Date of Hearing
15.12.2004
Date of Decision
In the matter of:
Shri Mahesh Parikh
Ms. D.N. Raval, Advocate
Versus
Securities & Exchange Board
of India
Coram:
Justice Kumar Rajaratnam, Presiding Officer
Dr. B. Samal, Member
N.L. Lakhanpal, Member
Per: Justice Kumar Rajaratnam, Presiding Officer
1. The appeal is taken up with consent of parties for final disposal. Certain directions were issued under Section 11B of the SEBI Act to a company known as Lesha Steels Ltd. on the ground that SEBI received several complaints from the investors of the company. As many as 57 investor grievances were pending with SEBI. SEBI after due process and after hearing the company (but the appellant was not heard) passed the order dated 10.10.2003 directing the company and their directors to disassociate themselves from the securities market for a period of 5 years. Aggrieved by this order dated 10.10.2003, the appellant has preferred this appeal.
2. The only ground raised by the appellant was that the appellant was not a director at the relevant time and that no show cause notice was issued by the respondent in his personal capacity as a director.
3. It is well settled law that if a person is to be met with an order debarring him from the securities market he should be served with a show cause notice and heard even though he may have been a director of the company. In this case, no show cause notice was admittedly issued on the appellant.
4. The ROC certificate produced before us shows that the appellant resigned on 15.3.1996 before the cause of action. The relevant portion of the certificate is extracted below:
A. Appointment and Changes Among Directors
Name or Names and Surname
in Full
Father’s / Husband’s Name
Usual Residential Address
Nation-ality
Date of appointment/
Reappointment
or Change
Brief Particulars of Change
Mr. Mahesh B. Parikh
S/0 late Shri Bhogilal Parikh
Rosie Apt.
North Avenue,
Santacruz (W)
Bombay
400 054
Indian
15.3.1996
Resigned as a Director
5. It was submitted by the counsel for the respondent that this will have to be verified since it is produced in Court for the first time.
6. In that limited view of the matter that no show cause notice was issued to the appellant, we set aside the impugned order only in so far as the appeal is concerned and given liberty to SEBI to proceed against the appellant by issuing separate show cause notice if in accordance with law. All contentions are left open.
(Pronounced in Court)
Presiding Officer
N.L. Lakhanpal
Member
Place: Mumbai
Date: 15.12.2004
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