Girishchandra M. Baluni vs Sebi

Date of Decision: 27/08/2018

Misc. Application No.214 of 2018 In Review Application No.5 of 2018 In Appeal No.340 of 2017

Securities and Exchange Board of India SEBI Bhavan, Plot No.C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ... Applicant (Org. Respondent)

Versus

Girishchandra M. Baluni L-112, Swatantra Senaninagar, Near Akhbarnagar, New Wadaj, Ahmedabad - 30 013. ... Respondent (Org. Appellant)

Mr. Vishal Kanade a/w Mr. Pulkit Sukhramani and Ms. Vidhi Jhawar, Advocates i/b The Law Point for Applicant-Org. Respondent.

Mr. Rakesh Puri, Advocate for the Respondent-Org. Appellant.

CORAM : Dr. C.K.G. Nair, Member

Per : Dr. C.K.G. Nair, Member (Oral)

Misc. Application No.214 of 2018 in Review Application No.5 of 2018:-

1.

By this Misc. Application, Applicant (Org. Respondent) seeks

condonation of 33 days delay in filing the Review Application. For the

reasons stated in the Misc. Application, delay is condoned. Misc.

Application is disposed of accordingly.

2

Review Application No.5 of 2018 in Appeal No.340 of 2017:-

2. This Review Application has been filed by SEBI (Org.

Respondent) seeking certain modifications/deletion in the order passed

by this Appellate Tribunal on 20/4/2018 in Appeal No.340 of 2017. The

operational part of the said order reads as follows:-

"5. In view of the above document which is not disputed by SEBI, it becomes evident that the appellant cannot be said to be a current director of Neesa Technologies Ltd.

6. In these circumstances decision of the WTM that the appellant continues to be a director of Neesa Technologies Ltd. cannot be sustained. Consequently, directions issued against the appellant to refund the monies collected by Neesa Technologies Ltd. along with other directors jointly and severally cannot be sustained.

7. In the result, impugned order is quashed and set aside qua the appellant and the appeal is allowed in the aforesaid terms with no order as to costs."

3. It is the submission of Applicant SEBI that the direction passed

by this Appellate Tribunal is only in respect of the liability of the

Respondent (Org. Appellant) as far as refund of monies collected by

Neesa Technologies Ltd. ("the company") through issuance of Non-

Convertible Debentures ("NCDs"). Further, it is submitted that the said

Order does not deal with the other direction passed by SEBI in the

impugned order against the Respondent (Org. Appellant) i.e.

debarment for a period of four years. It is the contention of SEBI

(Applicant) that the issue of liability of a director of the company in

totality was not argued before this Appellate Tribunal and hence, the

direction of four years debarment was not dealt with by the Original 3

Appellant. Order dated 20/4/2018 was passed by this Appellate

Tribunal only on hearing the period of the directorship of the Org.

Appellant and, therefore, the issue of debarment was not dealt with. If

the totality of the position is not dealt with, the legal liability of a

director as has been established by law through a number of judgments

of this Appellate Tribunal as well as by the Apex Court would be

vitiated. Hence, the prayer for partial review of this Appellate

Tribunal's Order dated 20/4/2018.

4. To state the facts briefly, the Respondent (Org. Appellant) was a

Director/Addl. Director of the company on two occasions; from

12/9/2011 to 24/4/2012 and 21/1/2014 to 27/5/2015. The company, Neesa

Technologies Ltd., collected monies from the public through allotment

of NCDs during 2013-14. An ex-parte order was passed by SEBI in this

matter on 3/6/2015 which was quashed and remanded back to SEBI

vide this Appellate Tribunal's Order dated 20/6/2017 in Appeal No.260

of 2016. Thereafter, SEBI passed the Order dated 20/9/2017 which on an

appeal was quashed against the Respondent (Org. Appellant) herein

vide our order dated 20/4/2018, which is sought to be modified by the

Review Application.

5. The learned Counsel for SEBI further submitted that the

Respondent (Orig. Appellant) was well aware that the Company -

Neesa Technologies Ltd. - had collected monies from the public

illegally through the issuance of NCDs since in the interim order of the 4

Whole Time Member of SEBI dated 3/6/2015 it was clearly stated that

SEBI had received complaints dated 15/9/2014 and vide their letter

dated 6/11/2014 SEBI sought detailed information from the Neesa

Technologies Ltd. and its directors including the Respondent (Org.

Appellant) in this Review Application. Though the company and one

of the directors submitted their replies, the Respondent herein did not

provide any reply. He resigned from the company only on 04/03/2015

and therefore, on 6/11/2014 when the communication was issued by

SEBI, he was very much part of the Board of Directors of the company

and was responsible for the affairs of the company. Moreover, one of

the directions of this Appellate Tribunal while remanding Appeal

No.260 of 2016 vide order dated 20/6/2017 was to examine the reasons

behind many of the directors of the company joining for a short time,

resigning and then rejoining, etc. It was, therefore, not that this

Appellate Tribunal had given a clean chit to the Org. Appellant

(Respondent herein) while remanding the matter back to SEBI.

6. Shri Rakesh Puri, learned Counsel for the Respondent (Org.

Appellant) submits that the impugned order in Appeal No.340 of 2017

was quashed and set aside qua the Appellant and the Appeal was

allowed is clearly stated in para 7 of this Appellate Tribunal Order

dated 20/4/2018. Further, in any case, even if it is presumed that only

joint and several liability of the appellant as far as refund of monies

collected from the public was quashed and set aside, it implies that the

Respondent (Org. Appellant) had no role in the entire issue of collecting 5

monies from the public and, therefore, was not liable to be punished

either in terms of a direction to refund or in terms of any restraint from

the securities market. In any case, he submits that the appellant has

already undergone almost 35 months of restraint from the securities

market beginning 3/6/2015, from the date of the interim order till

20/4/2018. Given that, as per the order of this Appellate Tribunal dated

20/4/2018, the appellant has been discharged and hence no further

restraint from the market is justified.

7. Considering the totality of the facts and the fact that the appellant

has undergone restraint of 35 months from the securities market and he

has been discharged from any liability as far as refund is concerned,

without getting into the details of the matter, I hold that no further

restraint beyond 20/4/2018 - the date of this Appellate Tribunal in

Appeal No.340 of 2017 - is warranted.

8. Review Application is disposed of on above terms with no order

as to costs.

Sd/-

Dr. C.K.G. Nair Member 27/08/2018 prepared & compared by-dg