Order in the matter of Shri Urvish R. Vora And Smt. Pallavi U. Vora

1. Vide order dated December 28, 2004, issued by Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’), I was appointed as the Adjudicating Officer under Rule 3 of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 to enquire into and to adjudge under Sec.15-I of Securities and Exchange Board of India Act, 1992 the alleged violation of Sec. 11C of Securities and Exchange Board of India Act, 1992 by Shri Urvish R. Vora and Smt. Pallavi U. Vora. For the sake of convenience, the said Shri Urvish R. Vora and Smt. Pallavi U. Vora will be referred hereinafter in this order collectively as ‘the noticees’.
   
    
2. As per the information provided to me by SEBI, SEBI conducted investigation in to the alleged price manipulation in the shares of Avinash Information Technologies Ltd. During the course of the said investigation, Shri P. K. Nagpal, Investigating Authority of SEBI in the matter, issued summonses dated August 29, 2003 directing the noticees, interalia, to furnish the information and produce certain documents mentioned in the annexure to the said summonses by September 10, 2003 and the said summonses were sent by registered post- acknowledgement due. The said summons was served at the address i.e., at Raji Building, 60 Feet Road, Ghatkopar, Mumbai – 400 077. However, it was alleged that there was no compliance of the said summonses by the noticees. 
   
    
3. I issued notices dated March 10, 2005 to the noticees under Rule 4(1) of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 calling upon the noticees to show cause as to why inquiry should not be held against them and penalty be not imposed under Sec. 15A (a) of Securities and Exchange Board of India Act, 1992. The said notices dated March 10, 2005 were sent to the noticee by registered post with acknowledgment due. However, the said notices were returned undelivered by postal authorities with indecipherable endorsements. I therefore, requested the aforesaid investigating authority of SEBI to serve the notices on the noticees in terms of Rule 7(c) of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalty by Adjudicating Officer) Rules, 1995. On April 26, 2003, I received fax messages from the noticees requesting for my appointment. From the said fax messages, it was noticed that the show cause notices were received by the noticees on April 10, 2005. Since by April 26, 2005, the time limit of 14 days stipulated by me was over and since there was no reply with respect to the charges leveled against the noticees, I was of the opinion that an inquiry should be held in the matter and accordingly notices of inquiry dated April 26, 2005  in terms of Rule 4(3) of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalty by Adjudicating Officer) Rules, 1995 were issued to the noticees fixing April 29, 2005 as the date of inquiry. The noticees or their authorised representatives/ lawyers were advised to appear for the inquiry at my office on the above date. Since there was a difficulty in serving the notices on the noticees, my office contacted Shri Urvish R. Vora on the telephone number which was indicated by him in the above said fax message to visit my office to collect the notices of inquiry. Accordingly, Shri Urvish Vora visited my office on April 26, 2005 and collected the notices of inquiry. On April 29, 2005, I received a written communication from the aforesaid investigating authority to the effect that the show cause notices issued by me to the noticees were served on them. From the copies of documents forwarded by the aforesaid Investigating Authority, I noticed that the show cause notices were served on the noticees on April 13, 2005 and not on April 10, 2005 as claimed by the noticees.  
   
    
4. On April 29, 2005, Shri Urvish Vora appeared before me for the inquiry for himself and as the authorised representative of his wife Smt. Pallavi Vora. Shri Urvish Vora filed a letter of authority dated April 28, 2005 issued by Smt. Pallavi Vora authorizing him to appear before me. The following in this paragraph are the brief details of the inquiry proceedings and the summary of submissions made by Shri Urvish Vora: At the commencement of the proceedings, I explained Shri Urvish Vora the violation, i.e., non compliance with the summons dated August 29, 2003 issued by the investigating authority of SEBI. Shri Vora was also explained of the penalty prescribed under Sec. 15A (a) of Securities and Exchange Board of India Act, 1992. Shri Vora submitted that he and his wife were not staying at the address mentioned in the summonses  since January 2003 as they shifted their residence to Happy Life Cooperative Housing Society Ltd 16, Sindhu Bagh, Tilak Road, Ghatkopar (E), Mumbai – 400 077. As per Shri Vora, the summonses issued by the investigating authority were received by his sister-in-law and she did not hand over the envelope received from SEBI by registered post either to him or to his wife. Shri Vora further submitted that the signatures contained on the acknowledgement card were of his sister-in-law, Smt. Heena Vora and not of himself or his wife. As per Shri Vora, there was some family feud and that could be the reason as to why Smt. Heena Vora did not pass on the envelope received by her. When asked by me as to when he shifted his residence from the address mentioned in the summons long back, why the same address was mentioned in the fax messages dated April 25, 2005, Shri Vora replied that it was only to ensure that the office of the Adjudicating Officer recognizes his case file. In support of his contentions, Shri Urvish Vora filed self attested photocopy of building maintenance receipt dated April 1, 2003 issued by the Happy Life Cooperative Housing Society Ltd., Sindhubagh, Tilak Road, Ghatkopar East, Mumbai – 400 077. Shri Vora also filed self attested photocopies of receipts dated January 16, 2005 and February 5, 2005 issued by Tata Indicom and Reliance Energy respectively. From the said documents, it is seen that the address of Smt. Pallavi Vora is 16/A, Sindhubagh, Happy Life Cooperative Housing Society Ltd., Tilak Road, Ghatkopar East, Mumbai 400 077. Further, Shri Vora submitted that the noticees were willing to cooperate with the investigating authority and they were ready to furnish the documents demanded by the investigating officer of SEBI. The details of proceedings of the inquiry were recorded and a copy was furnished to Shri Urvish Vora.
   
    
5. Before deciding the issues which require to be examined by me, the provisions of Securities and Exchange Board of India Act, 1992 with respect to the issuance of summons by the investigating authorities and the consequences of non- compliance are perused by me. Sec. 11C of Securities and Exchange Board of India Act, 1992, interalia provides that the Investigating Authority may require any intermediary or any person associated with securities market in any manner to furnish such information to or produce such books, or registers, or other documents, or record before him or any persons authorized by it. Sec. 15A (a) of Securities and Exchange Board of India Act, 1992 provides for imposition of monetary penalty of Rupees one lakh for each day during such failure continues or Rupees one crore, whichever is less by the Adjudicating Officer in case any person, who is required under Securities and Exchange Board of India Act, 1992 or any rules or regulations made thereunder to furnish any document, return or report, fails to furnish the same.
   
    
6. The noticee did not dispute the fact that the investigating authority of SEBI issued the above summonses. It is the case of the noticee that the summonses dated August 29, 2003 were never received by the noticees. From the unauthenticated photocopies of postal acknowledgments made available to me, I noticed that the envelopes containing the summonses were sent to the address of 60 feet Road, Ghatkopar East, Mumbai 400 077 and from the legible signature affixed thereon, it appears that the same was received by one H.V. Vora. It is the case of the noticees that the summonses were received by his sister-in-law Smt. Heena Vora and she never handed over the same to the noticees due to family feud. In support of their contentions, the noticees filed copies of documents like building maintenance receipt, electricity bill and telephone bill. On perusal of the aforesaid maintenance receipt, it appeared that the noticees were residing at a different building, other than the one to which the aforesaid summonses were sent from a date prior to the date of issuance of summonses. From a copy of the postal acknowledgements with respect to the summonses issued by the investigating authority, it appears that the envelope containing the summonses was handed over by the postman to a different person. The submission of Shri Urvish Vora that his sister-in-law Smt. Heena Vora might have received the summonses appears to be correct from the signatures contained on the postal acknowledgements. 
   
    
7. In terms of Order V, Rule 15 of the Code of Civil Procedure, 1908, service made on an adult family member at the residence of the defendant is a valid service. In the instant case, the summonses were served on an adult family member. However, it was the case of the noticees that the place where the summonses were served was not their residence as they were residing at a different address since a date prior to the issuance of summons. 
   
    
8. In the absence of any material on record to nullify the contentions of the noticees, I am inclined to accept the same. In my opinion, the documentary evidence furnished by the noticees sufficiently proves that the noticees shifted their residence long before the summonses were issued to them and the premises at which the summonses were delivered was not the residence of the noticees. Though, all the documents like bills and receipts filed by Shri Urvish Vora were issued in favour of Smt. Pallavi Vora, wife of Shri Urvish Vora, I do not see any reason to believe that Shri Urvish Vora is not residing at the address of his wife Smt. Pallavi Vora. Therefore, I conclude that no sufficient evidence exists on record to prove that the summonses were received by the noticees and they failed to comply with the same. 
   
   ORDER
   
    
9.  Since the failure of producing the documents before the investigating authority of SEBI by the noticees is not established, the question of imposing any penalty on them does not arise. Therefore, no monitory penalty is imposed on the noticees.
   
    
10. In terms of Rule 6 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995, copies of this order are sent to the noticee and also to Securities and Exchange Board of India.

Date: April 30, 2005                                  A. Chandra Sekhar Rao

Place: Mumbai                                          Adjudicating Officer