Dr. Uppal Devinder Kumar vs Sebi
- CitationAppeal No.87 of 2016
Ratio decidendi
The rule this decision rests on
An adjudicating officer's finding that a person acted as a director, made without recording any reasons on the material relied on and without considering the register of the Registrar of Companies, cannot be sustained; a finding of this kind requires reasoned consideration of the evidence bearing on the appointment. Where the adjudicating officer relies on investigation material to establish that a person acted as a director and that material is not put to that person, the person must be given an opportunity to deal with it before the finding is made, and absent such an opportunity the finding and the penalty founded on it are liable to be set aside.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI Date : 23/06/2016
Appeal No.87 of 2016
Dr. Uppal Devinder Kumar 58B, Raghunath Enclave, Aggar Nagar A, Ludhiana, Punjab. ... 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. Somasekhar Sundaresan a/w Mr. Paras Parekh and Mr. Dhaval Kothari, Advocates i/b J. Sagar Associates for the Appellant.
Mr. Shyam Mehta, Senior Advocate a/w Mr. Saurabh Bachhawat, Advocate 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)
1.
The Appellant is aggrieved by the order passed by the Adjudicating
Officer ("AO" for short) of the Securities and Exchange Board of India
("SEBI" for short) on 2nd February, 2016. By the said order, the Appellant is
directed to pay Rs.2,31,50,000/- under Section 15HA of the Securities and
Exchange Board of India Act ("SEBI Act" for short) for violating Section
12(1B) of SEBI Act.
2. The grievance of the Appellant all along had been that he was never
appointed as a Director of PACL Ltd. and even PACL Ltd. had not made any
filings before the Registrar of Companies stating that the Appellant was a
Director of PACL Ltd.
2
3. In spite of the specific stand taken by the Appellant to the above effect,
the AO of SEBI has rejected the contention of the Appellant in para 24.6.9 &
24.6.10 of the impugned order by merely recording that there is no reason to
disbelieve the findings recorded in the investigation report. The impugned
order does not set out the basis on which the investigation report considers that
the Appellant had acted as a Director of PACL Ltd. In any event, without
considering the merits of the investigation report qua the register maintained by
the Registrar of Companies and recording a specific finding, the AO could not
have held that the Appellant had acted as a Director of PACL Ltd. Assuming
that there was any material in the investigation report to suggest that the
Appellant had acted as a Director, then the AO ought to have given an
opportunity to the Appellant to deal with that evidence. In the absence of any
such opportunity given, the AO is not justified in holding that the Appellant
had acted as a Director of PACL Ltd. and impose penalty on the Appellant
along with other Directors of PACL Ltd.
4. For the aforesaid reasons, we quash and set aside the impugned order
qua the Appellant and restore the matter to the file of AO of SEBI for passing
fresh order on merits and in accordance with law.
5. Appeal is disposed of in the above terms with no order as to costs.
Sd/-
Justice J.P. Devadhar Presiding Officer
Sd/-
Jog Singh Member
Sd/-
Dr. C.K.G. Nair Member 23/06/2016 Prepared & compared by-ddg
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