K. C. Rajan vs Sebi

Date of Decision: 01.08.2017

Misc. Application No. 368 of 2016 And Misc. Application No. 183 of 2017 And Appeal No. 438 of 2016

K. C. Rajan S/o Chummar, Ex- Managing Director of M/s. Kunnamkulam Paper Mills Ltd. Aged 60 years, residing at Kuthur House, Kunnamkulam- 680 503 ...Appellant

Versus Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai -400 051 ...Respondent

Mr. Philip Mathew, Advocate i/b Mr. M.S. Roy, Advocate for the Appellant.

Mr. Gaurav Joshi, Senior Advocate with Mr. Vaibhav Wali, Advocate i/b Juris Corp for the Respondent.

CORAM: Justice J.P. Devadhar, Presiding Officer Jog Singh, Member Dr. C.K.G. Nair, Member

Per: Justice J.P. Devadhar (Oral)

1.

This appeal is filed to challenge the order passed by the Chairman

of Securities and Exchange Board of India ("SEBI" for short) on

10.04.2003. Misc. Application No. 368 of 2016 is filled by the appellant

seeking condonation of 110 days delay in filing the appeal. Misc.

Application No. 183 of 2017 is filed by SEBI for dismissal of the appeal 2

on the erroneous ground that the appellant has not filed any application

seeking condonation of delay in filing the appeal.

2. Facts relevant for considering the question of condoning the delay

in filing the appeal are as follows:-

a) By an order dated 10.04.2003 the Chairman of SEBI

had directed Kunnamkulam Paper Mills Ltd. ("the

company" for short) and its Directors including the

appellant to refund the money collected under the

issue made by offer document dated 15.02.2001 to the

investors with interests within 30 days from the

receipt of the said order.

b) Challenging the aforesaid order appellant had filed a

Writ Petition before Kerala High Court and by

Judgement and Order dated 30.07.2009 Learned

Single Judge of Kerala High Court allowed the Writ

Petition and quashed the order of SEBI dated

10.04.2003 on ground that the said order passed by

SEBI was without jurisdiction.

c) Challenging the aforesaid order, SEBI filed an appeal

before a Divisional Bench of Kerala High Court

which was allowed on 20.12.2012 whereby the order

passed by the Learned Single Judge was set aside and

the order passed by SEBI on 10.04.2003 was restored

with liberty to the appellant to challenge the said

decision inter alia on the jurisdictional issue, before 3

this Tribunal which is the appellate forum provided

under the SEBI Act itself.

d) Instead of filing an appeal before this Tribunal against

the order passed by the Chairman of SEBI on

10.04.2003 in compliance of the order passed by the

Division Bench of Kerala High Court, the appellant

filed Special Leave Petition ("SLP" for short) before

the Apex Court which was dismissed on 12.02.2016.

e) Thereafter, the appellant filed Appeal No. 390 of 2016

before this Tribunal on 02.08.2016 which was allowed

to be withdrawn on 23.11.2016 with liberty to file

fresh appeal within 4 weeks from 23.11.2016.

Accordingly, the present appeal is filed by the

appellant on 08.12.2016.

3. Although, in the Miscellaneous Application it is claimed that the

delay in filing the appeal is only 110 days, in fact the delay enormous.

After the Division Bench decision of Kerala High Court dated

20.12.2012 the appellant ought to have filed appeal before this Tribunal

within a reasonable time, which the appellant failed to do. Instead, the

appellant filed an SLP before the Apex Court. There is nothing on record

to suggest that the appellant had obtained stay of the order passed by the

Division Bench of Kerala High Court on 20.12.2012. Even, when the

SLP was dismissed by the Apex Court on 12.02.2016, appellant did not

seek extension of time to file Appeal before this Tribunal. Thus, there is

gross negligence on part of the appellant in not filing appeal against the 4

impugned order dated 10.04.2003 inspite of specific direction given to

that effect by a Division Bench of Kerala High Court.

4. Argument advanced by counsel for the appellant that the

proceedings before Kerala High Court and the Apex Court were initiated

under the prima facie belief that SEBI had no jurisdiction to pass the

impugned order and therefore, time taken in those proceedings ought to

have been condoned is without any merit, because, it was open to the

appellant to challenge the decision of SEBI by filing an appeal before this

Tribunal and contend that SEBI had no jurisdiction to pass the impugned

order, especially when it was not the case of the appellant that this

tribunal has no jurisdiction to entertain the appeal against the impugned

order passed by SEBI.

5. Moreover, even after dismissal of SLP by the Apex Court on

12.02.2016 the appellant chose to file Appeal No. 390 of 2016 before this

Tribunal belatedly on 02.08.2016. In that appeal, the appellant had taken

out Miscellaneous Application No. 316 of 2016 seeking condonation of

1309 days delay in filing the appeal. As the Appeal Memorandum did

not contain requisite particulars, Advocate for the appellant sought to

withdraw the appeal with liberty to file fresh appeal. Accordingly, the

present appeal is filed, with Miscellaneous Application No. 368 of 2016

seeking condonation of 110 days delay in filing the appeal. Apart from

the fact that the Miscellaneous Applications filed by the appellant contain

mutually contradictory statements, there is no reason to condone the

inordinate delay of nearly 170 days in filing the appeal from the Apex

Court order dated 12.02.2016 till the date of filing the initial appeal on

02.08.2016. Argument that the appellant got the case papers from the 5

Apex Court on 20.06.2016, has no merit, because for filing appeal

against the impugned order of SEBI, proceedings before the Apex Court

were not at all relevant. Therefore, the explanation for delay given by the

appellant who was the Managing Director of the company is devoid of

any merit.

6. It is relevant to note that SEBI had initiated Criminal Proceedings

against the appellant in the year 2003 before the 23rd Metropolitan

Magistrate Court, Chennai (CC No: 8859 of 2003) and the same is

presently pending for arguments before the 19 th Additional City Civil

Court, Parry's, Chennai. It is apparent that since the Criminal

Proceedings initiated against the appellant is nearing completion, the

appellant as an afterthought, has chosen to file the present appeal

belatedly, only with a view to delay implementation of the impugned

order.

7. In these circumstances, we see no merit in the Misc. Application

No. 368 of 2016 and the same is dismissed with no order as to costs. In

view of the dismissal of Misc. Application No. 368 of 2016, Misc.

Application No. 183 of 2017 filed by SEBI and also Appeal No. 438 of

2016 filed by the appellant becomes infructuous and the same are also

disposed of accordingly with no order as to costs.

Sd/-

Justice J.P. Devadhar Presiding Officer Sd/-

Jog Singh Member Sd/-

Dr. C.K.G. Nair Member 01.08.2017 Prepared & Compared By: PK