India Ratings And Research Private Ltd. vs Sebi

India Ratings and Research Private Ltd. ... Appellant

Versus

Securities and Exchange Board of India ...Respondent

Mr. Pesi Modi, Senior Advocate with Mr, Neville Lashkari, Mr. Sandeep Parekh, Ms. Deepika Goyal, Advocates i/b. Finsec Law Advisors and Mr. Anuj Berry, Advocate i/b. Shardul Amarchand Mangaldas for the Appellant

Mr. Shyam Mehta, Senior Advocate with Mr. Mihir Mody and Mr. Shehaab Roshan, Advocate i/b. K. Ashar & Co. for the Respondent.

CORAM: Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member Justice M.T. Joshi, Judicial Member

Per : Justice Tarun Agarwala, Presiding Officer

1.

An urgent application has been filed for hearing through

video conferencing.

2. Misc. Application no.159 of 2020 has been filed in

Appeal no.103 of 2020 praying that proceedings initiated by 2

Securities and Exchange Board of India (hereinafter referred

to as 'SEBI') pursuant to the second show cause notice dated

28th January, 2020 issued under Section 15-I(3) of the

Securities and Exchange Board of India Act, 1992

(hereinafter referred to as 'SEBI Act') should be stayed.

3. In this regard we have heard Shri Pesi Modi, learned

Senior Counsel alongwith Shri Neville Lashkari, Shri

Sandeep Parekh, Ms. Deepika Goyal and Shri Anuj Berry,

Advocates for the Appellant and Shri Shyam Mehta, learned

Senior Counsel alongwith Shri Mihir Mody and Shri Shehaab

Roshan, learned counsel for the Respondent.

4. We find that by the impugned order dated 26 th

December, 2019 the Adjudicating Officer has imposed a

penalty of Rs.25 lakhs upon the Appellant for violating the

Code of Conduct to the Securities and Exchange Board of

India (Credit Rating Agencies) Regulations, 1999

(hereinafter referred to as 'CRA Regulations') while granting

credit rating to IL&FS for the financial year 2018-19. After

passing of the impugned order, SEBI issued a second show

cause notice dated 28th January, 2020 by exercising powers

under Section 15-I(3) of the SEBI Act directing the Appellant

to show cause as to why penalty should not be enhanced as in 3

their opinion the order of the Adjudicating Officer was not in

the interest of the securities market.

5. Having heard the learned counsel for the parties at some

length, we are prima facie of the opinion that SEBI has the

power to initiate proceedings under Section 15-I(3) of the

SEBI Act. In the light of the aforesaid, we direct the

Respondent to file a reply within four weeks from today in

Appeal no.103 of 2020. Three weeks thereafter is allowed to

the Appellant to file rejoinder. The matter would be listed

for admission and for final disposal on 20 th August, 2020. In

the meanwhile, we direct the Appellant to deposit a sum of

Rs.25 lakhs pursuant to the impugned order dated

26th December, 2019 before the Respondent within four

weeks from today which would be subject to the result of the

appeal. We further direct that the proceedings in pursuance

to the second show cause notice dated 28th January, 2020 will

continue and the Respondent will pass appropriate orders

after giving an opportunity of hearing to the Appellant either

through physical hearing or through video conferencing but

any order that is passed by the Respondent shall not be given

effect to during the pendency of this appeal. Misc.

Application is accordingly disposed of. 4

6. Parties are directed to contact the Registrar 48 hours

before the date fixed to find out as to whether the hearing

would take place through video conferencing or through

physical hearing.

7. 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 Presiding Officer 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.

Digitally signed by TARUN

TARUN AGARWAL DN: c=IN, st=Uttar Pradesh, 2.5.4.20=a0e08b2d80e9d23c2c 2aa3e16780d684adad6bc9e81 0de2d7b0c28efd35557c9, Justice Tarun Agarwala AGAR postalCode=211001, street=B/ A,NYAYA MARG ALLAHABAD, serialNumber=095f8b286bb0b 1cd07ff676611f4f5e7999727d4 Presiding Officer WAL 04aa38ca422f9d3529bdb8a3, o=Personal, cn=TARUN AGARWAL Date: 2020.07.01 20:32:19 +05'30'

Dr. C. K. G. Nair Member

Justice M.T. Joshi Judicial Member

1.7.2020 RHN