BEFORE THE SECURITIES APPELLATE TRIBUNAL, MUMBAI

Appeal No.90/03��������������������������������������

Date of Hearing	1.9.04
Date of Decision	1.9.04

In the matter of:

Appellant���� :� M/s. Highway Users� Centres (I) Ltd., Mumbai

Respondent :� Securities & Exchange Board of India, Mumbai

����������� Appellant by���� :� Shri Burzin Somandy, Advocate

����������� Respondent by� :� S/Shri Dipan Merchant &�����

����������������������������������� �������� V.N. Shingnapurkar, Advocates��

Coram:

����������� Justice Shri Kumar Rajaratnam, Presiding Officer

����������� Dr. B. Samal, Member

Per:� Justice Kumar Rajaratnam, Presiding Officer

����������� The appeal is taken up with the consent of parties.� This appeal is directed against the impugned order dated 24.4.03 directing the appellant to wind up the existing scheme and to refund the money collected under the scheme.�

2.�������� This appeal can be disposed of on the short question of violation of principles of natural justice.�

3.�������� The show cause notice was issued to the appellant on 18^th of July 2002 asking the company to show cause as to why action should not be taken against the company and the promoters in terms of the SEBI (CIS) Regulations, 1999.� The company, by reply dated 30^th August 2002, contended that it was not operating any collective investment scheme.� It was also submitted that it was not required to submit any information with the SEBI and that the provisions of the said Regulations were not applicable to it.� It was further submitted that no money was mobilised by the appellant under the collective investment scheme.� The company further submitted that it may be provided an opportunity of personal hearing in the matter before any action was taken on the show cause notice dated 18^th July 2002.� The company was granted personal hearing.� The first personal hearing took place on 30^th November 2002.� However the company requested for an adjournment.� The matter was adjourned to 28^th December 2002.� The company sought for another adjournment.� Accordingly, an adjournment was granted for 12^th January 2003.� During the course of the said hearing, the learned Advocate appearing for the appellant again reiterated the submission that the company has been wrongly identified as coming within the scheme.� There is another company, Suman Motels Ltd., which has been inter-linked with this company, although the appellant is a separate legal entity.�� Various other submissions were also made.� The learned Advocate also sought for inspection of the records.� That was granted to the appellant on 14^th February 2003.� The appellant perused the documents and copies of the investor complaints against the appellant and was ready and willing to make his submissions on the basis of the inspection.� Although the inspection took place on 14^th February, no further hearing was granted and the impugned order was passed on 24.4.03 without hearing the appellant with respect to the documents for which inspection was granted to the appellant.

4.�������� The learned counsel for the appellant relied on the following judgments:

(1) ����� (2003) 9 Supreme Court Cases 731, State of Maharashtra and Ors.������������ vs. Jalgaon Municipal Council and Ors.

(2)������ (2003) 4 Supreme Court Cases 557, Canara Bank and Ors. Vs. Debasis Das and Ors.

�������������� and vehemently submitted that there was a violation of the principles of natural justice.� Having been given the opportunity for inspection of the documents, the appellant ought to have been heard by the respondent before passing the impugned order, which was sought for.� It was further submitted that the question of mistaken identity was also not gone into.�

5.�������� These are entirely the matters that the respondent must adjudicate upon in accordance with law.� It would not be open for this Court to look at the documents and pass orders.� The proper authority would be SEBI to decide the matter.� In that limited view of the matter, we have no alternative except to set aside the impugned order, remand it to the respondent for a fresh hearing.� The respondent shall, after hearing the appellant, dispose of the matter as expeditiously as possible in accordance with law.� It is also made clear that during the pendency of the disposal, the appellant shall not access the capital market.

�������������� 6.����� All contentions left open.� If the respondent relies on any fresh documents other than those that are already relied on while passing the impugned order, needless to say, the appellant shall have access to copies of those documents to enable it to defend itself.

�������������� 6.����� The appeal is disposed of accordingly.

�������������� 7.����� No order as to costs.

����� (Pronounced in Court)

Justice Kumar Rajaratnam

��� Presiding Officer

�����������������������������������������������������������

����������������������� ����������� Dr. B. Samal

����������������������������������������������������������� Member

Place: Mumbai

Date:� 1^st September 2004

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