Appeal No. 145 of 2005
Date of Decision
8.3.2006
Mr. Pawan Kumar Daruka
Versus
Securities & Exchange Board of India
Present : Mr. Tushar Shridharani, advocate for the appellant
Mr. Ravi Hegde, Advocate for the respondent
Coram:
Justice N.K. Sodhi, Presiding Officer
C. Bhattacharya, Member
R. N. Bhardwaj, Member
Per: Justice N.K. Sodhi, Presiding Officer (oral)
The appellant is a registered sub-broker with the Bombay Stock Exchange. During the course of inspection the Securities and Exchange Board of India (for short “the Board”) found that the appellant had committed several irregularities in the conduct of his business as a sub-broker. It was found that he had not maintained records properly and that the annual audited accounts were not being supplied to the exchange. He had not collected margin money from his clients while trading on their behalf and that he had not segregated his own account and fund from those of his clients and was maintaining a common account and common fund. Several other irregularities had also been noticed and therefore the Board decided to initiate action under the provisions of the Securities and Exchange Board of India Act, 1992 (for short “the Act”) and the Regulations framed thereunder. An adjudicating officer was appointed who issued a show cause notice to the appellant. The notice was received but the noticee did not respond. Several reminders were issued which too had been received by the appellant but there was no response from his side with the result that the adjudicating officer had to proceed ex parte. On the basis of the available material on record he recorded a finding regarding the various irregularities to which detailed reference has been made in paragraph 5 of the impugned order. Having found various irregularities the adjudicating officer by his order dated 25.10.2004 imposed a penalty of Rs. 2.50 lakhs on the appellant which has since been deposited. It is against this order that the present appeal has been filed under Section 15T of the Act.
2. We have heard the learned representative for the appellant and the learned counsel for the Board. There is no gainsaying the fact that during the course of inspection certain irregularities in the conduct of the business of the appellant were found for which a show cause notice was issued and he did not respond. On the basis of the material available on the record, the adjudicating officer proceeded to impose the penalty as aforesaid. Since the appellant did not appear before the adjudicating officer and has not filed his reply there is nothing on the record to show that the findings as recorded by the adjudicating officer are not correct. We have therefore no hesitation in upholding the findings as recorded in the impugned order.
3. The learned counsel for the appellant then urged that the amount of penalty levied was exorbitant and that the same be reduced. It is not in dispute that the appellant has since stopped his business and that during the period when the proceedings were going on before the adjudicating officer he was carrying on business through his agent. It is also not in dispute that the agent had received all notices from the Board but there was no response. The appellant pleads that his agent was at fault in not informing him about the pending proceedings before the adjudicating officer. Be that as it may, the appellant has since stopped his business as a sub-broker and that his business was not on a large scale and therefore, we are of the view that the ends of justice would be adequately met if the order of the adjudicating officer is modified and the penalty reduced to Rs. 1 lakh. We order accordingly.
4. The appeal stands disposed of as above with no order as to costs.
R.N. BhardwajMember