BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Appeal No.139/2003
In the matter of:
Manyog Investments Ltd. & Others. Appellants
Vs.
The Securities and Exchange Board of India Respondent
Shri Gaurav Joshi
Advocate
Shri Nishit Dhruva
Advocate
Shri D. P. Desai
Advocate for Appellants
Shri Kumar Desai
Advocate
Ms. Daya Gupta
Advocate
Shri D. Sura Reddy
Asst. Legal Adviser, SEBI for Respondent
ORDER
This is an appeal against the order dated 5th September, 2003 passed by the Respondent directing the Appellant and its directors S/Shri Yogesh Ruparel and Manish Shah to dissociate themselves from the capital market for a period of 5 years and further directing them not to deal in securities in any manner whatsoever for a period of 5 years. The appeal was taken up for hearing on December 24, 2003.
The impugned order passed by the Respondent is an ex parte order because, as mentioned in the order, the Appellant had failed to appear despite repeated notices. On the date of the hearing of the appeal the learned Counsel for the Appellant drew our attention to Exhibit C attached to the Memorandum of Appeal pointing out that the notice to the Appellant mentioned in the impugned order had been sent at a wrong address and that the Appellant was therefore, totally unaware of the proceedings before the Respondent. The learned Counsel for the Appellant also drew our attention to an order passed against the Appellants by the Respondent on March 28, 2003 on similar facts involving the same key player, namely, Shri D. K. Dalal in which the Appellant had merely been directed to be cautious in future. Pointing out the disparities between the orders at Exhibit D and the impugned order, the learned Counsel argued that if the Appellant had got an opportunity to participate in the proceedings before the Respondent leading to the impugned order he would have been able to explain the correct position to the Respondent and would not have incurred the severe punishment inflicted on him by the impugned order. He, therefore, argued that the service of the notice at a wrong address had resulted in complete denial of justice to the Appellant.
The learned Counsel for the Respondent argued that the address at which the notice had been served was that of a close relative of the Appellant who was one of the directors and that it was, therefore, reasonable to assume that the Appellant had been apprised of the contents of the notice. The learned Counsel for the Appellant stated in reply that the person concerned had resigned from the directorship of the company much earlier and had been living at substantial distance from the registered office.
On going through the rival contentions we find that adequate service of notice is a pre requisite of the principles of natural justice. This is particularly so when the authorities decide to pass ex parte orders. In this case the service of notice can not be considered as adequate and proper and since there is indeed a wide disparity between the two orders dated March 28, 2003 and September 5, 2003 on somewhat identical facts. The proper address of the company was listed with the Respondent and correspondence in respect of the earlier order dated March 28, 2003 had indeed been made on that address. Non service of notice is thus obviously a serious slip rendering the entire proceedings and the resultant order non est. In these circumstances we do not consider it necessary to go into the facts or the merits of the case. The following order is passed:
ORDER
The impugned order dated September 5, 2003 is hereby, set aside. The Respondent would however, be free to intiate fresh proceeding if deemed necessary on the same facts after giving due opportunity to the Appellant of being heard.
Sd/- Sd/-
B. SAMAL N. L. LAKHANPAL
Place: Mumbai,
Date: January 12, 2004.