Amit Misra vs Sebi

Order Reserved on: 14.01.2020 Date of Decision : 17.01.2020

Appeal No. 409 of 2019

Amit Misra S-201, Prayagkunj - 3, Strachey Road, Civil Lines, Allahabad - 211 001 (Uttar Pradesh) ..... Appellant Versus Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051. ... Respondent

Mr. Amit Agrawal, Advocate with Mr. Mittu Choudhary and Mr. Sahil Raveen, Advocates i/b Regstreet Law Advisors for the Appellant.

Mr. Pradeep Sancheti, Senior Advocate with Ms. Eram Quraishi and Mr. Harshad Vyas, Advocates i/b MDP & Partners for the Respondent.

CORAM : Justice Tarun Agarwala, Presiding Officer Justice M.T. Joshi, Judicial Member

Per : Justice Tarun Agarwala, Presiding Officer

1.

The present appeal has been filed against the order dated

July 11, 2019 passed by the Whole Time Member ('WTM'

for short) of the Securities and Exchange Board of India 2

('SEBI') issuing various directions under Section 11 and 11B

of the SEBI Act, 1992. The facts leading to the filing of the

present appeal is, that SEBI observed that Togo Retail

Marketing Limited ('TRML/the Company' for short) had

made an offer of equity shares during financial years 2003-04,

2004-05 and 2008-09 from 8424 allottees and raised an

amount of Rs. 7.74 crore. The said offer of equity shares was

found to be in violation of SEBI laws and the Companies Act,

1956. Accordingly, an ex parte interim order dated August 5,

2015 was passed against the Company and its directors

including the appellant restraining them from mobilizing

funds through the issue of equity shares, prohibiting any

diversion of funds and restraining them from accessing the

securities market. Inspite of this interim order, the appellant

did not appear before the WTM nor offered any explanation

or reply. As a result, a final order dated July 11, 2019 was

passed by the WTM wherein the appellant along with other

entities have been directed to refund the amount collected

through the open offer along with interest at the rate of 15%

per annum. The appellant has been directed to provide a full

inventory of its assets and properties and further has been

directed to provide details of all the bank accounts etc. 3

The appellant has also been prevented from selling his assets

till such time the refund is not made.

2. The appellant being aggrieved by the aforesaid order has

filed the present appeal.

3. The appellant in the impugned order has been shown as

Director from July 12, 2006 to October 8, 2007 and Managing

Director from October 9, 2007 to April 16, 2012. During this

period the WTM has found that the Company had issued

591200 shares to 61 investors. The WTM also came to the

conclusion that the appellant alongwith other Directors had

violated Section 56, Section 60 and Section 73 of the

Companies Act, 1956 while making an offer to the public.

4. We have heard Shri. Amit Agrawal, the learned Counsel

for the appellant and Shri Pradeep Sancheti, the learned

Senior Counsel for the respondent SEBI. The learned counsel

for the appellant contended that the appellant has become a

victim of fraud played by the Company and its promoter. The

learned counsel further contended that the appellant was only

an employee being the sales manager in the Company and

was never appointed as a Director or Managing Director.

It was contended that the appellant had never given any 4

consent and that all the documents that have been relied upon

are on the basis of forged letters.

5. In this regard we have perused Form 32 Exhibit 'N' to

the memo of appeal where we find that the appellant has been

shown as 'Independent' and again as 'Executive Director'.

The attachment annexed to the Form 32 is the alleged consent

letter dated October 9, 2007 given by the appellant for

becoming the Managing Director of the Company. A perusal

of this consent letter indicates that one Kishan Pal Singh has

signed this letter and that the consent letter has not been

signed by the appellant. The extract of the minutes of the

Board of Directors of the Company held on October 9, 2007

indicates that the appellant was appointed as Managing

Director with effect from October 9, 2009 whereas the WTM

has recorded that the appellant had been appointed with effect

from October 9, 2007.

6. The WTM in its order has relied upon Form 32 and has

further contended that if any of the Directors find that the

entries are incorrect it would be open to the said entities

including the appellant to get appropriate order from a Court

of law.

5

7. Be that as it may. We find that there is a lot of

discrepancy in Form 32 which has been relied upon by the

WTM. The date of the appointment is not clear, namely,

whether the appellant was appointed as a Board of Director

on October 9, 2007 or October 9, 2009. At one place he has

shown to be appointed as Managing Director but the

resignation letter only shows that he was a Director.

At another place he has been shown as 'Executive Director'

in 'Independent' category and again in the same Form he has

been shown as a 'Managing Director'. Thus, there are

contradictory entries in Form 32. Further, we find that the

consent letter has been signed by some other person and not

by the appellant. The supporting documents annexed to

Form 32, namely, the consent letter and the extracts of the

minutes of the Board of Directors does not reflect the correct

picture. On the other hand, the appellant contends that he was

merely an employee and was never a Director and had no

involvement in the day-to-day affairs of the running of the

Company.

8. In the light of the aforesaid, the impugned order passed

by the WTM insofar as it relates to the appellant cannot be 6

sustained and is quashed. The appeal is allowed. The matter is

remitted to the WTM to pass a fresh order in accordance with

law after giving an opportunity to the appellant to place his

contention and after making due enquiries from the relevant

records. In this regard, we direct the appellant to appear

before the WTM on February 14, 2020 on which date the

appellant shall file his reply and WTM will proceed from

there onwards and pass appropriate orders after giving an

opportunity of hearing. No order on costs.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Justice M.T. Joshi Judicial Member 17.01.2020 Prepared and compared by:msb