IN THE SECURITIES APPELLATE TRIBUNAL MUMBAI

 

 

Review Application No. 13 of 2006

 in

 Appeal No. 21 of 2006

 

Date of Decision

2.3.2007

 

Jermyn Capital LLC	……	Applicant- Appellant
Versus
Securities & Exchange Board of India	……	Respondent

 

Present : Mr. Janak Dwarkadas, Sr. Advocate with Mr. Shuva Mandal,  Mr. Ashni Roy & Mr. Jaitra Jani, Advocates for the appellant

 

 Mr. J.J. Bhatt, Sr. Advocate with Mr. Anant Upadhyay, Advocate for the respondent

 

Coram:

 Justice N.K. Sodhi, Presiding Officer

 R. N. Bhardwaj, Member

 

Per: Justice N.K. Sodhi, Presiding Officer

 

 

 This is an application filed under Section 15U of the Securities and Exchange Board of India Act, 1992 seeking review of our order dated 6.9.2006 dismissing Appeal no. 21 of 2006 filed by the applicant wherein we upheld the finding of the respondent Board that the applicant was not a fit and proper person to access the capital market. The primary ground on which the order is sought to be reviewed is that while disposing of the appeal we did not deal with some of the contentions raised by the applicant at the time of the hearing of the appeal. It is urged that the applicant had contended during the course of the hearing of the appeal that it had no concern with Ketan Parekh and that the respondent was not right in levelling the charge that it was Ketan Parekh who was carrying on the operations in the garb of the applicant and that this contention has not been dealt with in our order under review. It is true that this contention was raised and we were of the view that the gravamen of the charge levelled against the applicant was that it was not a “fit and proper person” which charge we upheld for reasons other than those which weighed with the respondent Board. We have held in our order that the applicant is not a “fit and proper person” because Mr. Hugh Hamilton Andrews who admittedly managed from Dubai the operations of the applicant company in the securities market in India is a close associate of one Mr. Dharmesh Doshi who is a close associate of Ketan Parekh. In other words, we upheld the charge on a different ground. It is also true that Shri Janak Dwarkadas, the learned senior counsel appearing for the applicant had raised some other pleas as well while challenging the order dated 13.6.2006 passed by the respondent Board which had been impugned in the appeal. Since we had come to the conclusion that the applicant/appellant is not a “fit and proper person”, it was not necessary for us to deal with any other contention. Securities and Exchange Board of India (Criteria for Fit and Proper Person) Regulations, 2004 apply across the board to all intermediaries and persons who want to associate themselves with the securities market and they require such persons to be “fit and proper person”. Once we hold that a particular intermediary or a person is not a “fit and proper person” within the meaning of these Regulations then he cannot have access to the securities market and it is for this reason that we did not deal with the other contentions. We could have observed in our order that it was not necessary for the other contentions to be dealt with in view of our finding that the applicant is not a fit and proper person.

   2.            The learned senior counsel then contended that we were not justified in making adverse observations against Mr. Andrews as his conduct was not in issue and it did not form part of the show cause notice. He drew our attention to paragraph 10 of the order wherein we have observed that “Because of this business/professional association it is legitimate to infer that Andrews too does not enjoy a good reputation.” We cannot agree with this submission. What was in issue before us was whether the applicant which is a limited company incorporated in Dubai was a “fit and proper person” or not. We have already observed in our order that when the reputation of a body corporate is in issue then the reputation of the persons who manage that body corporate is to be seen. Admittedly, Andrews manages the affairs of the applicant company which is clear from its Articles of Association. Therefore, his conduct had to be examined and while examining his conduct we concluded that he was a close associate of Dharmesh Doshi who was absconding from the country and also of Ketan Parekh who has been debarred from accessing the capital market for 14 years. It is for this reason that we observed that Andrews did not enjoy a good reputation in the context of the securities market. It cannot be said that we could not comment on his conduct.

   3.            Lastly, it was emphatically contended by the learned senior counsel for the applicant that we were not justified in placing reliance on the chargesheet filed by the CBI against Dharmesh Doshi and Ketan Parekh and that the said chargesheet did not form part of the show cause notice. The argument is that the principles of natural justice have been violated in as much as the applicant had no opportunity to show cause against what was stated in the said chargesheet. We cannot accept this contention either. During the course of the hearing of the appeal an issue arose whether the passport of Dharmesh Doshi had been revoked or not and we called upon the learned counsel for the respondent Board to produce the records. He produced a file which contained a copy of the order of the competent authority revoking the passport. Be that as it may, the file also had in it a copy of the chargesheet that has been filed by the CBI in the Court of Chief Metropolitan Magistrate, Ahmedabad against Dharmesh Doshi, Ketan Parekh and several others under Sections 405, 406, 408, 409, 420 and 120B IPC. Since the chargesheet was on the record of the respondent Board and even though no reference had been made to it in the order that had been impugned before us, we looked into the same and our findings have been recorded in the order now sought to be reviewed. We may mention that even though the respondent Board did not refer to the chargesheet as such, it took note of the criminal case pending against the aforesaid persons in the Court of Chief Metropolitan Magistrate, Ahmedabad and also to the non-bailable warrants issued by that Court against Dharmesh Doshi on the basis of which a red corner notice had been issued by the Interpol against him. The chargesheet had been filed in that case and it is a document which is on the record before the Board and from the contents thereof we drew our inference that the applicant was not a fit and proper person because of the association of Andrews with Dharmesh Doshi and Ketan Parekh against whom criminal cases were pending.

   4.            In the result, we find no ground to review our order and dismiss the review application.

 

 

2.3.2007

 

//SR2/3/07 15:35