar,
Uttarakhand - 244713.
Head Office :
2B, Sector- 126, Noida
Gautam Budh Nagar,
Uttar Pradesh 201304.
2. Ms. Smita Bhartia
Residing at S-5, Panchsheel Park,
1st Floor, Opposite Panchsheel Club,
New Delhi - 110 017. .. Appellants
Versus
1. Securities & Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051.
2. Mr. Shreekant Javalgekar
Flat No. 1002, 10th Flr., Tower III,
The Orchard Residency, LBS Marg,
Behind R City Mall, Ghatkopar (West),
Mumbai - 400 086.
3. Mrs. Asha Shreekant Javalgekar (Deceased)
Flat No. 1002, 10th Flr., Tower III,
The Orchard Residency, LBS Marg,
Behind R City Mall, Ghatkopar (West),
Mumbai - 400 086.
4. Mr. Manish Shah
504, Raheja Heaven, Prananjali,
N. S. Road No. 10th, JVPD,
Juhu, Vile Parle (W),
Mumbai - 400 049.
5. Mr. Prakash Shah
504, Raheja Heaven, Prananjali,
5
N. S. Road No. 10th, JVPD,
Juhu, Vile Parle (W),
Mumbai - 400 049.
6. Mr. Hariharan Vaidyalingam
B/503/504, Plot No. 104, Dosti Elite,
Next to Sion Telephone Exchange,
Sion Circle, Mumbai - 400 022.
7. Mr. Arvindkumar Iyengar
401, EMP 07, Jupiter,
Evershine Millenium Paradise,
Thakur Village, Kandivali (East),
Mumbai - 400 101.
8. Mrs. Dhanashri Iyengar
401, EMP 07, Jupiter,
Evershine Millenium Paradise,
Thakur Village, Kandivali (East),
Mumbai - 400 101.
9. Mr. Bharat Kanaiyalal Sheth
Ocean House, 134/A,
Dr. Annie Besant Road, Worli,
Mumbai - 400 018. .. Respondents
Mr. Ankit Lohia, Advocate i/b Mr. Birrul Ali, Advocate o/b Bellator
Legal for the Appellants.
Mr. Shyam Mehta, Senior Advocate with Mr. Mihir Mody,
Mr. Arnav Misra, Mr. Mayur Jaisingh, Advocates i/b K. Ashar & Co.
for the Respondent Nos. 1.
Mr. Vinay Chauhan, Advocate with Mr. K. C. Jacob, Advocate i/b
Corporate Law Chambers India for the Respondent Nos. 2.
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Mr. Vikram Nankani, Senior Advocate i/b Finsec Law Advisors for
the Respondent Nos. 4 and 5.
None for the Respondent Nos. 6.
Mr. M. Raghuvamsi, Advocate i/b Finsec Law Advisors for the
Respondent Nos. 7 and 8.
Mr. Somasekhar Sundaresan, Advocate with Mr. Tomu Francis,
Mr. Abhishek Venkataraman, Mr. Arka Saha, Advocates i/b Khaitan
& Co. for the Respondent Nos. 9.
CORAM : Justice Tarun Agarwala, Presiding Officer
Justice M. T. Joshi, Judicial
Per : Justice M. T. Joshi, Judicial Member
1. In both the present appeals, identical facts are involved and
all the respondents have raised a preliminary objection that the
appeals are not maintainable. In the circumstances, both the appeals
were heard on this issue jointly and, therefore, the present common
order is being passed.
2. The facts on record would show that the respondent No. 1
Securities and Exchange Board of India (hereinafter referred to as
'SEBI') in both the appeals had conducted investigation into the
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alleged misconduct of Multi Commodity Exchange (hereinafter
referred to as 'MCX') and in the circumstances, a show cause notice
was issued to the MCX. The other respondents in the appeals were
either the officials of MCX or connected thereto. It was found that
after the issuing of show cause notice, they had traded in the scrip of
the MCX and 63 Moons Technologies Ltd. (hereinafter referred to as
"63 Moons"), one of the sister company for a period between April
27, 2012 to July 31, 2013. It was alleged that during this period,
these respondents had traded in the scrip being in possession of
Unpublished Price Sensitive Information (UPSI) i.e. issuance of
notice to MCX. The facts of the notice came to the knowledge of the
public when the information of issue of notice to MCX etc. was
published by daily Economic Times on January 9, 2018.
3. Besides separate proceedings against, MCX, 63 Moons, etc.
the proceedings were initiated against the present respondent Nos. 2
to 8 in the appeal No. 256 of 2018 and respondent Nos. 2 to 9 in the
appeal No. 257 of 2018 for alleged insider tradings. Interim orders
of restraining them from dealing in the securities market as detailed
therein were also passed. After hearing these respondents, however,
the impugned orders dated January 5, 2018 and January 31, 2018
were passed of exonerating these respondents in the respective
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matters out of which the present two appeals have arisen. By the
said impugned orders, the learned Whole Time Member (hereinafter
referred to as 'WTM') had exonerated all these respondents. The
appellants claim that they are aggrieved by the said order and hence
the present appeals were preferred.
4. It is the case of the appellants that they are the victims of the
fraud committed by MCX. They had filed various complaints with
various authorities and even filed Writ Petition No. 1405 of 2015 and
Writ Petition No. 519 of 2016 before the Bombay High Court.
Respondent SEBI in one of the Writ Petition submitted that it was
carrying the investigation and the same would be concluded in a
timely manner. Accordingly, the order was passed in the Writ
Petition. Now, however, the respondent Nos. 2 to 8 in the appeal No.
256 of 2018 and respondent Nos. 2 to 9 in the appeal No. 257 of
2018 are exonerated by the learned WTM vide the impugned orders
and, therefore, the appellants are aggrieved by the same.
5. The facts on record would show that MCX or National Spot
Exchange Ltd. was acting as spot exchange in commodity under the
exemption granted by Department of Consumer Affairs (for short
'DCA'). Since it was a National Spot Exchange Ltd. of the
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commodity, only one day forward contract permission was granted.
Since the year 2009, the Commodity Exchange started trading
contract for a longer settlement cycle i.e. trading day plus 25 day. It
was alleged that in a way this cycle was used solely as a financial
transactions - money lending cycle, wherein a pre-determined
amount as a profit was being given which in fact was an interest. In
view of the various complaints of various stake-holders including the
appellants, the investigation was conducted. The show cause notice
was issued against the Exchange etc. It appears that criminal cases
were also lodged by the Government of India and various
proceedings were lodged.
6. During investigation it was noted that during the period the
notice was issued and it remained unpublished, the present
respondent Nos. 2 to 8 in the appeal No. 256 of 2018 and respondent
Nos. 2 to 9 in the appeal No. 257 of 2018 had traded in the scrip.
Therefore, interim orders as detailed (supra) were passed in each of
the appeals. After receipt of the material found by the respondents
and upon hearing them, the learned WTM in both the appeals came
to the conclusion that the appellants have not traded on the basis of
unpolished price sensitive information (for short UPSI) and they
have not violated the provisions of Regulation 11 of the Securities
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and Exchange Board of India (Prohibition of Insider Trading)
Regulations, 1992 (hereinafter referred to as 'PIT Regulations') read
with Regulation 15 of the PIT Regulations.
7. We have heard Mr. Ankit Lohia, the learned counsel for the
appellants and Mr. Shyam Mehta and Mr. Vikram Nankani, the
learned senior counsel with Mr. Vinay Chauhan, Mr. Somasekhar
Sundaresan, Mr. M. Raghuwamshi, the learned counsel for the
respondent through video conference.
8. The respondent submits that the appellants cannot be termed
as aggrieved due to the passing of the said orders. Respondent SEBI
while making investigation in the affairs of National Spot Exchange
Ltd. and MCX had on the sideline, noted that the respondents have
traded in the relevant scrips after issuing show cause notice to the
National Stock Exchange of India Ltd. (hereinafter referred to
'NSEIL') by the Department of Corporate Affairs. Upon hearing the
respondents, however, respondent SEBI came to the conclusion that
no violation of the PIT Regulation was found. Thus, the issue of
insider trading is solely between SEBI and the noticees in both the
proceedings, the appellants cannot be termed as aggrieved by the
same and, therefore, the present appeals are not maintainable.
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9. On the other hand, the learned counsel for the appellants
Mr. Ankit Lohia in both the appeals submitted that the appellants are
the victim of the misdeeds of the NSEIL, MCX and, therefore, the
appeals are maintainable.
10. Section 15T of the Securities and Exchange Board of India
Act, 1992 (hereinafter referred to as 'SEBI Act') which provides for
appeal runs 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 manner.
(2) to (6) ..................................................."
11. The issue is whether the present appellants can be termed as
a person aggrieved by the impugned order ? It is to be noted that the
appellants claimed victims of the misdeeds of the MCX etc.
Respondent SEBI had conducted investigations on the complaints of
various people including the appellants and orders are already
passed regarding the acts of MCX as detailed (supra). During
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investigations, respondent SEBI found that the present respondent
Nos. 2 to 8 in the appeal No. 256 of 2018 and respondent Nos. 2 to 9
in the appeal No. 257 of 2018 had traded in the concerned scrip and,
therefore, the proceedings were lodged. After hearing them,
however, the respondent SEBI came to the conclusion that they have
not indulged into the insider trading.
12. In the case of Jasbhai Motibhai Desai vs. Roshan Kumar
& Ors. [AIR 1976 SC 578], the Hon'ble Supreme Court was
examined that question of locus-standi of the appellants therein and
had laid down the following tests to determine when the person can
be said to be aggrieved so as to get a right of appeal. For facility, the
relevant portion is extracted hereunder :-
"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, recognized 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
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authority? Is the stature, 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 stature dealing with private rights or particular
individuals?"
13. So far as the present issue is concerned, the appellants
cannot at all be called as an aggrieved persons. The facts and issue
in the proceedings before the learned WTM in both the appeals were
as to whether the concerned respondent had indulged into the insider
trading and whether they were liable for restraint to be put by the
respondent SEBI. The person can be said to be aggrieved by the
order if the party is directly affected by the order. The appellant
cannot be said to have been affected by the order passed by the
learned WTM. Admittedly, numerous persons have filed complaints
against the alleged misdeeds of the Exchange on the basis of which
separate independent action was taken against the Exchange.
Therefore, in our view, since the appellants are not the aggrieved
party, the appeals are not maintainable. In the reasons, the following
order :-
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ORDER
14. Appeal Nos. 256 and 257 of 2018 are hereby dismissed without any order as to costs.
15. The present matter was 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 Judicial Member 05.08.2021 Digitally signed by RAJALAKSH RAJALAKSHMI H NAIR MI H NAIR Date:
PTM 2021.08.09
11:34:40 +05'30'