BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA
CORAM: V. K CHOPRA, WHOLE TIME MEMBER
ORDER
(Under Section 11B of the Securities and Exchange Board of India Act, 1992 against Shri Yeshwant M. Desai, erstwhile Director of M/s Enkay Texofood Industries Ltd.)
DATE OF HEARING: 28.06.2007
APPEARANCES:
FOR THE NOTICEE:
- Shri Shyam Mehta, Advocate representing Shri Yeshwant M. Desai
- Shri Mohit Arora, Advocate representing Shri Yeshwant M. Desai
FOR SEBI:
- Shri Jeevan Sonparote, DGM, SEBI
- Shri Mohamed Rahaz P.M., Legal Officer, SEBI
1.0 BACKGROUND
1.1 Securities and Exchange Board of India (hereinafter referred to as “SEBI”) received several complaints from investors against M/s Enkay Texofood Industries Ltd. (hereinafter referred to as “the company”) and the same were forwarded to the company for redressal. As on March 31, 2002, a total of 368 investor grievances were pending redressal with the company. SEBI, vide letter dated April 3, 2002 advised the company to meet officials of SEBI for expeditious redressal of the complaints. The company did not attend the meeting. SEBI vide show cause notice dated May 24, 2002 called upon the company to show cause as to why appropriate action / proceedings should not be taken against them under Section 11B and 27 of the Securities and Exchange Board of India Act, 1992 read with Section 621 of the Companies Act, 1956 for violation of Section 73 and 113 of the Companies Act, 1956. The company had not replied to the said show cause notice nor did it correspond with SEBI in this regards. Vide order dated October 14, 2002, SEBI directed the company and its directors to redress the grievances of the investors within a period of one month from the date of the order, failing which SEBI would be constrained to pass a restraining order on the company and its directors. An opportunity of personal hearing was granted on May 31, 2003 which was not availed and thus culminating into an order dated October 10, 2003 directing the company and its directors namely Shri Goel B. Tulsidas, Shri Goyal B. Murlimanohar, Shri Goyal B Atulkrishna, Shri Yeshwant M. Desai, Shri Jaiveer Singh Bhaker, Shri Sunil Shankar Rao, Shri Suresh Bhagwat Prasad Gupta, Shri Kamal Kishore Kabra and Shri Ajay Santoshrao to dissociate themselves from the securities market for a period of 5 years.
1.2 Subsequent to the Order, Shri Yeshwant M. Desai (hereinafter referred to as ‘noticee’) filed Appeal No. 158 of 2003 before the Hon’ble Securities Appellate Tribunal (hereinafter referred to as “SAT”) against the said order on the ground that he had resigned from the company w.e.f. July 14, 1998. He also contended before the Hon’ble SAT that he is an advocate and solicitor by profession and has been practicing full time since the year 1953. He was a partner in a law firm, M/s Ambubhai & Diwanji from 1959 to 1991 and thereafter in the law firm, M/s Desai and Diwaji. He also argued that he was a professional, non executive director of the company and was not responsible for the day to day affairs of the company. The Hon’ble SAT vide order dated July 07, 2004 set aside the above order and remanded the matter back to SEBI for a fresh consideration in accordance with law.
2.0 HEARING
2.1 In pursuance of the SAT order, in order to dispose of the matter, an opportunity of personal hearing was granted to the noticee on May 16, 2007 which was adjourned on the request of the noticee to June 28, 2007. Shri Shyam Mehta and Shri Mohit Arora, Advocates attended the hearing on behalf of the noticee on June 28, 2007. During the course of hearing, they reiterated the submissions made in their written submissions dated June 26, 2007. A copy of the Form 32 has also been submitted.
3.0 CONSIDERATION OF ISSUES & FINDINGS
3.1 The only issue to be decided in this matter is whether the noticee was responsible for the failure of the company to redress the investor grievances which were pending in the year 2002.
3.2 The noticee stated that he had not received any show cause notice or any other communication from SEBI or the company except the final order dated October 10, 2003. The noticee has claimed to have resigned from the company w.e.f. July 14, 1998. The noticee has produced the copy of the resignation letter acknowledged by the company. Further, the noticee has also produced copy of the Form 32 filed by the company.
3.3 I note that SEBI had called upon the company to address the issue of pending investor grievances in April 3, 2002. Subsequently show cause notice was issued to the company in May 2002 and the first interim directions to address the pending grievances within one month was issued to the company in October 2002 and the final order was passed on October 10, 2003.
3.4 I observe from the documents produced by the noticee establish the fact he had resigned from the company as a director and also that the effective date of the resignation is the date of filing of the Form 32 with the ROC, i.e. July 15, 1998.
3.5 In view of the fresh facts brought to my notice in the instant proceeding by the noticee in his submissions, I conclude that the noticee was not subject to the interim direction issued by SEBI in October 2002 and subsequent order dated October 10, 2003.
4.0 ORDER
4.1 Taking into consideration the totality of the facts and circumstances of the case and in exercise of the powers conferred upon me in terms of Section 19 of the Securities and Exchange Board of India Act, 1992 read with Section 11B of Securities and Exchange Board of India Act, 1992, I hereby drop the instant proceedings against the noticee, Shri Yeshwant M. Desai.
|
Place: Mumbai
|
V. K. CHOPRA
|
|
Date: June 29, 2007
|
WHOLE TIME MEMBER
|
|
|
SECURITIES AND EXCHANGE BOARD OF INDIA
|