Jayeshkumar Narottamdas Gandhi vs Sebi

Date of Decision : 15.05.2020

Misc. Application No.134 of 2020 And Misc. Application No.129 of 2020 In Appeal No.503 of 2019

Jayeshkumar Narottamdas Gandhi ...Applicant

In the matter of:-

Jayeshkumar Narottamdas Gandhi & Ors. ...Appellants

Versus

Securities and Exchange Board of India . ... Respondent

Ms. Rinku S. Valanju and Pratham Masurekar, Advocates i/b R. V. Legal - for the Applicant.

Mr. Kumar Desai a/w Mr. Abhiraj Arora, Mr. Vivek Shah, Advocates i/b ELP for the Respondent, and Mr. Pradeep Kumar, DGM, SEBI.

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.

We have heard Ms. Rinku Valanju along with Mr. Pratham

Masurkar, Advocates for the Appellant, and Shri Kumar Desai 2

along with Mr. Abhiraj Arora, Mr. Vivek Shah, Advocates and

SEBI official Mr. Pradeep Kumar.

2. The facts in brief are, that the Adjudicating Officer ("AO"

for short) by an Order dated 24th June 2019 imposed a penalty of

Rs.6,00,000/- for violation of Regulations 3 and 4 of Securities and

Exchange Board of India (Prohibition of Fraudulent and Unfair

Trade Practices relating to Securities Market) Regulations, 2003.

The Appellant filed an appeal before this Tribunal and, during

the pendency of the appeal, the Recovery Officer of SEBI

recovered an amount of Rs.6,35,521/- on 17th December, 2019.

Appeal No.503/2019 was heard and finally allowed by this

Tribunal by Judgment dated 21/2/2020 and the order of the AO

was set aside.

3. Pursuant to the order of this Tribunal, the appellant filed an

application dated 27/2/2020 for refund of Rs.6,35,521/-. The

Respondent instead of refunding the amount issued an email

dated 13/3/2020 informing the appellant that SEBI intends to file

an appeal before the Supreme Court against the order of the

Tribunal and, therefore, the refund of the amount would be

subject to the outcome of the appeal before the Supreme Court. 3

The appellant was further informed that there is no specific order

for refund of the amount by the Tribunal.

4. The appellant thereafter filed a Misc. Application

No.129/2020 before the Tribunal. This Tribunal directed SEBI to

file a reply and posted the application for hearing on 4/4/2020.

Before the application could be taken up for consideration, the

Tribunal closed on account of the lockdown in view of the

COVID-19 pandemic. The appellant has now filed an urgency

application along with Misc. Application No.134/2020 praying

that a direction be issued to SEBI to refund the amount of

Rs.6,35,521/- along with interest. The applicant also contended

the he is in dire need of money as he has to undergo a spinal

surgery and, in this regard, has filed medical certificates.

5. The appellant on 5/5/2020 also gave an undertaking to SEBI

that he would again place the amount within 15 days of any stay

order being passed by the Supreme Court in the proposed appeal

to be filed by SEBI.

6. The learned Counsel for the appellant contended that once

the order of the AO has been set aside by the Tribunal, there was

no justification for SEBI to withhold the money and that holding 4

of the money was wholly illegal and without any authority of

law.

7. On the other hand, Shri Kumar Desai, learned Counsel

contended that SEBI has taken a decision to file an appeal against

the order of this Tribunal and that the appeal has been drafted

but could not be filed on account of the lockdown. It was also

urged that there is no direction of this Tribunal to refund the

amount. The learned Counsel however, contended that in view

of the undertaking given by the appellant, SEBI would refund the

amount if such undertaking of the applicant is recorded by the

Tribunal.

8. Having heard the learned counsel for the parties, we are of

the opinion that once the order of the AO imposing a penalty was

set aside, there was no justification for SEBI to withhold any

amount which was recovered pursuant to the order of the AO.

Such retention of the amount after the order of the AO has been

set aside, is without any authority of law. The fact that no

direction for refund of the amount was issued by the Tribunal is

immaterial. Once the order has been set aside, there is no amount

to be recovered and consequently any amount so recovered has

to be refunded immediately.

5

9. The Respondent has a right to file an appeal before the

Supreme Court against the order of the Tribunal. The appeal was

allowed by the Tribunal on 21/2/2020. No steps were taken by

SEBI to file an appeal before the lockdown i.e. 25/3/2020.

Therefore, retention of the money by SEBI was wholly

unwarranted, especially when the appellant has also given an

undertaking to abide by the order of the Supreme Court, if any.

10. In view of the aforesaid and in view of the undertaking

given by the appellant, we dispose of the Misc. Application

No.129/2020 and No.134/2020 directing SEBI to refund the

amount of Rs.6,35,521/- on or before 22/5/2020, failing which SEBI

would be further liable to pay interest from the date of recovery

till date of payment @ 12% per annum.

11. Accordingly, we dispose of the Misc. Application

Nos.129/2020 and 134/2020 with no order as to costs.

12. 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 6

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.

TARUN Digitally signed by TARUN AGARWAL DN: c=IN, st=Uttar Pradesh, 2.5.4.20=a0e08b2d80e9d23c2c2 aa3e16780d684adad6bc9e810de

AGAR Sd/- 2d7b0c28efd35557c9, postalCode=211001, street=B/ A,NYAYA MARG ALLAHABAD, serialNumber=095f8b286bb0b1c d07ff676611f4f5e7999727d404a Justice Tarun Agarwala WAL a38ca422f9d3529bdb8a3, o=Personal, cn=TARUN AGARWAL

Date: 2020.05.16 12:55:01 +05'30' Presiding Officer

Sd/-

Dr. C.K.G. Nair Member

Sd/-

Justice M.T. Joshi Judicial Member 15.05.2020 dg