M/S. Padma Impex Private Limited vs Sebi

Date of Decision : 27.09.2019

Appeal No. 273 of 2018

1.

First Financial Services Ltd.

2. Nirmal Singh Mertia

Kothari Mile Stone, Kothari Mall, 2nd Floor, S V Road, Malad (W), Mumbai - 400 064. ..... Appellants 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. Vinay Chauhan, Advocate with K.C. Jacob, Advocate i/b Corporate Law Chambers India for Appellants.

Mr. Pradeep Sancheti, Senior Advocate with Mr. Sumit Rai, Mr. Mihir Mody and Mr. Sushant Yadav, Advocates i/b K. Ashar & Co. for the Respondent.

WITH Appeal No. 158 of 2018 Suresh Kumar Khandelia C/2801, Oberoi Woods, Mohan Gokhale Road, Goregaon (East), Mumbai - 400 063. ..... 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. Ashok Bansal, Chartered Accountant for the Appellant.

Mr. Pradeep Sancheti, Senior Advocate with Mr. Sumit Rai, Mr. Mihir Mody and Mr. Sushant Yadav, Advocates i/b K. Ashar & Co. for the Respondent.

WITH Appeal No. 159 of 2018

Smt. Manju Khandelia C/2801, Oberoi Woods, Mohan Gokhale Road, Goregaon (East), Mumbai - 400 063. ..... 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. Ashok Bansal, Chartered Accountant for the Appellant.

Mr. Pradeep Sancheti, Senior Advocate with Mr. Sumit Rai, Mr. Mihir Mody and Mr. Sushant Yadav, Advocates i/b K. Ashar & Co. for the Respondent.

WITH Appeal No. 181 of 2018

Syncom Formulations (India) Ltd. 7, Niraj Industrial Estate, Off Mahakali Caves, Andheri (E), Mumbai - 400 093 Maharashtra ..... 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 3

Mr. Ankit Lohia, Advocate with Ms. Nirali Mehta, Practicing Company Secretary i/b Mindspright Legal for the Appellant.

Mr. Pradeep Sancheti, Senior Advocate with Mr. Sumit Rai, Mr. Mihir Mody and Mr. Sushant Yadav, Advocates i/b K. Ashar & Co. for the Respondent.

WITH Appeal No. 216 of 2018

1. Comfort Intech Ltd.

2. Comfort Fincap Ltd.

3. Comfort Securities Ltd.

4. Anil Agarwal HUF

5. Anil Agarwal

A 301, Hetal Arch, Above Union Bank of India, S V Road, Malad (West), Mumbai - 400 064. ..... Appellants 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. Somasekhar Sundaresan, Advocate with Ms. Aarti Sathe and with Mr. Ravishekhar Pandey, Advocates i/b Legis Law Practice.

Mr. Pradeep Sancheti, Senior Advocate with Mr. Sumit Rai, Mr. Mihir Mody and Mr. Sushant Yadav, Advocates i/b K. Ashar & Co. for the Respondent.

WITH Appeal No. 246 of 2018

1. Rajendra Kumar Agarwal HUF

2. Rajendra Kumar Agarwal (Karta)

3. Ritesh Agarwal - HUF

4. Ritesh Agarwal (Karta) 4

5. Shilpa Agarwal

6. Adhunik Transport Organisation Ltd.

1004 Orchid Tower, Vasant Valley Complex, Dindoshi Bus Depot, Film City Road, Malad (East), Mumbai - 400 097. ..... Appellants

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. Chetan R. Shah, Advocate for Appellants.

Mr. Pradeep Sancheti, Senior Advocate with Mr. Sumit Rai, Mr. Mihir Mody and Mr. Sushant Yadav, Advocates i/b K. Ashar & Co. for the Respondent.

WITH Appeal No. 290 of 2018

1. B.P. Jhunjhunwala 1-D, Rajagiri Residency, No. 125, Marshalls Road, Egmore, Chennai - 600 008.

2. B.P. Jhunjhunwala - HUF 1-D, Rajagiri Residency, No. 125, Marshalls Road, Egmore, Chennai - 600 008. ..... Appellants

Versus

Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051. .... Respondent 5

Mr. Rajesh Khandelwal, Advocate i/b Juris Link for Appellants.

Mr. Pradeep Sancheti, Senior Advocate with Mr. Sumit Rai, Mr. Mihir Mody and Mr. Sushant Yadav, Advocates i/b K. Ashar & Co. for the Respondent.

WITH Appeal No. 291 of 2018

Mr. Ashokbhai Nathabhai Buha C/26, Sneh Sagar Society, Opp. Green Park, Katargam, Surat - 395 004. ..... 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. Geet Shikhar, Advocate for the Appellant.

Mr. Pradeep Sancheti, Senior Advocate with Mr. Sumit Rai, Mr. Mihir Mody and Mr. Sushant Yadav, Advocates i/b K. Ashar & Co. for the Respondent.

WITH Appeal No. 311 of 2018

Mr. Bharatbhai Nathabhai Buha C/26, Sneh Sagar Society, Opp. Green Park, Katargam, Surat - 395 004. ..... 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 6

Mr. Geet Shikhar, Advocate for the Appellant.

Mr. Pradeep Sancheti, Senior Advocate with Mr. Sumit Rai, Mr. Mihir Mody and Mr. Sushant Yadav, Advocates i/b K. Ashar & Co. for the Respondent.

WITH Appeal No. 374 of 2018 Global Infratech & Finance Limited Office No. 16, Ground Floor, Rukmani Purushottam No. 21, J.P. Road, Andheri West, Mumbai - 400 058. ..... 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. Rajesh Khandelwal, Advocate i/b Juris Link for the Appellant

Mr. Pradeep Sancheti, Senior Advocate with Mr. Sumit Rai, Mr. Mihir Mody and Mr. Sushant Yadav, Advocates i/b K. Ashar & Co. for the Respondent.

WITH Appeal No. 382 of 2018 S. Krishna Rao 106/22, Golden Flats, Mugappair Chennai - 600 050 ..... 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 7

Mr. Rajesh Khandelwal, Advocate i/b Juris Link for the Appellant

Mr. Pradeep Sancheti, Senior Advocate with Mr. Sumit Rai, Mr. Mihir Mody and Mr. Sushant Yadav, Advocates i/b K. Ashar & Co. for the Respondent.

WITH Appeal No. 137 of 2019

M/s. Padma Impex Private Limited 6/7, Kings Road, Howrah, West Bengal - 711 101. ..... 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. Nirman, Advocate i/b Ms. Shruti Belani, Advocate for the Appellant.

Mr. Pradeep Sancheti, Senior Advocate with Mr. Sumit Rai, Mr. Mihir Mody and Mr. Sushant Yadav, Advocates i/b K. Ashar & Co. for the Respondent.

CORAM : Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member Justice M.T. Joshi, Judicial Member

Per : Justice Tarun Agarwala, Presiding Officer (Oral)

1. These appeals have been filed against the order of the

Whole Time Member ('WTM' for short) of Securities and 8

Exchange Board of India ('SEBI' for short) dated April 2,

2018 restraining the appellants from accessing the securities

market and further prohibiting them from buying, selling or

otherwise dealing in securities, directly or indirectly, or from

being associated with the securities market in any manner,

whatsoever, for a period of three years from the date of the

order. The said was order passed in the exercise of the powers

conferred under Section 19 read with Section 11(1), 11(4) and

11B of the Securities and Exchange Board of India Act, 1992

(hereinafter referred to as the 'SEBI Act').

2. The facts leading to the filing of these appeals are that

on the basis of preliminary investigation in the trading and

dealings in the scrips, an ex parte interim order dated

December 19, 2014 was passed restraining the appellants and

other entities from accessing the securities market and

preventing them from buying, selling or dealing in securities,

either directly or indirectly, in any manner till further

directions. The ex parte interim order was subsequently

confirmed by four confirmatory orders dated April 20, 2015,

June 2, 2016, June 14, 2016 and August 25, 2016.

Appeals were preferred against the interim directions and

confirmatory order before this Tribunal which was disposed 9

of with a direction to SEBI to conclude the investigation and

pass appropriate orders expeditiously.

3. Thereafter, upon conclusion of the investigation a show

cause notice was issued on September 29, 2017 indicating

that preferential allotment was followed by an abnormal and

huge rise in the price of scrips. After considering the replies

and submissions of the parties and the evidence that was

brought on record, the WTM passed the impugned order

holding that the fraudulent scheme conceived and executed by

the appellants was with the common objective of making

wrongful gains by manipulating the market and undermining

its integrity. The WTM accordingly restrained the appellants

from accessing the securities market and further prohibited

them from buying, selling or otherwise dealing in securities,

directly or indirectly, or being associated with the securities

market in any manner, whatsoever, for a period of three years

from the date of the order.

4. The appellants being aggrieved by the said order have

filed the present appeals.

5. We have heard the learned counsel for the parties. The

contentions of the appellants are that the WTM committed a 10

manifest error in holding that the appellants were guilty in

manipulating the price of the scrips pursuant to the

preferential allotment.

6. Without going into the merits as to whether the

appellants were involved in the abnormal and huge rise in the

price of the scrips by treating all entities connected to the

Company pursuant to the issuance of the preferential

allotment of shares, we are of the opinion that the appeals can

be disposed of without going into the merits.

7. We find that the order of debarment as per the impugned

order is of three years. These three years have already been

undergone by the appellant pursuant to the impugned ex parte

order dated December 19, 2014 restraining them from

accessing the securities market, etc. As on date four years and

ten months have elapsed and the appellants are still debarred

from accessing the securities market etc. We find that the

WTM has not considered the period of debarment already

spent from the date of the ex parte interim order till the date

of passing of the order while considering the quantum of

penalty. We are, thus, of the opinion that the debarment 11

period spent by the appellants from the date of the ex parte

impugned order till today is sufficient.

8. Thus, without going into the merits of the case and

without considering the submissions of the counsel for the

parties on merits, we dispose of all the appeals holding that

the restraint order restraining the appellants from buying,

selling or otherwise dealing in securities, directly or

indirectly, or being associated with the securities market in

any manner, whatsoever will come to an end from today.

9. It was stated by the learned counsel that, for the same

offence, adjudication proceedings have been initiated by the

Adjudicating Officer of SEBI and submitted that the findings

given in the impugned order of the WTM would be relied

upon by the AO. It was urged that the finding given in the

impugned order should not be come in the way while

considering the matter on merits by the Adjudicating Officer

of SEBI.

10. We make it clear that the Adjudicating Officer of SEBI

will consider the matter on merits without being influenced by

the findings given by the WTM of SEBI. 12

11. In the light of the aforesaid, all the appeals are partly

allowed to the extent stated aforesaid. In the circumstances of

the case, the parties shall bear their own costs.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C.K.G. Nair Member

Sd/-

Justice M.T. Joshi Judicial Member 27.09.2019 Prepared and compared by:msb