Kaushik Chattopadhyay vs Sebi

Date of Decision: 18.08.2017

Misc. Application No. 279 of 2016 And Appeal No. 335 of 2016

Sourindra Nath Mukherjee 'Orbit City', Wing II/3-C, 82A, Raja S.C. Mullick Road, Kolkata- 700 047 ...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. Rishikesh Gagan Vyas, Company Secretary and Mr. Hitesh Buch, Company Secretary for the Appellant.

Mr. Pradeep Sancheti, Senior Advocate with Mr. Tomu Francis and Mr. Vivek Shah, Advocates for the Respondent.

WITH Appeal No. 3 of 2017

Kaushik Chattopadhyay 23, Abhay Mukherjee Lane, Belgaria, Kolkata- 700 056 ...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 2

Mr. Ravichandra Hegde, Advocate with Ms. Stuti Shah, Advocate i/b J. Sagar Associates for the Appellant.

Mr. Pradeep Sancheti, Senior Advocate with Mr. Tomu Francis and Mr. Vivek Shah, Advocates for the Respondent.

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

Per: Justice J.P. Devadhar (Oral)

Misc. Application No. 279 of 2016 In Appeal No. 335 of 2016

There is delay of 504 days in filing the appeal. By this

Miscellaneous Application, applicant seeks condonation of the said

delay. For the reasons stated in the application, delay is condoned.

Miscellaneous Application is disposed of accordingly.

Appeal No. 335 of 2016 and Appeal No. 3 of 2017

1.

This two appeals are filed basically to challenge the confirmatory

order passed by the Whole Time Member ("WTM" for short) of

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

06.02.2015. By the said order, the directions contained in the ex-parte

order dated 16.05.2013 have been continued until further orders.

2. It is not in dispute that the appellants are the past directors of the

company known as Basil International Limited. 3

3. As per para 36(a) of the impugned confirmatory order dated

06.02.2015, Basil International Limited and its present directors,

including Mr. Manindra Kumar Basu, Mr. Jayanta Kumar Basu,

Mr. Susanta Kumar Jana, Mr. Mohammed Afaque Ahmed and

Mr. Nirmalendu Bhowmik, are jointly and severally directed to refund

the money collected by the company through issuance of Redeemable

Preference Shares with returns that were promised by the company to its

investors. As per para 36(a) of the impugned confirmatory order, the

company, its present directors and past directors including the appellants

herein are restrained from accessing the securities market for a period of

four years.

4. Counsel for the appellants submit that in these two appeals

appellants are not contesting the restraint order passed against them, but

are contesting the decision of the Recovery Officer of SEBI in initiating

recovery proceeding against the appellants especially when the impugned

confirmatory order does not require the appellants to make any payment

to the investors.

5. On a plain reading of para 36(a) of the impugned confirmatory

order dated 06.02.2015 it is evident that the direction to refund the

amount is only against the company and its present directors and not

against the past directors like the appellants. In our view, the Recovery

Officer of SEBI is clearly in error in initiating recovery proceedings

against the appellants who are the past directors. Counsel for SEBI fairly

states that he agrees with our view.

4

6. In these circumstances, we quash the recovery proceedings

initiated by the Recovery Officer of SEBI against the appellants.

7. In view of the above, the appellants do not press the appeals.

Accordingly, both the appeals are disposed of in the aforesaid terms with

no order as to costs.

Sd/-

Justice J.P. Devadhar Presiding Officer

Sd/-

Dr. C.K.G. Nair Member 18.08.2017 Prepared & Compared By: PK