BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI
Appeal No.64/2002
Date of Hearing:13th April, 2004
Date of decision: 21st May, 2004
In the matter of
M/s. Shilpa Shares and Appellant – Represented by
Securities Limited Shri Hemant Sapale, Partner Advocate
Versus
Securities and Exchange Board
of India Respondent – Represented by
Shri Kumar Desai, Advocate
Coram:
Justice Shri Kumar Rajaratnam, Presiding Officer
Dr. B. Samal, Member
Shri N. L. Lakhanpal, Member
Per : Shri N. L. Lakhanpal, Member
This is an appeal against the order dated 16th May, 2002 passed by the Respondent suspending the certificate of registration of the appellant for a period of three months. It is seen from the records that the office of the appellant was got inspected by the Respondent to see whether the books of accounts, records and other documents were being maintained and business was being conducted by the appellant in accordance with the provisions of the Securities Contract (Regulation) Rules, 1957, the Securities and Exchange Board of India Act, 1992, the rules and regulations made thereunder and the Securities Contract (Regulation) Act, 1956. Since the inspection revealed serious irregularities an enquiry officer was appointed. The enquiry officer, after considering the facts, documents and records and the submissions made by the present appellant recommended that the certificate of registration of the appellant be suspended for a period of three months for violations in respect of non maintenance of books of account, document register, margin deposit book etc., non segregation of clients account from his own account and misuse of clients account, non reporting of off the floor transactions and fund based activities. In respect of some other violations the enquiry officer recommended that a warning be issued to the appellant. On the basis of the enquiry report, the respondent sent show cause notice to the appellant through the NSE which came back undelivered with the endorsement “company is locked”. The show cause notice was again sent by NSE by Registered Post A.D. and this also came back undelivered with the same endorsement. Substituted service was thereafter resorted to and the show cause notice was pasted on the door of the appellant’s premises. Thereafter the respondent passed the impugned order ex-parte on merits.
2. It is seen from the records that the present appeal proceedings are practically redundant because the impugned order was passed in May 2002 and the suspension of the certificate of registration was only for a period of three months. It is seen from the application dated 4/9/2002 of the appellant at page 131 of the appeal papers that the appellant has already undergone three suspension from 20/5/2002 to 19/8/2002. It was made out at the time of hearing of this appeal that if the appeal is allowed, the appellant will be spared the stigma of having been punished by the official regulator of the securities market. However, on going through the records we find that it is not as if the appellant had committed no violations or that the suspension of three months is an excessive penalty. The violations proved in the proceedings before the enquiry officer were indeed serious enough to have warranted the suspension for three months. If the appellant could not plead his case before the respondent, the fault lies entirely with the appellant because the respondent made all possible efforts to serve the show cause notice on him.
In the circumstances we have no other alternative except to dismiss the present appeal. The appeal is accordingly dismissed. There shall be no order as to costs.
(Pronounced in Court)
Sd/-
Justice Kumar Rajaratnam
Presiding officer
Sd/- Sd/-
Dr. B. Samal, N. L. Lakhanpal,
Member Member
Place: Mumbai
Date: 21st May
smn