Hamraj Fashions Consultants P. Ltd. vs Sebi

Date of Decision: 17.6.2021

Misc. Application No.638 of 2021 (Stay Application) And Misc. Application No.639 of 2021 (Application of Sale of Shares) And Appeal No.383 of 2021

Hamraj Fashions Consultants P. Ltd. (Now known as Gilani Infra Pvt. Ltd.) 22/1, 107 Shilly Plaza, K Kamaraj Road, Bangalore-560 042. ...Appellant

Versus

Securities and Exchange Board of India SEBI Bhavan, Plot No.C4-A, G Block, Bandra-Kurla Complex, Bandra (E), Mumbai -400051. ...Respondent

Ms. Rinku Valanju, Advocate with Mr.Pratham Masurekar and Mr. Aditya Shah, Advocate i/b. R V Legal for the Appellant.

Mr. Suraj Surjit Choudhary, Advocate with Mr. Abhishek Khare and Ms. Samreen Fatima, Advocates i/b. Khare Legal Chambers for the Respondent.

CORAM: Justice Tarun Agarwala, Presiding Officer Justice M.T. Joshi, Judicial Member 2

Per: Justice Tarun Agarwala, Presiding Officer (Oral)

1.

The appellant has been filed the present appeal against

the order dated 30th April, 2021 passed by the Whole

Time Member ('WTM' for short) debarring the appellant

from accessing the securities market for a period of two

years.

2. The contention of the appellant is, that the impugned

order was passed ex-parte without giving an opportunity

of hearing to the appellant. It was contended that the

show cause notice was never served upon the appellant at

its registered office in Karnataka. It has been said that the

name of the Company was changed in December, 2015

and the registered office shifted from Kolkata to

Karnataka on 13th August, 2017 and the change of

registered office was intimated under section 13 of the

Companies Act to the Registrar of Companies.

3. In this regard, we called upon the respondent to file a

short affidavit with regard to the service of the show

cause notice. The affidavit which has been filed by the 3

respondent indicates that they tried to serve the appellants

at an address given in the allotment letter which returned

undelivered inspite of which the affixation was done at

the same address and publication was also made in

various newspapers in Kolkata. Since no one appeared

the authority proceeded ex-parte against the appellant and

passed the impugned order.

4. We find it strange that once a report came that the

address is insufficient the respondent insistence in

making service by affixation at the same address. At no

stage did the respondent bother to find out the correct

address by looking into the website of the Ministry of

Corporate Affairs. If they had done so they would have

found the change in the registered office of the Company

which shifted from Kolkata to Karnataka.

5. In view of the aforesaid, we are of the opinion that the

impugned order suffers from the vice of arbitrariness

being violative of Article 14 of the Constitution of India

since the entire proceedings were done ex-parte without

serving the appellant. On this ground alone the impugned 4

order cannot be sustained and is quashed. The appeal is

allowed and the matter is remitted to the WTM to pass a

fresh order after serving the show cause notice and

proceedings.

6. In this regard, we direct the appellant to give the

name, address of the Company as well as details of its

Directors including email within ten days from today to

the respondent. Thereafter, the WTM will proceed in

accordance with law.

7. With regard to the service of summons and enquiry we

find that SEBI has framed Rules for adjudication of

disputes by the Adjudicating Officer which is called the

Securities and Exchange Board of India (Procedure for

Holding Inquiry and Imposing Penalties by Adjudicating

Officer) Rules, 1995. No such Rules or procedure for

holding inquiry and service has been framed for the

WTM. We, accordingly, direct that a copy of this order

be placed before the Chairman of Securities and

Exchange Board of India to consider framing of

rules/procedure/guidelines/circulars for the purpose of 5

service and procedure for inquiry for the WTM. Misc.

application nos.638 and 639 of 2021 are disposed of

accordingly.

8. The present matter was heard through video

conference due to Covid-19 pandemic. At this stage it is

not possible to sign a copy of this order nor a certified

copy of this order could be issued by the registry. In these

circumstances, this order will be digitally signed by the

Private Secretary on behalf of the bench and all

concerned parties are directed to act on the digitally

signed copy of this order. Parties will act on production

of a digitally signed copy sent by fax and/or email.

Justice Tarun Agarwala Presiding Officer

Justice M.T. Joshi Judicial Member

17.6.2021 RAJALA Digitally by signed

RHN KSHMI NAIR RAJALAKSHMI H

Date: 2021.06.28 H NAIR 10:21:55 +05'30'