THE SECURITIES APPELLATE TRIBUNAL MUMBAI
Appeal No.29/2004
Date of Hearing: 8th April, 2004
Date of decision: 8th April, 2004
In the matter of
1. Dharnendra Industries Ltd.,
2. Bhupendra B. Gandhi Appellants – Represented by
Mr. S. K. Ravi, Advocate
Versus
1. Securities and Exchange
Board of India
2. The Chairman, Securities
& Exchange Board of India. Respondents – Represented by
Shri Kumar Desai, Counsel
Ms. Daya Gupta, Advocate
Mr. Joby Mathew, Legal
Officer, SEBI
Appeal No.30/2004
In the matter of
1. Dharnendra Overseas Ltd.,
2. Bhupendra B. Gandhi Appellants – Represented by
Mr. S. K. Ravi, Advocate
Versus
1. Securities and Exchange Board
of India
2.The Chairman, Securities &
Exchange Board of India. Respondents – Represented by
Shri Kumar Desai, Counsel
Ms. Daya Gupta, Advocate
Mr. Joby Mathew, Legal
Officer, SEBI
Coram:
Justice Shri Kumar Rajaratnam, Presiding Officer
Dr. B. Samal, Member
Shri N. L. Lakhanpal, Member
Per : Dr. B. Samal, Member
Both the above appeals were taken up together, with the consent of Appellants and Respondents.
The first Appellant is a company incorporated under the Companies Act, 1956 having their registered office at 908, GIDC Engineering Estate, Sector 28, Gandhinagar – 382028, Gujrat. Mr. Navinchandra B. Gandhi, Mr. Dharmendra B. Gandhi and Mr. Bhupendra B. Gandhi are its directors. The second Appellant is a company incorporated under the Companies Act, 1956 having its registered office at Dharmendranagar, Plot No.559, At Post: Sachana Ta: Viramgam, Dist, Ahmedabad, Gujrat. Mr. Navinchandra B. Gandhi, Mr. Suchil M. Kothari, Mr. Bhupendra B. Gandhi and Mr. Arvind J. Shah are its directors.
The Respondents received several complaints against both the companies from investors and as at 31st March, 2002, a total of 116 investors’ grievances which were not resolved or acted upon were pending with both the Appellants. The Respondent advised the Appellants to meet officials of SEBI in connection with the redressal of investors’ grievances pending against them . However, the Appellants failed to do so. As the Appellants failed to redress the grievances of investors within the stipulated time the Appellants were granted an opportunity to be heard before the Respondent. The hearing was fixed for 31st May, 2003. However, the Appellants failed to appear before the Respondent. Therefore, in exercise of the powers conferred on the Respondent vide section 11(1) and 11 (4) (b) read with Section 11B of the SEBI Act, the Respondent directed that the Appellants and their directors shall dissociate themselves from the securities market for a period of 5 years and that the aforesaid persons shall not deal in securities in any manner whatsoever for a period of 5 years. With the consent of both the Appellants and Respondents the appeals were taken up for final hearing.
The learned Counsel for the Appellants went on insisting that they do not have the copies of the complaints received by the Respondents and the Respondents should be directed by the Tribunal to send copies of the complaints. Learned Counsel for the Respondents submitted that they do not keep copies with them and virtually it is not possible for them to keep copies as more than thousand complaints are received at their office everyday. The learned Counsel for the Respondents submitted a letter dated 24th March, 2004 from MCS Ltd., which was Registrar to the Appellants. This letter highlights that inspite of number of reminders issued by the Registrar, the Appellants have failed to attend to the same. Though we do not depend on the contents of the letter yet the fact remains that the Appellants have not attended to a large number of complaints which has also been confirmed in their 16th Annual Report for the year 2002-2003 that 121 complaints remained pending to be attended. The learned Counsel for the Appellants had submitted that due to flood during the relevant period and in the absence of Compliance Officer they have not been in a position to dispose of the cases within the time schedule as desired. It was also stated that both the companies have gone to BIFR for consideration of rehabilitation package.
As the matter involves public interest and as the Annual Report of the Appellant Company for the year 2002-2003 itself admits that there are 121 complaints, which have not been attended to, the Respondent was justified, in the facts and circumstances of the case, in passing the order. There is no merit in the appeal. Accordingly we pass the following order.
ORDER
After hearing both the parties, the appeal is dismissed on the ground that this is a clear case of mismanagement and the Appellants are bound to attend to the grievances of the shareholders within a stipulated time schedule. However, if BIFR approves suitable revival package and the same requires mobilisation of capital from the public, the Appellants are open to approach the Respondent to review the suspension.
(Pronounced in Court)
Sd/-
Justice Kumar Rajaratnam
Presiding officer
Sd/- Sd/-
Dr. B. Samal, N. L. Lakhanpal,
Member Member
Place: Mumbai,
Date: April 16, 2004.