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    BEFORE THE ADJUDICATING OFFICER

    SECURITIES AND EXCHANGE BOARD OF INDIA

    [ADJUDICATION ORDER NO. AP/AO-08/2006-07]

    Under Section 15-I of Securities and Exchange Board of India Act, 1992 read with Rule 4(3) of SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995�

     

    In respect of

    �

    ANGAD NIRYAT PVT. LTD

    AND �

     

    In the matter of Investigations in

     

    FAST CAPITAL GROWTH LTD.

     

     

    1.0  Securities and Exchange Board of India (hereinafter referred as �SEBI�) conducted investigations in the scrip of Fast Capital Growth Ltd.� (hereinafter referred as �FCG�) for the period from October 1995 to December 1995. Pursuant to this investigations, SEBI appointed Mr. K.R.C.V. Seshachalam, as the Adjudicating Officer under Rule 3 of SEBI (Procedure For Holding Inquiry And Imposing Penalties By Adjudicating Officer) Rules, 1995 (hereinafter, Adjudication Rules) read with Section 15 I of SEBI Act, 1992 to inquire into and adjudge the alleged failure of Angad Niryat Pvt. Ltd. (hereinafter referred as �ANPL�) to comply with the summons issued by the Investigating Officer under provisions of Section 11(3) of SEBI Act, 1992 for which penalty is imposable under Sections 15A (a) of SEBI Act, 1992. The aforesaid appointment was conveyed vide order dated July 15, 2003 and vide order dated December 28, 2004, the matter was transferred to Mr. A. Chandrasekhar Rao. Subsequently vide order dated February 03, 2006, the matter was transferred to the undersigned.

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

    2.0        In terms of Rule 4(1) of the Adjudication Rules, a Show Cause Notice (SCN) dated May 12, 2006 was issued to ANPL alleging non-compliance of summons dated December 3, 1998, issued by the Investigating Authority.� The said SCN was served on ANPL through registered post acknowledgement due on May 22, 2006.� Vide said SCN, ANPL was directed to file its reply within 14 days of receipt of this notice.� It is noted that no response to the said SCN is made by ANPL though the time for doing so has expired.

     

    3.0        In the instant case the allegation against ANPL is that it did not respond to the summons dated December 3, 1998 issued under Section 11 (3) of SEBI Act, 1992. However, upon examining the material on record, the following are my observations:

     

    3.1        The summons issued to ANPL by the investigating officer on December 3, 1998 do not specify the documents which were to be produced by the parties. The said summons direct ANPL to produce �all the documents upon which you intend to rely in support of your defence or which may be material for the purpose of the said investigation�.� In this connection, it may be noted that no proceedings were launched against the entity as on the date of issuance of summons and no charges were levelled against it.� Therefore, the question of ANPL producing the documents in support of its defence does not arise.� Further, the summons directed ANPL to produce all those documents which may be material for the purpose of investigation.� This implies that the investigating officer left it to the discretion of the entity as to the materiality of the documents which were required for the investigation carried out by SEBI.� Rule 5, Order 16 of the Code of Civil Procedure, 1908 stipulates that every summons for the attendance of a person to give evidence or to produce a document shall describe with reasonable accuracy any particular document which the person summoned is called on to produce.� In this connection, it may be noted that in the instant case, the investigating authority derived its powers in terms of Section 11 (3) of Securities and Exchange Board of India Act, 1992 under which the Board shall have the same powers as are vested in a civil court inter-alia, with respect to production of books of account and other documents.� Therefore, the aforesaid provision of the Code of Civil Procedure, 1908 is very much applicable to the summons issued by the investigating officer.� Hence, the undersigned is of the considered view that a summon can not be enforced under Section 15A (a) of the SEBI Act, 1992 for the failure of a person to produce unspecified and unstipulated documents.� To sum up, I hold that the summons issued by the investigating officer was vague, indistinct and unclear as far as the description of the documents required to be produced is concerned.�

     

    3.2        I have also noted another major discrepancy in the summons as far as the person before whom the entity was to be present.� On one hand, the summons states that the entity was summoned to appear before Kum. Susan Kurian, Regional Manager of SEBI at Kolkata on the other hand the same summons also state that the entity was to appear before the investigating officer i.e. Smt. Usha Narayanan who issued the summons.�

     

    3.3        Another infirmity noticed with respect to the summons is that it did not bear the date and time at which the entity was to attend before the Regional Manager of SEBI/Investigating Officer.�� In my view it is not possible to enforce the said summons.

     

    3.4        As regards service of the summons, I have not found any document to prove that the summons was served upon ANPL.

     

    4.0        From the aforesaid it is clear that the matter has been referred for Adjudication despite the fact that summons are not served on ANPL. �From the material on record, there is nothing to suggest that fresh summons was issued to ANPL in the matter of FCG. If the summons is not served, then the legal obligation on ANPL to furnish information and to be present before the IO does not arise. Logically, in the absence of legal obligation in the first place, default of obligation does not arise at all.

     

    5.0        Considering the observations recorded in paragraph 3.0 and 4.0 above.� I am not inclined to proceed further in the matter.� Also in terms of Rule 4 (3) of Adjudication Rules a duty is cast upon the A.O. to proceed with the inquiry only if he is of the opinion that inquiry should be held.� For the reasons recorded above, I am of the firm view that inquiry should not be held in the matter for the alleged violations in the SCN.

     

    6.0        As no inquiry is needed to be held in this case, for the reasons recorded above, I am hereby dropping the charges against Angad Niryat Pvt. Ltd in the instant Adjudication proceedings.

     

    7.0        This order of adjudication is made and passed on 20th day of July 2006 at Mumbai.

     

     

     

    AMIT PRADHAN

    ADJUDICATING OFFICER

     



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