IN THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Appeal No. 14 of 2006
Date of decision: 24.07.2007
Messrs Hanil Era Textiles Ltd. ………Appellant
Versus
Securities & Exchange Board of India ………Respondent
Mr. Sean Wassoodew Advocate for the appellant.
Mr. Chirag Balsara Advocate with Shri. Anant Upadhyay, Advocate for the respondent.
CORAM
Justice N. K. Sodhi, Presiding Officer
Arun Bhargava, Member
Utpal Bhattacharya, Member
Per: Justice N. K. Sodhi, Presiding Officer (Oral)
The appeal under section 15T of the Securities and Exchange Board of India Act, 1992 is directed against the order dated November 21, 2005 passed by the adjudicating officer imposing a penalty of rupees ten lacs on the appellant company for not redressing the grievances of its investors.
The Securities and Exchange Board of India (for short the Board) received several complaints from the investors of the appellant company to the effect that their grievances had not been redressed. The grievances pertain to non –receipt of share certificates after transfer and non receipt of duplicate share certificates after indemnity bonds had been duly executed. The main grievance of the investors was that they had not received interest on debentures and also non –receipt of the redemption amount. Some of the investors had also complained that they had not received dividends on shares as declared by the company and that interest on delayed payment of redemption amount too had not been received. Adjudication proceedings were initiated to inquire whether the grievances of the investors had been redressed or not. The adjudicating officer issued a show cause notice dated December 7, 2004 calling upon the appellant to file its reply within fourteen days from the date of receipt thereof. Admittedly, no reply was filed. The adjudicating officer proceeded with the inquiry and before concluding the same decided to afford a personal hearing to the appellant. Several notices were issued to the appellant at its registered office and even though some of those were received by the appellant, it did not appear before the adjudicating officer. By order dated November 21, 2005, the adjudicating officer concluded that the appellant had not redressed the grievances of its investors and, therefore, was liable to a penalty and accordingly imposed a sum of rupees ten lacs as penalty on the appellant. Hence this appeal.
One of the grievances of the appellant is that the show cause notice was never received by it and, therefore, it could not file its reply. We have seen the original record produced by the learned counsel for the Board and are satisfied that the aforesaid show cause notice had been received by one J. P. Kamani who is admittedly an officer of the appellant company. This notice appears to have been received by him in the office of the Board on 25.1.2005 when he had gone there to appear in response to a letter subsequently written to the appellant. Since the appellant had been severed with the show cause notice and it did not file any reply, the impugned order passed by the adjudicating officer could be upheld on that ground alone. However, the learned counsel for the appellant strenuously contends before us that all the grievances of the investors have since been redressed and that the unclaimed redemption amount due to the investors had been deposited in the investor protection fund as per the requirements of the Companies Act. He further contends that the other complaints of the investors have also been looked into and redressed to their satisfaction. In view of the categoric stand taken by the appellant, we are of the view that the ends of justice would be adequately med if the appellant is given one last opportunity to appear before the adjudicating officer and satisfy him that the grievances made by its investors have since been redressed. We, therefore, set aside the impugned order and direct the appellant to appear before the adjudicating officer on August 7, 2007 at 11.00 a.m. with all the material in its possession to satisfy the latter that the grievances of the investors have been redressed. It will be open to the adjudication officer to call upon the appellant to produce such further material as he may deem necessary and after examining all the documents and material produced before him, he shall pass a fresh order in accordance with law. There is no order as to the costs.
Sd/-
Justice N. K. Sodhi
Presiding Officer
Sd/-
Arun Bhargava
Member
Sd/-
Utpal Bhattacharya
Member