Grd Securities Limited vs Sebi
- CitationAppeal No. 66 of 2018
Ratio decidendi
The rule this decision rests on
Where a decision-making body's rejection of a request for a stay is communicated without the reasons for that rejection, the rejection is improper and cannot stand. Where an adjudicating authority has granted a party a statutory or prescribed period within which to file a review application, it is not open to that authority to treat the review as an empty formality and to implement the impugned order before that period has expired; the order may be implemented only subject to the outcome of the review.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Date of Decision : 01.03.2018
Appeal No. 66 of 2018
GRD Securities Limited 238A, A J C Bose Road, 6th Floor, Kolkata - 700 012. ...Appellant
Versus [[
National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex, Bandra East, Mumbai - 400 051. ...Respondent
Mr. Jaikishan Lakhwani, Advocate for the Appellant.
Mr. Neville Lashkari, Advocate with Mr. Rashid Boatwalla and Mr. Rahul Jain, Advocates i/b Manilal Kher Ambalal for the Respondent.
CORAM : Justice J.P. Devadhar, Presiding Officer Dr. C.K.G. Nair, Member
Per : Justice J.P. Devadhar (Oral)
1.
Not on Board. Mentioned by counsel for appellant and taken up for
hearing by consent of both parties.
2. Appellant is aggrieved by the communication issued by the National
Stock Exchange of India Limited ('NSE' for short) on February 26, 2018.
By the said communication, the appellant is informed that the representation
made on February 16, 2018 seeking stay of the order passed by the 2
Disciplinary Action Committee (DAC) of the NSE on February 8, 2018 has
been rejected.
3. By order dated February 8, 2018 the DAC of NSE sought to impose
monetary penalty of Rs. 2,05,43,900/- on the appellant and directed that the
trading membership of the appellant in CD segment be suspended for a
period of one trading day after giving 3 weeks' notice to the appellant.
4. Accordingly, by a letter dated February 8, 2018 (wrongly typed as
February 08, 2017) Dr. Dinesh Kumar Soni, Head - Inspection & Exchange
Compliance of NSE forwarded a copy of the order of DAC dated February
8, 2018 and called upon the appellant to pay the penalty amount of
Rs. 2,05,43,900/- within 10 days and further stated that as per the order of
DAC dated February 8, 2018 the trading membership of the appellant in CD
segment will be suspended for a period of one day on Monday, March 05,
2018. In the said letter it was also stated that if the appellant was aggrieved
by the order of DAC dated February 8, 2018, the appellant may file Review
Application with documentary evidence within 90 days from February 8,
2018.
5. Thereafter, by a letter dated February 16, 2018 the appellant
informed NSE that the Review Application is being filed by the appellant
and till then operation of the order of DAC dated February 8, 2018 be
stayed.
6. By the impugned communication dated February 26, 2018 NSE has
informed the appellant that the DAC in its meeting held on February 19,
2018 considered the letter of the appellant dated February 16, 2018 and has 3
declined to grant stay and hence the order of DAC dated February 8, 2018
shall be implemented.
7. In our opinion, the decision of NSE is unsustainable for two reasons.
Firstly, reasons given by DAC for rejecting the plea of the appellant seeking
stay of the order dated February 8, 2018, if any, has not been communicated
to the appellant which is totally improper. Secondly, having given 90 days
time to the appellant to file Review Application, NSE is not justified in
seeking to implement the order of DAC dated February 8, 2018 even before
expiry of 90 days. NSE cannot treat the Review proceedings as an empty
formality and seek to implement the order even before the period for filing
Review Application has expired.
8. On behalf of NSE it is contended that the appellant has not yet filed
the Review Application and hence, the appellant may at least be permitted
to deposit the penalty amount. Having given 90 days time to file Review
Application, before the expiry of 90 days it is not open to the NSE to
contend that the appellant has not filed the Review Application till date.
Similarly, the NSE is not justified in seeking implementation of the
impugned order relating to penalty even before the appellant has filed the
Review Application.
9. In these circumstances, we pass the following order:-
(a) Communication of NSE being Exb. 'B' to the appeal dated
February 8, 2018 (wrongly typed as February 08, 2017) is
quashed and set aside.
(b) Appellant is directed to file Review Application on or before
March 15, 2018.
4
(c) Subject to the result of the Review Application NSE shall
implement the order of DAC dated February 8, 2018.
10. 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 01.03.2018 Prepared and compared by:msb
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