Kavit Industries Limited vs Sebi

Date of Decision: 11.08.2017

Appeal No. 176 of 2017

Kavit Industries Limited 9th Floor, Galav Chambers, Sayajigunj, Vadodara- 390 020, Gujarat ...Appellant

Versus

1.

BSE Limited P.J. Towers, Dalal Street, Mumbai- 400 001

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

Mr. J. J. Bhatt, Advocate i/b Ms. Rinku Valaju, Advocate for the Appellant.

Mr. Ajay Khaire, Advocate with Mr. Nair Renjith Ramesh, Advocate i/b The Law Point for the Respondent No. 1

Mr. Gaurav Joshi, Senior Advocate with Mr. Tomu Francis and Mr. Vivek Shah, Advocates for Respondent No. 2

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

Per: Justice J.P. Devadhar (Oral)

1. Without conducting any investigation and without hearing the

appellant, whether the Securities and Exchange Board of India ("SEBI"

for short), solely based on the letter dated 09.06.2017 received from the 2

Ministry of Corporate Affairs (MCA), is justified in passing the ex-parte

order on 07.08.2017 and directing the stock exchanges to treat, inter alia,

the appellant company as a 'suspected shell company' and suspend the

daily trading in the securities of the appellant company on the stock

exchanges by moving the securities of the appellant company to Stage VI

of Graded Surveillance Measure ("GSM" for short) is the question raised

in this appeal.

2. Similar question was raised in the case of J. Kumar Infraprojects

Ltd. (Appeal No. 174 of 2017) and by our order dated 10.08.2017 we

have stayed direction 1(a) & (b) contained in the impugned

communication of SEBI dated 07.08.2017 qua the appellant therein.

3. In view of the facts set out in the Memorandum of Appeal and

other documents tendered at the time of hearing relating to annual

turnover of the appellant company for last three years, which even

according to SEBI prima facie appear to be correct, we extend the said

stay to the case of the appellant company herein and direct the stock

exchanges to reverse their decision in respect of the appellant company

as expeditiously as possible.

4. Appellant company has already made a representation to SEBI

against the impugned communication of SEBI dated 07.08.2017. SEBI is

directed to dispose of the said representation in accordance with law. 3

5. It is made clear that this order shall not come in the way of SEBI

as well as the stock exchanges to investigate the case of the appellant

company and initiate proceedings if deemed fit.

6. Appeal is disposed of in the aforesaid terms with no order as to

costs.

Sd/-

Justice J.P. Devadhar Presiding Officer

Sd/-

Jog Singh Member

Sd/-

Dr. C.K.G. Nair Member 11.08.2017 Prepared & Compared By: PK