BEFORE THE SECURITIES APPELLATE TRIBUNAL, MUMBAI
Appeal No.128/05
Date of Hearing : 19.10.2005
Date of Decision : 19.10.2005
In the matter of:
Appellant : M/s. Coverage & Consultants Ltd., Indore
Respondent : Securities and Exchange Board of India, Mumbai
Appellant by : Shri J.J. Bhatt, Advocate
Respondent by : Shri Cherag Balsara, Advocate
Coram:
Justice Kumar Rajaratnam, Presiding Officer
C. Bhattacharya, Member
R.N. Bhardwaj, Member
Per: Justice Kumar Rajaratnam, Presiding Officer
The appeal is taken up with the consent of parties.
2. The appellant-company has been imposed with a penalty of Rs.27 lakhs for not answering summons by an order dated 28th June 2005.
3. Aggrieved by this order, the appellant has preferred this appeal.
4. In normal circumstances, we would have taken a lenient view of the matter taking into account earlier precedents.
5. However, the non-answering of summons in this case by the appellant even at this stage has caused enormous difficulty to the respondent in determining the real culprits behind the fungible shares of Accurate Exports Ltd.
6. Learned counsel for the appellant submitted that the company is defunct and further submitted that the company cannot be prosecuted in a criminal case for failure of payment of the penalty and relied on the judgment of the Supreme court reported in Standard Chartered Bank and Others vs. Directorate of Enforcement and Others (2005 Supreme Court Cases (Cri) 961).
7. Learned counsel for the respondent, Mr. Balsara, vehemently argued that this is one of the extraordinary cases where investigation was hampered because of the non-co-operation of the appellant. In fact, it was submitted that even at this stage the information sought for in the summons has not been furnished to the Investigating Officer. He submitted that this is a continuing offence.
8. Mere filing of an affidavit before the Tribunal giving some sketchy details would not absolve the appellant from appearing before the Investigating Officer and having his statement recorded.
9. However, taking into account the facts and circumstances of the case and also taking into account that the appellant is now willing to co-operate fully with the respondent within two weeks from the date of receipt of this order, we feel it appropriate, without it being a precedent, to modify the penalty to Ten Lakhs of Rupees. Therefore, the order of the respondent is modified accordingly.
10. It is also common ground that independent action is being taken against the appellant u/s. 11 of the Act to debar the appellant from the securities market and show cause notice has been issued to that effect. However, this action will not in any way have any relevance to the present proceeding, which is u/s.15A.
11. No order as to costs.
(Dictated in open Court)
Sd/-
Justice Kumar Rajaratnam
Presiding Officer
Sd/- Sd/-
(R.N. Bhardwaj) (C. Bhattacharya)
Member Member
Place: Mumbai
Date: 19.10.2005
Avm