Securities Appellate Tribunal
Sonal H Desai vs Sebi on 31 May, 2022
Author: Tarun Agarwala
Bench: Tarun Agarwala
BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Date of Decision: 31.05.2022
Misc. Application No. 382 of 2022
And
Appeal No. 224 of 2022
1.Dollex Capital And Finance Pvt. Ltd.
2. Kingfisher Trading Company Pvt. Ltd.
3. Dinesh Jivrajbhai Vajar
4. Sangeeta Dinesh Vajar
5. Ayush Rameshwar Gaur 307, Chawda Commercial Centre, Next Evershine Mall, Chincholi Bunder Road, Malad (West), Mumbai- 400 064 ...Appellants Versus Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai- 400 051 ...Respondent Mr. Saurabh Bachhawat, Advocate with Ms. Yashvi Panchal, Advocate for Appellants.
Mr. Pradeep Sancheti, Senior Advocate with Mr. Manish Chhangani, Mr. Ravi Shekar Pandey & Ms. Samreen Fatima, Advocates i/b The Law Point for the Respondent-SEBI.
2WITH Misc. Application No. 383 of 2022 And Appeal No. 225 of 2022
1. Adore Merchantile Company Private Limited
2. Yogendra Janardhan Bangera
3. Ashok Sakharam Pilke 306, Chawda Commercial Centre, Chincholi Bunder Road, Relife Road, Deorukhkar Wadi, Malad (West), Mumbai- 400 064 ...Appellants Versus Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai- 400 051 ...Respondent Mr. Saurabh Bachhawat, Advocate with Ms. Yashvi Panchal, Advocate for Appellants.
Mr. Sumit Rai, Advocate with Mr. Manish Chhangani, Mr. Ravi Shekar Pandey & Ms. Samreen Fatima, Advocates i/b The Law Point for the Respondent-SEBI.
WITH Misc. Application No. 384 of 2022 And Appeal No. 226 of 2022
1. Waterbase Mercantile Company Pvt. Ltd.
2. Satyendrakumar Ramshankar Pandey
3. Niranjani Satyendrakumar Pandey 3 240/1915, Motilal Nagar No. 1., Near Post Office, Goregaon (West), Mumbai- 400 104 ...Appellants Versus Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai- 400 051 ...Respondent Mr. Saurabh Bachhawat, Advocate with Ms. Yashvi Panchal, Advocate for Appellants.
Mr. Sumit Rai, Advocate with Mr. Manish Chhangani, Mr. Ravi Shekar Pandey & Ms. Samreen Fatima, Advocates i/b The Law Point for the Respondent-SEBI.
WITH Misc. Application No. 385 of 2022 And Appeal No. 227 of 2022
1. Faith Finstock Pvt. Ltd.
2. Pankaj Kanaiyalal Parikh
3. Mayuri Kalpesh Pandya 306, Chawda Commercial Centre, Chincholi Bunder Road, Relife Road, Deorukhkar Wadi, Malad (West), Mumbai- 400 064 ...Appellants Versus Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai- 400 051 ...Respondent 4 Mr. Saurabh Bachhawat, Advocate with Ms. Yashvi Panchal, Advocate for Appellants.
Mr. Sumit Rai, Advocate with Mr. Manish Chhangani, Mr. Ravi Shekar Pandey & Ms. Samreen Fatima, Advocates i/b The Law Point for the Respondent-SEBI.
WITH Misc. Application No. 386 of 2022 And Appeal No. 228 of 2022
1. Francisca Investment Private Limited
2. Vasantbhai Nathabhai Patel
3. Prem Shivbaran Vishwakarma
4. Prakash Devaka Kalke Seeta Niwas, Pratap Nagar Marg, Farid Nagar, Bhandup (West), Mumbai- 400 078 ...Appellants Versus Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai- 400 051 ...Respondent Mr. Saurabh Bachhawat, Advocate with Ms. Yashvi Panchal, Advocate for Appellants.
Mr. Sumit Rai, Advocate with Mr. Manish Chhangani, Mr. Ravi Shekar Pandey & Ms. Samreen Fatima, Advocates i/b The Law Point for the Respondent-SEBI.
5WITH Misc. Application No. 387 of 2022 And Appeal No. 229 of 2022
1. Prolific Mercantile Company Pvt. Ltd.
2. Prakash Shamrao Dalvi
3. Rajendra Mahadev Kelakar 305, Chawda Commercial Centre, Chincholi Bunder Road, Relife Road, Deorukhkar Wadi, Malad (West), Mumbai- 400 064 ...Appellants Versus Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai- 400 051 ...Respondent Mr. Saurabh Bachhawat, Advocate with Ms. Yashvi Panchal, Advocate for Appellants.
Mr. Sumit Rai, Advocate with Mr. Manish Chhangani, Mr. Ravi Shekar Pandey & Ms. Samreen Fatima, Advocates i/b The Law Point for the Respondent-SEBI.
WITH Misc. Application No. 388 of 2022 And Appeal No. 230 of 2022
1. Sterjet Trading Company Pvt. Ltd.
2. Janibabu Ahmadkhan Chauhan
3. Kamlesh Premraj B 6 Maqbool Compound, Chawl No. 17, Room No. 4, RS Marg, Pathan Wadi, Malad (East), Mumbai- 400 097 ...Appellants Versus Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai- 400 051 ...Respondent Mr. Saurabh Bachhawat, Advocate with Ms. Yashvi Panchal, Advocate for Appellants.
Mr. Sumit Rai, Advocate with Mr. Manish Chhangani, Mr. Ravi Shekar Pandey & Ms. Samreen Fatima, Advocates i/b The Law Point for the Respondent-SEBI.
WITH Misc. Application No. 389 of 2022 And Appeal No. 231 of 2022
1. Fotosoft Multimedia Pvt. Ltd.
2. Balkrishna Amritlal Oza Royal Sands, B/503, Bh. Citi Hall, New Link Road, Andheri (West), Mumbai- 400 053 ...Appellants Versus Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai- 400 051 ...Respondent 7 Mr. Saurabh Bachhawat, Advocate with Ms. Yashvi Panchal, Advocate for Appellants.
Mr. Sumit Rai, Advocate with Mr. Manish Chhangani, Mr. Ravi Shekar Pandey & Ms. Samreen Fatima, Advocates i/b The Law Point for the Respondent-SEBI.
WITH Misc. Application No. 436 of 2022 And Appeal No. 232 of 2022 Sonal H Desai 704/7 Natraj Bldg., 121 S V Road, Near Standard Chartered Bank, Santacruz West, Mumbai- 400 054 ...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 Ms. Akansha Jain, Practicing Company Secretary i/b Ms. Kanksha Vyas, Advocate for the Appellant.
Mr. Sumit Rai, Advocate with Mr. Manish Chhangani, Mr. Ravi Shekar Pandey & Ms. Samreen Fatima, Advocates i/b The Law Point for the Respondent-SEBI.
AND Misc. Application No. 437 of 2022 And Appeal No. 233 of 2022 Manjula M Doshi 704/7 Natraj Bldg., 121 S V Road, Near Standard Chartered Bank, Santacruz West, Mumbai- 400 054 ...Appellant 8 Versus Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai- 400 051 ...Respondent Ms. Akansha Jain, Practicing Company Secretary i/b Ms. Kanksha Vyas, Advocate for the Appellant.
Mr. Sumit Rai, Advocate with Mr. Manish Chhangani, Mr. Ravi Shekar Pandey & Ms. Samreen Fatima, Advocates i/b The Law Point for the Respondent-SEBI.
CORAM: Justice Tarun Agarwala, Presiding Officer Ms. Meera Swarup, Technical Member Per: Justice Tarun Agarwala, Presiding Officer (Oral)
1. Having heard the learned counsel for the appellants, we find that the controversy involved in the present appeals is squarely covered by a decision of this Tribunal in Yatin Pandya HUF vs. SEBI (Appeal No. 719 of 2021 decided on March 24, 2022) which also arose from the same show cause notice.
2. In addition to the above, we find that there is an inordinate delay of more than 12 years in the issuance of the show cause notice. Such delay by itself causes prejudice.
93. In Ashlesh Gunvantbhai Shah vs. SEBI (Appeal No. 169 of 2019) decided on January 31, 2020. This Tribunal held:-
"12. Having considered the matter we are of the view that there has been an inordinate delay on the part of the respondent in initiating proceedings against the appellants for the alleged violations. The controversy in this regard is squarely covered by a decision of this Tribunal in Mr. Rakesh Kathotia & Ors. vs SEBI in Appeal No. 7 of 2016 decided by this Tribunal on May 27, 2019. The relevant paragraph is extracted herein below:-
"23. It is no doubt true that no period of limitation is prescribed in the Act or the Regulations for issuance of a show cause notice or for completion of the adjudication proceedings. The Supreme Court in Government of India vs, Citedal Fine Pharmaceuticals, Madras and Others, [AIR (1989) SC 1771] held that in the absence of any period of limitation, the authority is required to exercise its powers within a reasonable period. What would be the reasonable period would depend on the facts of each case and that no hard and fast rule can be laid down in this regard as the determination of this question would depend on the facts of each case. This proposition of 10 law has been consistently reiterated by the Supreme Court in Bhavnagar University v. Palitana Sugar Mill (2004) Vol.12 SCC 670, State of Punjab vs. Bhatinda District Coop. Milk P. Union Ltd (2007) Vol.11 SCC 363 and Joint Collector Ranga Reddy Dist. & Anr. vs. D. Narsing Rao & Ors. (2015) Vol. 3 SCC 695. The Supreme Court recently in the case of Adjudicating Officer, SEBI vs. Bhavesh Pabari (2019) SCC Online SC 294 held:
"There are judgments which hold that when the period of limitation is not prescribed, such power must be exercised within a reasonable time. What would be reasonable time, would depend upon the facts and circumstances of the case, nature of the default/statute, prejudice caused, whether the third-party rights had been created etc."
13. Similar view was again relied in Ashok Shivlal Rupani & Ors. vs. SEBI (Appeal No. 417 of 2018 along with other connected appeals decided on August 22, 2019) and again in Sanjay Jethalal Soni & Ors. vs SEBI in Appeal No. 102 of 2019 and other connected appeals decided on November 14 2019.
1114. We also find that in the case of Ashok Shivlal Rupani (supra) the period of investigation was January 4, 2010 to January 10, 2011 in the scrip of M/s. Oregon Commercial Ltd. and the show cause notice issued on November 20, 2017 which this Tribunal held that there was an inordinate delay. In the instant case, the same scrip was investigated for the same period and there is a delay of 7 years in issuing the show cause notice. To this extent, the facts are common. Further, Civil Appeal No. 8444 - 8445 of 2019 Securities and Exchange Board of India vs. Ashok Shivlal Rupani & Anr, etc was dismissed by the Supreme Court on November 15, 2019 thus affirming the decision of this Tribunal.
15. In the light of the aforesaid, we are of the opinion that there has been an inordinate delay in the issuance of the show cause notice. Even though there is no period of limitation prescribed in the Act and Regulations in the issuance of a show cause notice or for completion of the adjudication proceedings the authority is required to exercise its powers within a reasonable period as held recently in Adjudicating Officer, Securities and Exchange Board of India vs. Bhavesh Pabari (2019) SCC OnLine SC 294. In the instant case, we are of the opinion that the power to adjudicate has not been exercised within a reasonable period and therefore no penalty could be imposed."
124. In Sanjay Jethalal Soni and Ors. vs. SEBI (Appeal No. 102 of 2019 decided on November 14, 2019. This Tribunal held:-
"11. Having heard the learned counsel for the parties at some length we find that the respondent had investigated the scrips of Shree Global Tradefin Ltd. for the period March 1, 2009 to January 10, 2011 in September 2011. Pursuant thereto, a show cause notice dated April 20, 2012 was issued for the violation found during the investigated period March 1, 2009 to November 30, 2009. The respondents thereafter waited for another five years to issue a second show cause notice dated July 20, 2017 for the investigated period April 1, 2010 to January 10, 2011 which had been investigated in September 2011. We find that the respondents were aware of the alleged violation and thus there is no justification for waiting for more than five years to issue the second show cause notice dated July 20 2017. In our view there is an inordinate delay in initiating the proceedings."
5. In Ashok Shivlal Rupani vs. SEBI (Appeal No. 417 of 2018 decided on August 22, 2019). This Tribunal held:-
"6. Having considering the matter, we are of the view that there has been an inordinate delay on the part of the respondent in initiating proceedings 13 against the appellants for alleged violations. Much water has flown since the alleged violations and at this belated stage the appellants cannot be penalized. It is alleged that disclosure under PIT Regulations was not made but similar disclosure was made by the appellant under SAST Regulations. Therefore, information was available on the Stock Exchange and therefore it cannot be said that the respondents were unaware of the alleged violations. Further, the purpose of disclosure was to make the market aware of the change of shareholding of the shareholders. When a disclosure was made by the company under SAST Regulations the investors became aware of the change in the shareholding. The non-compliance of Regulation 13 if any becomes technical in nature.
7. In Mr. Rakesh Kathotia & Ors. vs. SEBI (Appeal No. 07 of 2016 decided by this Tribunal on 27.05.2019) proceedings were quashed on account of inordinate delay. The said decision is squarely applicable to the instant case. For facility, the relevant paragraph of the order is extracted hereunder:
"23. It is no doubt true that no period of limitation is prescribed in the Act or the Regulations for issuance of a show cause notice or for completion of the adjudication proceedings. The Supreme Court in Government of India vs, Citedal Fine 14 Pharmaceuticals, Madras and Others, [AIR (1989) SC 1771] held that in the absence of any period of limitation, the authority is required to exercise its powers within a reasonable period. What would be the reasonable period would depend on the facts of each case and that no hard and fast rule can be laid down in this regard as the determination of this question would depend on the facts of each case. This proposition of law has been consistently reiterated by the Supreme Court in Bhavnagar University v.
Palitana Sugar Mill (2004) Vol.12 SCC 670, State of Punjab vs. Bhatinda District Coop. Milk P. Union Ltd (2007) Vol.11 SCC 363 and Joint Collector Ranga Reddy Dist. & Anr. vs. D. Narsing Rao & Ors. (2015) Vol. 3 SCC 695. The Supreme Court recently in the case of Adjudicating Officer, SEBI vs. Bhavesh Pabari (2019) SCC Online SC 294 held:
"There are judgments which hold that when the period of limitation is not prescribed, such power must be exercised within a reasonable time. What would be reasonable time, would depend upon the facts and circumstances of the case, nature of the default/statute, prejudice caused, whether the third-party rights had been created etc."15
6. In view of the aforesaid, the justification given by the Adjudicating Officer in the impugned order is without any merit.
7. In view of the aforesaid, the impugned order is set aside on account of inordinate delay. The appeals are allowed with no order as to costs. The Misc. Applications are disposed of accordingly.
8. 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 Technical Member RAJALA Digitally signed by RAJALAKSHMI 31.05.2022 KSHMI H HDate:
NAIR 2022.06.01 PK NAIR 15:26:47 +05'30'