Adventz Finance Pvt. Ltd. vs Sebi

DATE : 15.07.2016

Appeal No. 206 of 2016

Adventz Finance Pvt. Ltd. 31, B.B.D. Bagh (S), Hong Kong House, Kolkata - 700 001. ..... Appellant

Versus

1.

Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.

2. Jai Annanya Investments Pvt. Ltd.

BIA Merline Chambers, 18, Abdul Hamid Street, Floor, Room No. 101/A, Kolkata - 700 069/ ...... Respondents

Ms. Vaneesa Agrawal, Advocate for the Appellant. Mr. J. P. Sen, Senior Advocate with Mr. Nishit Dhruva, Mr. Rohan Agrawal, Advocates i/b MDP & Partners for the Respondent No. 1. Mr. Jaikishan Lakhwani, Advocate for the Respondent No. 2.

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

Per : Justice J. P. Devadhar (Oral)

1. This appeal reveals the shoddy manner in which the directions of

this Tribunal are dealt with by the Whole Time Member ('WTM' for short)

of Securities and Exchange Board of India ('SEBI' for short).

2. This Tribunal on May 6, 2016 disposed of Appeal nos. 90

(appellant herein) and 97 of 2016 by recording the statement made by

counsel of SEBI that the representations made by the appellants therein

would be heard and disposed of within seven weeks from that day. 2

3. Although one WTM of SEBI gave opportunity of hearing to the

appellant on June 21, 2016, no order was passed till June 24, 2016, the date

on which seven weeks from May 6, 2016 expired. The WTM of SEBI did

not bother to seek extension of time from this Tribunal for passing the

order.

4. It is only when the present appeal was mentioned on July 7, 2016

seeking urgent circulation, counsel for SEBI orally applied for extension of

time to pass an order. We rejected the said oral application and directed

that the appeal be placed for admission on July 12, 2016.

5. On July 12, 2016 when the appeal was taken up for hearing, counsel

for SEBI tendered a letter dated July 8, 2016 and submitted that the said

letter contains the reasons on the basis of which the competent authority viz

the WTM of SEBI has rejected the representation of the appellant herein.

On perusal of the said letter it was seen that it was not an order passed by

the WTM of SEBI but only a communication issued by the Chief General

Manager of SEBI recording the gist of the order allegedly passed by the

WTM of SEBI. With a view to enable SEBI to furnish a copy of the order

passed by the WTM of SEBI, we adjourned the matter to the post lunch

session at 2.15 P.M. AT 2.15 P.M. no such order could be produced and,

therefore, we adjourned the matter to July 13, 2016.

6. On July 13, 2016 when the appeal was taken up for hearing, Senior

Counsel for SEBI fairly stated that there is no order passed by the WTM of

SEBI and submitted that the letter dated July 8, 2016 was issued by the

Chief General Manager, on the basis of the endorsement made by the WTM

of SEBI on the office note put up by a junior officer (AM) of SEBI on June

23, 2016. Copy of the office note (without annexures) was tendered by the 3

counsel for SEBI. With a view to consider the scope and ambit of the said

file noting, we adjourned the matter to July 15, 2016.

7. Today, when the appeal is taken up for hearing, counsel for SEBI

tendered affidavit filed by the Chief General Manager of SEBI. In the said

affidavit it is stated that the WTM had instructed that a note be prepared

and accordingly, a note was prepared and put up for approval of WTM on

June 23, 2016. It is further stated in the said affidavit that alongwith the

said note, draft letters to be sent out to the appellant were also placed before

the WTM of SEBI. The said note as also draft letters were approved by the

WTM on June 27, 2016 and, accordingly, letter dated July 8, 2016 was

issued to the appellant, thereby communicating the decision of the WTM of

SEBI disposing off the representation of the appellant.

8. When questioned as to whether there is any order passed by the

WTM of SEBI, counsel for SEBI fairly stated that there is no order passed

by the WTM of SEBI.

9. Thus, it is evident that the WTM of SEBI permitted the Chief

General Manager to issue a letter to the appellant that the representation

made by the appellant has already been disposed off by the WTM of SEBI,

when in fact no order was passed by the WTM of SEBI.

10. In these circumstances, it is apparent that the WTM of SEBI sought

to represent that he has already passed an order, when in fact there was no

order passed by the WTM of SEBI.

11. As per the order passed by this Tribunal on May 6, 2016, the WTM

of SEBI was required to pass an order by June 24, 2016. Accordingly,

having heard the appellant on June 21, 2016, the WTM of SEBI was duty

bound to pass an order by June 24, 2016. If for any administrative 4

constraints it was not possible to pass an order within the stipulated time,

then the WTM of SEBI ought to have sought extension of time, which the

WTM of SEBI has failed to do. Instead, the WTM of SEBI resorted to a

totally impermissible mode of representing that an order has been passed

when in fact no order was passed by him. In such a case, informing the

party that an order disposing of the representation is already passed,

without actually passing an order, is nothing but an attempt to mislead in

the matter. We strongly condemn the irresponsible approach adopted in the

matter.

12. Since the WTM of SEBI has not passed any order, we would have

directed the WTM of SEBI who had heard the appellant on June 21, 2016

to pass an order immediately. However, we are informed that the said

WTM of SEBI is travelling.

13. In these circumstances, we quash the letter issued by the Chief

General Manager on July 8, 2016 and direct SEBI to assign the matter to

any other responsible WTM of SEBI who shall pass an order on the

representation of the appellant within two weeks from today after giving an

opportunity of hearing to the appellant. It would be open for such WTM of

SEBI to hear the representation of the appellant as also the representation

made by the Respondent No. 2 together and pass appropriate order thereon.

14. Since we are distressed with the manner in which the WTM of SEBI

has discharged his quasi judicial duties which is highly detrimental to the

interests of the securities market, we direct the registry to forward a copy of

this order to the Hon'ble Finance Minister and also to the Chairman of

SEBI for information.

5

15. Since the appellant is made to run around on account of apathy on

part of WTM of SEBI, we disposed of the appeal in the aforesaid terms

subject to payment of costs quantified at ` 1 lac to be paid by SEBI to the

appellant within one week from today.

Sd/-

Justice J. P. Devadhar Presiding Officer

Sd/-

Jog Singh Member

Sd/-

Dr. C. K. G. Nair Member 15.07.2016 Prepared & Compared by PTM