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In the matter of Piyush Jhaveri

Apr 26, 2005
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Orders : Orders of SAT

IN THE SECURITIES APPELLATE TRIBUNAL

MUMBAI

 

 Appeal No. 23/2005

 

Date of Hearing

19.4.2005

Date of Decision           

26.4.2005

 

In the matter of:

 

Piyush Jhaveri

Appellant – Represented by

 

Shri Sanjay Mehta, Advocate

 

Versus

 

 

Securities & Exchange Board

Respondent –Represented by

of India

Shri Vivek Menon, Advocate

 

Coram:

            Justice Kumar Rajaratnam, Presiding Officer

             

 

Per:  Justice Kumar Rajaratnam, Presiding Officer

 

 

   1.            The appeal is taken up with consent of parties for final disposal.

   2.            This appeal is against the order dated 23.12.2004 of the adjudicating officer appointed by Securities and Exchange Board of India under Rule 5(1) of Securities and Exchange Board of India (Procedure for Holding Enquiry and imposing penalties by adjudicating officer) Rules, 1995 read with Section 15A of Securities and Exchange Board of India Act, 1992.

   3.            The impugned order of the adjudicating officer reads as under: 

“9. a.  The said violation by the entity attracts penalty as prescribed under Clause (a) of section 15A of the said Act.

b.  Though Section 15A(a) prescribes a maximum penalty of Rs. 1 crore for violation of Section 11C(2), however, in view of the above facts and circumstances of the case, the findings as recorded above, and taking into account the factors as contained in Section 15J of the said Act, I am of the view that a penalty of Rs. 5,00,000/- (Rupees Five Lakhs) only would be commensurate and justified.

c.  Therefore, I hereby, impose a penalty of Rs. 5,00,000/- (Rupees Five Lakhs) only on Shri Piyush Jhaveri, Proprietor of Shri Parshwa Finance for violation of Section 11C(2) of Securities and Exchange Board of India Act, 1992, under Clause (a) of Section 15A of Securities and Exchange Board of India Act, 1992.  Shri Piyush Jhaveri, Proprietor of Shri Parshwa Finance shall pay this amount of penalty by way of crossed demand draft drawn in favour of “SEBI – Penalties Remittable to Government of India” payable at Mumbai within 45 days of receipt of this order.  The said Demand draft shall be forwarded to Shri R. Mohan, General Manager, Investigations Department, SEBI, Mittal Court, B – wing, First Floor, Nariman Point, Mumbai 400021.”

 

   4.            The brief facts of the case are that the appellant is carrying on business in trading of shares in the name and style of M/s. Shri Parshwa Finance.  The appellant was served with summons to appear in person before the investigating authority on 14.6.2002.  However, according to the appellant, the said summon was received by the appellant on or about 13.6.2002 and on the same day the appellant wrote a letter to Investigating Authority of the respondent seeking some time for appearance.  Another summon was received by the appellant on 24.10.2002 requiring the appellant to be present on 25.10.2002.  However, the appellant requested for some other convenient date after 25.10.2002 in response to which the appellant was asked to appear by the respondent on 21.11.2002.

   5.            On 21.11.2002 the appellant remained personally present before the investigating authority and during the course of the said personal hearing, the investigating authority had called upon to produce certain documents before the investigating authority.

   6.            The appellant submitted that on 21.11.2002 a statement of the appellant was recorded and the appellant was directed to produce certain documents before the investigating authority.  Pursuant to the said direction, on 25.11.2002 the appellant despatched by post/under certificate of posting the said documents to the investigating authority. 

   7.            However, in the month of November 2003 the appellant received a show cause notice under Rule 4 of the SEBI (Procedure for Holding Enquiry and Imposing Penalties by the Adjudicating Officer) Rules, 1995 calling upon the appellant to show cause within 21 days from the date of the service of the said notice as to why enquiry should not be held against the appellant for levying penalty in accordance with Section 15A of the Act. 

   8.            On Perusal of the said notice, the appellant found that it was alleged against him that during the course of investigation, the appellant was found to have failed to produce the documents by the stipulated date and it was further alleged that it was in violation of Section 11C(ii) of SEBI Act, 1992 and that therefore the appellant was liable for penalty under Section 15A of the said Act. 

   9.            On receipt of the said notice, the appellant immediately by his letter dated 26.11.2003 sent a reply pointing out to the adjudicating officer inter alia that after recording of the appearance statement on 21.11.2002 the desired documents were despatched on 25.11.2002.  The appellant also enclosed along with the said reply copies of the documents which were sent along with the letter dated 25.11.2002 and requested the adjudicating officer to verify as to whether the Board had received the same or not.  It was also submitted by the appellant in the said reply that the documents were submitted within stipulated time.  The appellant had stated that he also cooperated with the authority and therefore he has not flouted any direction of the respondent.

10.            The appellant also appeared before the adjudicating officer on 30.1.2004.  The appellant submitted that during the course of personal hearing, the appellant confirmed that on 25.11.2002 the desired documents were despatched by the appellant to the respondent under certificate of posting and the proof of sending the same was enclosed along with reply dated 25.11.2002.

11.            The appellant by letter dated 31.1.2004 forwarded to the adjudicating officer a copy of the covering letter dated 24.11.2002 regarding despatching of the documents to Mr. S. Ravindran, General Manager, SEBI, Mumbai.  Further, by letter dated 6.2.2004 the appellant informed the adjudicating officer that the Post Master of Ambawadi post office stated that except Under Postal Certificate no other certificate could be issued by the Post Office and that was the only valid evidence on despatch in the eye of law.

12.            The appellant further submitted that in spite of the appellant having submitted the required documents, which however according to the investigating officer, were not received by him and desired the same having been once again submitted by the appellant at the time of replying to the show cause notice along with the letter dated 26.11.2002.  The same was not taken into consideration by the adjudicating officer.

13.            The appellant further submitted that there was no basis for imposing any penalty on him in view of the fact that the ground for imposing such penalty with the appellant had failed to produce and submit required documents did not survive.  The appellant stated that he is a small trader in shares.  The penalty of Rs. 5 lakhs is too heavy for him and he would be completely ruined and out of business if he would be compelled to pay this amount.

14.            The learned counsel for the respondent submitted that the investigating officer has confirmed that the said documents were not received by them during the course of investigation.  However, the documents claimed to have been submitted by the respondent under certificate of posting which were forwarded to investigation team who have confirmed that the documents are the same as sought for during the course of investigation.  The adjudicating officer has referred to the order of this Tribunal in the case of Megha Resources Ltd. vs. SEBI in appeal 49/2001 dated 19.3.2002.

15.            Considering the facts and circumstances of the case, it cannot be said that what was sent at the time of the investigation did not reach the investigating officer.  There is no statement from the investigating officer on record to show that he did not receive the documents.  It is also common ground that a copy of the documents sent during the adjudication proceedings were complete and had all the materials that was required during investigation.  The only question before the Court was whether these documents were sent at the time of investigation was at the time of adjudicating proceedings.  The learned counsel for the appellant produced the Under Certificate of Posting to show that they were sent at the time of the investigation and another copy was sent at the time of adjudication proceedings.

16.            I have perused all the documents.  I have also perused the order of the Tribunal in the case of Megha Resources Ltd. vs. SEBI dated 19.3.2002.

17.            It would have been appropriate to have recorded the statement of the investigating officer that no particulars were sent during adjudication proceedings.  It is also not in dispute that what was sent at the time of adjudication proceedings are the copies of the documents required by the investigating officer.  In these circumstances, it cannot be ruled out that the original documents that were required by the respondent were in fact sent during the investigation.

18.            Considering all these facts and circumstances of the case, I reduce the penalty from Rs. 5 lakhs imposed by the respondent to Rs. 25,000/-.  This amount may be deposited with the respondent within a period of 4 weeks from the receipt of the order.  Accordingly, the impugned order is modified and the appeal is disposed of.  No order as to costs. 

 

Justice Kumar Rajaratnam

Presiding Officer

 

Place: Mumbai

Date:  26.04.2005

 

//SR40525