Aadya Commodities Pvt. Ltd. vs Sebi

Date of Decision : 16.01.2018

Misc. Application No. 351 of 2017 And Appeal No. 383 of 2017

Aadya Commodities Pvt. Ltd. Through Ms. Vandana Sinha (AR) 13, 2nd Floor, Vaishali, Pitampura, New Delhi - 110 088. ...Appellant

Versus [[

Multi Commodities Exchange of India Limited Exchange Square, Suren Road, Chakala, Andheri (East), Mumbai - 400 093. ...Respondent

Mr. Rakesh Kumar Sinha, Advocate with Mr. Rajeev Kumar Jha, Advocate for the Appellant.

Mr. Sameer Pandit, Advocate with Ms. Madhupreetha Elango, Advocate i/b Wadia Ghandy & Co. for the Respondent.

CORAM : Justice J.P. Devadhar, Presiding Officer Jog Singh, Member Dr. C.K.G. Nair, Member

Per : Dr. C.K.G. Nair (Oral)

Misc. Application No. 351 of 2017:-

There is delay of 18 days in filing the appeal. By Miscellaneous

application applicant seeks condonation of the said delay. For the reasons

stated in the Misc. Application, delay is condoned. Miscellaneous

Application is disposed of accordingly. 2

Appeal No. 383 of 2017:-

1.

This appeal has been filed challenging the order / e-mail

communication dated October 25, 2017 issued by the Multi Commodity

Exchange of India Limited ('MCX' for short) whereby the request of the

appellant for recalling an earlier ex parte order passed by the MCX dated

September 18, 2017 has been rejected. By the order dated September 18,

2017 passed by MCX the appellant had been declared a 'Defaulter' under

Rule 41(a) with immediate effect and with all the attendant consequences

for violation of rules of the exchange in not honouring the orders of the

Investor Grievance Redressal Committee ('IGRC') of the exchange.

2. The appellant is a Company functioning as a member / broker of

MCX. The basic contention of the Learned Counsel for the appellant

Shri. Rakesh Kumar Sinha is that the appellant has sufficient funds to meet

the obligation towards its clients. However, because of the restraint imposed

by the Securities and Exchange Board of India ('SEBI' for short) on August

22, 2017, inter alia against the appellant and its group entities from dealing

in the securities market directly or indirectly and from alienating any of their

assets etc., the appellant is not in a position to immediately honour its

obligations. Accordingly, the appellant has sought more time from the

respondent MCX. The appellant has also submitted a representation to SEBI

against the order (supra) passed by SEBI on August 22, 2017 stating that

they have no role in the alleged violations made by their group entity

Amrapali Aadya Trading & Investment Pvt. Ltd. ('ATIPL'). Further, on

receipt of the show cause notice dated September 4, 2017 from MCX

relating to pending complaints against the appellant with MCX and

insufficiency of funds to meet the obligations etc and further to the letter of 3

MCX dated September 7, 2017 asking the appellant to appear before the

Defaulter's Committee at 12.30 p.m. on September 13, 2017, the appellant

had sent an e-mail on September 13, 2017 seeking four more weeks' time to

file their reply. This extended time period was required because of various

developments in their Company consequent to the issue of the ex parte ad

interim order by SEBI dated August 22, 2017. The crux of the argument of

the appellant is that they have sufficient funds with them which could have

been used to repay the outstanding obligation towards their clients, but for

the restraint order issued by SEBI.

3. Shri Sameer Pandit, Learned Counsel for the respondent MCX fairly

stated that they are concerned with the obligations to the investors and the

impugned orders are issued only to enforce the same. Further, he stated that

the obligation may not be limited to the 15 complaints on which the IGRC

has admitted a total claim of Rs. 58.32 Lakh. There may be other investors /

claimants also approaching the exchange in due course. All such claims will

have to be honoured by the appellant.

4. We do not find any merit in the arguments advanced by the Learned

Counsel for the appellant. If sufficient funds are available with them nobody

is preventing the appellant from discharging their obligation towards their

clients. The argument of the appellant that the ex parte ad interim order of

SEBI dated August 22, 2017 is coming in the way of discharging their

obligation has no merit since the primary objective of the SEBI order itself

is to protect the interests of the investors and SEBI would not come in the

way of any legitimate proposal from the part of the appellant to honour their

obligations towards their clients / investors and to that extent allowing them

to deal in securities etc. The appellant's intention by taking shelter under 4

the SEBI order dated August 22, 2017 as well as in seeking more time from

SEBI and from MCX who is respondent in the present appeal on the date on

which they had to appear for personal hearing etc. clearly show that the

appellant is not serious in discharging their obligations towards their

investors / clients. Given these reasons, we do not find any merit in the

arguments advanced by the appellant in seeking recall of the order of the

MCX dated September 18, 2017 or in dismissing MCX's order dated

October 25, 2017.

5. In the result, appeal does not survive and the same is hereby

dismissed. No order on costs.

Sd/-

Justice J.P. Devadhar Presiding Officer

Sd/-

Jog Singh Member

Sd/-

Dr. C.K.G. Nair Member 16.01.2018 Prepared and compared by: msb