Bhavesh Jain & Anr. vs Sebi

Date of Decision: 23.11.2016

Misc. Application No. 217 of 2016 And Appeal No. 269 of 2016

1.

Bhavesh Jain

2. Rakesh Jain Ramsaran Bldg., 3rd Floor Room No. 21, Jain Society, Sion (West) - 400 022 Maharashtra ...Appellants

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. Bhavesh Jain and Mr. Rakesh Jain, Appellants in Person.

Mr. Rajesh Nagory, Advocate with Mr. Saurabh Bachhawat and Mr. Vivek Rana, Advocates i/b K. Ashar & Co. for the Respondent.

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

Per: Justice J.P. Devadhar (Oral)

Misc. Application No. 217 of 2016

There is delay of 50 days in filing the appeal. By this

Miscellaneous Application, applicant seeks condonation of the said

delay. For the reasons stated in the application, delay is condoned.

Miscellaneous Application is disposed of accordingly. 2 Appeal No. 269 of 2016

1. This appeal is filed by the appellants to challenge the

communication of Securities and Exchange Board of India ("SEBI" for

short) dated April 5, 2016. By the said communication the appellants

were called upon to pay interest amounting to ` 1,08,211 on or before

April 21, 2016 failing which SEBI would take appropriate action in

accordance with law.

2. Facts relevant to the present appeal are as follows:-

a) By an order dated March 11, 2013 the Adjudicating

Officer ("AO" for short) of SEBI had imposed penalty

on the appellants under Section 15HA of the

Securities and Exchange Board of India Act, 1992

("SEBI Act" for short) for violating the Securities and

Exchange Board of India (Prohibition of Fraudulent

and Unfair Trade Practices relating to Securities

Market) Regulations, 2003 ("PFUTP Regulations" for

short). As the penalty amount was not paid within the

stipulated time, recovery proceedings were initiated

against the appellants.

b) Thereupon, appellants filed Appeal No. 113 of 2015

before this Tribunal. By an order dated September 11,

2015 this Tribunal reduced the penalty to ` 3 lac and 3

directed the appellants to pay the said penalty within

two months from September 11, 2015.

c) Challenging the order of this Tribunal the appellants

filed Civil Appeal, which was dismissed by the Apex

Court on November 21, 2015.

d) Thereafter, the appellants filed Review Application

which was also dismissed by the Apex Court on

February 10, 2016.

e) Subsequently, on March 02, 2016 appellants paid the

penalty amount of ` 3 lac to SEBI.

f) Since the amount of ` 3 lac was not paid within the

time stipulated by this Tribunal by a communication

dated March 18, 2016 the appellants were called upon

to pay the interest amounting to ` 1,08,211 on or

before March 31, 2016. However, the appellants

failed to pay the said amount.

g) Finally by the impugned communication dated April

05, 2016 interest amount of ` 1,08,211 was once

again demanded from the appellants. In the said

communication it was stated that if the entire amount

of ` 1,08,211 was not paid by April 21, 2016 action

would be taken in accordance with law. 4

h) Thereupon the appellants have filed the present appeal

on July 05, 2016.

3. Appellant No. 1 appearing on behalf of appellants in person

submitted that immediately after disposal of the Review Application by

the Apex Court on February 10, 2016 the appellants have paid the

amount of ` 3 lac on March 02, 2016 and hence SEBI is not justified in

demanding interest from the appellants. Alternatively it is submitted that

the interest be waived and SEBI be directed to forthwith lift the

attachment of all the bank accounts as well as demat accounts of the

appellants.

4. We see no merit in the aforesaid contentions.

5. At the outset, it is relevant to note that the appellants, as ordered by

this Tribunal were liable to pay the penalty amount of ` 3 lac on or

before November 10, 2015. Admittedly, that amount was not paid by

November 10, 2015. There is nothing on record to suggest that the Apex

Court had passed any stay order or granted extension of time to pay the

penalty. Even after the dismissal of the Civil Appeal by the Apex Court,

appellants instead of paying the penalty chose to file Review Application

before the Apex Court. Review Application was dismissed on February

10, 2016. Thereafter on March 02, 2016 the appellants paid only the

penalty amount of ` 3 lac without any interest. 5

6. In these circumstances, since the penalty amount was not paid

within the time stipulated by this Tribunal, SEBI is justified in

demanding interest on penalty.

7. In the appeal, the appellants have not disputed the quantum of

interest demanded by SEBI, but have sought waiver of interest on ground

that the penalty was paid after the dismissal of Review Application.

8. Having failed to pay the penalty within the stipulated time,

appellants cannot escape liability to pay interest on penalty. Hence, we

see no reason to interfere with the demand raised by SEBI.

9. Accordingly, the appeal is dismissed with no order as to costs.

Sd/-

Justice J.P. Devadhar Presiding Officer

Sd/-

Jog Singh Member

Sd/-

Dr. C.K.G. Nair Member 23.11.2016 Prepared & Compared By: PK