K. Venkatraman vs Sebi

Date of Decision : 25.03.2021

Misc. Application No. 78 of 2021 And Appeal No. 12 of 2021

K. Venkatraman 177, Ground Floor, 2A Cross, 2nd Main, Domlur, Bangalore - 560071. ..... Appellant

Versus

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

Mr. Keshav Borhade, Advocate for the Appellant. Mr. Abhiraj Arora, Advocate with Mr. Karthik Narayan, Ms. Rashi Dalmia, Advocates i/b ELP for the Respondent.

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

Per : Justice Tarun Agarwala, Presiding Officer (Oral)

1.

The appellant has challenged the order dated June 9, 2009

passed by the Adjudicating officer (hereinafter referred to as ' AO')

whereby a penalty of Rs. 5 lac was imposed for violation of 2

Securities and Exchange Board of India (Prohibition of Fraudulent

and Unfair Trade Practices relating to Securities Market)

Regulations, 2003 (hereinafter referred to as 'PFUTP Regulations').

The appellant has also challenged the recovery certificate issued by

the Recovery Officer (hereinafter referred to as 'RO') dated

December 11, 2017 for recovery of the amount pursuant to the order

of the AO. Since there is a delay in the filing of the appeal an

application for condonation of delay has been filed. The ground

urged is that the appellant was never aware of the adjudication

proceedings as he was never served with the show cause notice nor

any opportunity of hearing was provided to him. Further, the

recovery certificate dated December 11, 2017 was also never served

upon him and that the appellant came to know about this matter for

the first time when the RO sent an email on November 17, 2019 and

soon thereafter the present appeal was filed.

2. The respondent admits that show cause notice could not be

delivered / served upon the appellant in spite of their level best in

trying to get the same served through various means. The learned

counsel for the respondent however contended that one of the notices

for hearing was duly served on the address of the appellant.

However, this fact has been denied by the appellant who has filed

proof of the fact that during the time when this notice was allegedly

served, the appellant was out of the country. We also find that the 3

impugned order was never served nor the recovery certificate was

served.

3. Considering the aforesaid admitted position, we are of the

opinion that the impugned order dated June 9, 2009 is violative of the

principles of natural justice. The delay in the filing of the appeal is

validly explained. We accordingly condone the delay and allow the

application.

4. Since the impugned order was passed ex-parte without serving

the show cause notice, the said impugned order cannot be sustained

and is quashed. The recovery certificate dated December 11, 2017

issued pursuant to the said order is also quashed.

5. The appeal is allowed. The matter is remitted to the AO who

will issue a show cause notice and proceed from there onwards in

accordance with law after giving an opportunity of hearing. For this

purpose, the appellant will appear before the AO on April 15, 2021

on which date a show cause notice will be served upon the appellant.

6. Since the bank account has been attached pursuant to the

impugned order of the AO and the recovery certificate, and since the

said recovery certificate and the order of the AO has been quashed

we direct SEBI to intimate the bank forthwith to remove the

attachment order.

4

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 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 25.03.2021 RAJALA Digitally by signed

KSHMI RAJALAKSHMI H

PTM NAIR Date: 2021.03.30 H NAIR 10:51:02 +05'30'