Jik Industries Limited vs Sebi
- CitationAppeal No. 172 of 2018
Ratio decidendi
The rule this decision rests on
The impugned order, which directs a forensic audit and restricts promoters and directors to buying but not selling shares, is set aside insofar as it fails to record why the appellant's comments on the auditor's discrepancies were not accepted; an order of this kind must give reasons for rejecting the explanations offered by the party affected. A forensic audit and trading restrictions imposed under such an order do not amount to a finding against, or a stigma upon, the party or its promoters and directors, and the restrictions may be relaxed for legitimate purposes on application to the exchange, which must consider such applications in accordance with law.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Date of Decision : 30.05.2018
Appeal No. 172 of 2018
JIK Industries Limited Balkum, Pada No. 3, Thane, Maharashtra - 400608. ...Appellant
Versus [[
National Stock Exchange of India Limited Exchange Plaza, Plot No. C/1, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ...Respondent
Mr. Paras Parekh, Advocate with Ms. Stuti Shah and Mr. Robin Shah, Advocates i/b J. Sagar Associates for the Appellant.
Mr. Rahul, Advocate i/b Manilal Kher Ambalal & Co 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. Taken up with the consent of the parties.
2. Appellant is aggrieved by the order passed by the Chief of
Regulatory of National Stock Exchange of India Limited ('NSE' for short)
on May 2, 2018. By that order, inter alia, an independent forensic auditor is
appointed to verify the transactions set out therein and further the promoters
and directors of JIK Industries Limited are permitted only to buy the
securities of JIK Industries Limited but not permitted to sell the said shares.
3. In the impugned order, the discrepancies noticed by the independent
auditor and the comments given by the appellant on the said discrepancies 2
are recorded. However, the reason as to why the comments given by the
appellant are not accepted and forensic audit is ordered is not recorded,
which is not proper.
4. In any event, since forensic audit is to be carried out at the cost of
NSE, without going into the merits of the case we direct the forensic audit
be completed as expeditiously as possible. It is made clear that order
directing forensic audit and imposing restrictions on the promoters and
directors of the appellant shall not be treated as stigma on the appellant and
the promoters and directors of the appellant. If the promoters and directors
of the appellant want to sell the shares of the appellant for any legitimate
purpose, then they are at liberty to approach NSE and NSE shall consider
the same in accordance with law.
5. Appeal is disposed of in the above terms with no order as to costs.
Sd/-
Justice J.P. Devadhar Presiding Officer
Sd/-
Dr. C.K.G. Nair Member 30.05.2018 Prepared and compared by:msb
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