Assam Company India Limited vs Sebi
- CitationAppeal No. 196 of 2017
Ratio decidendi
The rule this decision rests on
The Securities and Exchange Board of India cannot, without any investigation and without hearing the company concerned, rest an ex parte order classifying a company as a suspected shell company and moving its securities to Stage VI of the Graded Surveillance Measure solely on the strength of a communication received from the Ministry of Corporate Affairs; such an order is open to stay where the company's annual turnover over the preceding three years, as shown by documents placed before the Tribunal, prima facie appears to contradict the basis of the classification. Where an order of this kind has been stayed, the Tribunal may direct the stock exchanges to reverse their implementing decision expeditiously, and the affected company retains the right to make a representation to SEBI, which SEBI must dispose of in accordance with law; the stay does not preclude SEBI or the stock exchanges from investigating the company and initiating proceedings if they deem fit.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Date of Decision : 21.08.2017
Appeal No. 196 of 2017
Assam Company India Limited Greenwood Tea Estate, P.O., Dibrugarh, Assam. ...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. Mustafa Doctor, Senior Advocate with Mr. Sairam Subramanian, Mr. Vaisakh Shaji, and Mr. Akash Karmarkar, Advocates i/b Khaitan & Co. for the Appellant.
Mr. Tomu Francis, Advocate with Mr. Vivek Shah, Advocate for the Respondent.
CORAM : Justice J.P. Devadhar, Presiding Officer Dr. C.K.G. Nair, Member
Per : J.P. Devadhar (Oral)
1.
Without conducting any investigation and without hearing the
appellant, whether the Securities and Exchange Board of India ("SEBI" for
short), solely based on the letter dated 09.06.2017 received from the
Ministry of Corporate Affairs (MCA), is justified in passing the ex-parte
order on 07.08.2017 and directing the stock exchanges to treat, inter alia, the
appellant company as a 'suspected shell company' and suspend the daily
trading in the securities of the appellant company on the stock exchanges by
moving the securities of the appellant company to Stage VI of Graded
Surveillance Measure ("GSM" for short) is the question raised in this
appeal.
2
2. Similar question was raised in the case of J. Kumar Infraprojects Ltd.
(Appeal No. 174 of 2017) and by our order dated 10.08.2017 we have
stayed direction 1(a) & (b) contained in the impugned communication of
SEBI dated 07.08.2017 qua the appellant therein.
3. In view of the facts set out in the Memorandum of Appeal and other
documents tendered at the time of hearing relating to annual turnover of the
appellant company for last three years, which even according to SEBI prima
facie appear to be correct, we extend the said stay to the case of the
appellant company herein and direct the stock exchanges to reverse their
decision in respect of the appellant company as expeditiously as possible.
4. Appellant company is at liberty to make a representation to SEBI
against the impugned communication of SEBI dated 07.08.2017. If
representation is made, SEBI shall dispose of the said representation in
accordance with law.
5. It is made clear that this order shall not come in the way of SEBI as
well as the stock exchanges to investigate the case of the appellant company
and initiate proceedings if deemed fit.
6. Appeal is disposed of in the aforesaid terms with no order as to costs.
Sd/-
Justice J.P. Devadhar Presiding Officer
Sd/-
Dr. C.K.G. Nair Member
21.08.2017 Prepared and compared by:
msb
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