Aryavrat Suppliers Private Limited vs Sebi

Date : 29.01.2024

Appeal No. 13 of 2024

Sanjay Kumar Agrawal & Anr. ...Appellants

Versus

Securities and Exchange Board of India ...Respondent

Mr. Vikas Bengani, Advocate for the Appellant.

Mr. Pradeep Sancheti, Senior Advocate with Mr. Manish Chhangani, Mr. Sumit Yadav, Mr. Abhay Chauhan and Mr. Atul Kumar Agrawal, Advocates i/b The Law Point for the Respondent - SEBI.

AND Appeal No. 14 of 2024

Aryavrat Suppliers Private Limited ...Appellant

Versus

Securities and Exchange Board of India ...Respondent

Mr. Vikas Bengani, Advocate for the Appellant.

Mr. Pradeep Sancheti, Senior Advocate with Mr. Manish Chhangani, Mr. Sumit Yadav, Mr. Abhay Chauhan and Mr. Atul Kumar Agrawal, Advocates i/b The Law Point for the Respondent - SEBI. 2

ORDER:

1. Appeal no. 13 of 2024 has been filed by Sanjay Kumar

Agrawal (Appellant no. 1) and Sunita Agrawal (Appellant no. 2)

challenging the Order No. QJA/GR/IVD/ID16/29180/2023-24

dated September 8, 2023 issued by the Securities and Exchange

Board of India ('SEBI' for short) whereby the Appellants have

been restrained from accessing the securities market for a period

of 6 months from the date of the order and a penalty of Rs. 5

lakh each has been imposed under Section 15HA of the SEBI

Act, 1992 on the ground that by virtue of holding promotership

and directorship of the Company, namely, Gokul Solutions

Limited (GSL) and by providing funds to an entity who traded

in the scrip, the Appellants were guilty of manipulating the scrip

of GSL. Appeal no. 14 of 2024 has been filed by Aryavrat

Suppliers Private Limited impugning the above stated order

dated September 8, 2023 whereby the appellant, Aryavrat

Suppliers Private Limited (Appeal no. 14 of 2024) has been

restrained from accessing the securities market for a period of 6

months from the date of the order and a penalty of Rs. 5 lakh

has been imposed under Section 15HA of the SEBI Act. The

Appellant has also been directed to disgorge the unlawful gain 3

of Rs. 24.98 lakh being the alleged amount of enrichment made

by the appellant at the cost of investing public.

2. It is the case of the Appellants that, at this stage, interim

relief be provided to them by staying the impugned order dated

September 8, 2023 as the original order uploaded on the website

of the Respondent was removed and a fresh order was uploaded

wherein a number of modifications, additions and deletions

were made. Further, there has been an inordinate delay in

initiation and conclusion of the proceedings. The Appellant nos.

1 and 2 have not executed any trades in the scrip and they have

a strong case on merits as they have been made vicariously

liable for mistakes allegedly committed by the Company

without any evidence about their involvement in the

manipulation of the scrip of the Company. The Appellants have

also contended that while this appeal has been admitted by this

Tribunal, the Respondent has started Recovery Proceedings

instead of awaiting the result of the Appeal.

3. On the other hand, the Respondent stated that the

Appellants have not filed any miscellaneous application seeking

interim relief. They have not raised sufficient grounds to show

that the findings against them were erroneous. A minimum 4

penalty of Rs. 5 lakh under Section 15HA of SEBI Act, 1992

has been imposed on the Appellants and they have not produced

any evidence to show that they are incapable of paying the

penalty amount. On the uploading of the order on SEBI's

website, the Respondent stated that an unended draft of the

order got inadvertently uploaded instead of the final version of

the signed order. The mistake was immediately corrected by

uploading the correct version of the final order. The

modifications were inconsequential changes and corrections of

the errors which can be rectified under Rule 5(5) of the SEBI

(Procedure for Holding Inquiry and Imposing Penalties) Rules,

1995.

4. Having heard both the parties on the interim relief sought

by the Appellants, I am of the view that keeping in view that

Appellant nos. 1 and 2 have not traded in the scrip of the

Company and in order to balance the equities, it would be

appropriate to direct the Appellant no. 1 (Sanjay Kumar

Agrawal) and Appellant no. 2 (Sunita Agrawal) in Appeal no.

13 of 2024 to deposit a sum of Rs. 2.50 lakh each before the

Respondent within two weeks from today. If the same amount is

deposited, the balance amount shall not be recovered during the

pendency of the appeal. Considering that trades carried out by 5

the Appellant has been impugned, no interim relief is being

allowed to Aryavrat Suppliers Private Limited in Appeal no. 14

of 2024 at this stage.

5. Let a reply be filed by the Respondent on the appeal

within three weeks. Rejoinder to be filed within three weeks

thereafter. The matter would be listed for admission and for

final disposal on April 2, 2024.

Ms. Meera Swarup Technical Member

29.01.2024 MADHUKAR Digitally signed by MADHUKAR SHAMRAO SHAMRAO msb BHALBAR BHALBAR Date: 2024.01.31 17:29:58 +05'30'