Makesworth Projects And Developers ... vs Sebi
- CitationAppeal No. 26 of 2015
Ratio decidendi
The rule this decision rests on
The impugned ex-parte adjudication order, passed without affording the appellants a personal hearing and where the appellants' replies were received only shortly before its passing, cannot stand, as it is vitiated for want of compliance with the principles of natural justice and the requirement of a hearing under the adjudication rules. Where a co-noticee, in a parallel appeal arising from the same common ex-parte order, has already obtained a quashing of that order and a direction for a fresh decision after a reasonable opportunity of being heard, and that direction remains unimplemented, the Tribunal may set aside the impugned order as against the other appellants and direct a fresh decision after hearing them, notwithstanding their earlier default in responding to notices. A party's default in responding to notices, or the filing of a cryptic reply, does not by itself disentitle it to a fresh opportunity of hearing; such default may instead be addressed by imposing costs as a condition of permitting the party to file a detailed reply.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Date : 15.12.2015
Appeal No. 26 of 2015
Makesworth Projects and Developers Pvt. Ltd. ...... Appellant 1A, Grant Lane, 1st Floor, Kolkata - 700 012.
Versus
1.
Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. Brooks Laboratories Ltd.
Village Kishanpura, Nalagarh Road, Buddi Nalagarh, Himachal Pradesh - 174 101. ...... Respondents
With Appeal No. 27 of 2015
Alishan Estates Private Limited 1, R. N. Kukherjee Road, Kolkata - 700 001. ...Appellant
Versus
1. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. Brooks Laboratories Ltd.
Village Kishanpura, Nalagarh Road, Buddi Nalagarh, Himachal Pradesh - 174 101. ...Respondents
With Appeal No. 28 of 2015
Khusboo Complex Private Limited 1A, Grant Lane, Room No. 114, Kolkata - 700 012. ...Appellant
Versus
1. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2 2. Brooks Laboratories Ltd.
Village Kishanpura, Nalagarh Road, Buddi Nalagarh, Himachal Pradesh - 174 101. ...Respondents
With Appeal No. 29 of 2015
Mangalmayee Hirise Private Limited 1A, Grant Lane, Room No. 114, Kolkata - 700 012. ...Appellant
Versus
1. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. Brooks Laboratories Ltd.
Village Kishanpura, Nalagarh Road, Buddi Nalagarh, Himachal Pradesh - 174 101. ...Respondents
With Appeal No. 30 of 2015
Shirdhan Jewellery Private Limited 1A, Grant Lane, Kolkata - 700 012. ...Appellant
Versus
1. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. Brooks Laboratories Ltd.
Village Kishanpura, Nalagarh Road, Buddi Nalagarh, Himachal Pradesh - 174 101. ...Respondents
With Appeal No. 31 of 2015
1. Konark Commerce & Industries Ltd.
2. Ajay Kumar Agarwal
3. Raj Narayan Pandey 6 & 6/3, Shashi Shekhar Bose Road, Kolkara - 700 025. ...Appellants 3
Versus
1. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. Brooks Laboratories Ltd.
Village Kishanpura, Nalagarh Road, Buddi Nalagarh, Himachal Pradesh - 174 101. ...Respondents
With Appeal No. 32 of 2015
1. Suryamukhi Projects Private Limited
2. Pulak Bagchi
3. Bajrang Sultania
4. Neeraj Kedia 1A, Grant Lane, Kolkata - 700 012. ...Appellants
Versus
1. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. Brooks Laboratories Ltd.
Village Kishanpura, Nalagarh Road, Buddi Nalagarh, Himachal Pradesh - 174 101. ...Respondents
With Appeal No. 33 of 2015
1. Pushpanjali Hirise Private Limited
2. Umesh Singh 1A, Grant Lane, Room No. 114, Kolkata - 700 012. ...Appellants
Versus
1. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. Brooks Laboratories Ltd.
Village Kishanpura, Nalagarh Road, Buddi Nalagarh, Himachal Pradesh - 174 101. ...Respondents 4
With Appeal No. 34 of 2015
1. Jagarnath Consultants Private Limited
2. Umesh Singh 1A, Grant Lane, 3rd Floor, Kolkata - 700 012. ...Appellants
Versus
1. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. Brooks Laboratories Ltd.
Village Kishanpura, Nalagarh Road, Buddi Nalagarh, Himachal Pradesh - 174 101. ...Respondents
With Appeal No. 35 of 2015
1. Sharadaraj Tradefin Ltd.
2. Bajrang Kumar Sultania 1, Croocked Lane, Room No. 109, Kolkata 700 069. ...Appellants
Versus
1. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. Brooks Laboratories Ltd.
Village Kishanpura, Nalagarh Road, Buddi Nalagarh, Himachal Pradesh - 174 101. ...Respondents
With Appeal No. 36 of 2015
1. Silicon Hotel Private Limited
2. Pramod Ramdin Sharma
3. Umesh Singh 156A, Lenin Sarani, 3rd Floor, ...Appellants Kolkata - 700 013.
Versus 5
1. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. Brooks Laboratories Ltd.
Village Kishanpura, Nalagarh Road, Buddi Nalagarh, Himachal Pradesh - 174 101. ...Respondents
With Appeal No. 37 of 2015
1. Growfast Realtors Private Limited
2. Pramod Ramdin Sharma 1A, Grant Lane, 1st Floor, Room No. 114, Kolkata - 700 012. ...Appellants
Versus
1. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. Brooks Laboratories Ltd.
Village Kishanpura, Nalagarh Road, Buddi Nalagarh, Himachal Pradesh - 174 101. ...Respondents
With Appeal No. 38 of 2015
1. Sunshine Housecon Ltd.
2. Umesh Singh 1, Croocked Lane, 1st Floor, R. No. 109, Kolkata - 700 069. ...Appellants
Versus
1. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. Brooks Laboratories Ltd.
Village Kishanpura, Nalagarh Road, Buddi Nalagarh, Himachal Pradesh - 174 101. ...Respondents
With 6 Appeal No. 39 of 2015
1. Blue Print Securities Ltd.
2. Bajrang Kumar Sultania 1, Croocked Lane, R. No. 109, 1st Floor, Kolkata - 700 069. ...Appellants
Versus
1. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. Brooks Laboratories Ltd.
Village Kishanpura, Nalagarh Road, Buddi Nalagarh, Himachal Pradesh - 174 101. ...Respondents
With Appeal No. 40 of 2015
1. Neelkamal Dealcom Private Limited
2. Umesh Singh 3, Saklat Place, Kolkata - 700 072. ...Appellants
Versus
1. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. Brooks Laboratories Ltd.
Village Kishanpura, Nalagarh Road, Buddi Nalagarh, Himachal Pradesh - 174 101. ...Respondents
Mr. Farook Razak, Senior Advocate with Mr. Sohail Haque, Mr. A. K. Upadhyay, Advocates for the Appellants. Mr. Shyam Mehta, Senior Advocate with Mr. Mihir Mody, Mr. Saurabh Bachhawat, Advocates i/b K. Ashar & Co. for the Respondent No. 1. None for the Respondent No. 2.
CORAM : Justice J. P. Devadhar, Presiding Officer Jog Singh, Member
Per : Jog Singh (Oral) 7
1. By this bunch of 15 appeals, the appellants seek to challenge a
common ex-parte order dated December 31, 2013 passed by the learned
adjudicating officer under Sections 15I and 15HA of the Securities and
Exchange Board of India Act, 1992 (For short SEBI Act) read with Rule 5
of the Securities and Exchange Board of India (Procedure for Holding
Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (for
short adjudicating rules), imposing various monetary penalties on the
appellants for violations of Section 12A(a), (b) & (c) of the SEBI Act,
1992, Regulation 3(a) to (d), 4(1), (2)(a) & (e) of the Securities and
Exchange Board of India (Prohibition of Fraudulent and Unfair Trade
Practices Relating to Securities Market), Regulations 2003 (for short FUTP
Regulations)
2. With the consent of parties, all these appeals are taken up for hearing
and are being disposed of by this common order by taking Appeal no. 31 of
2015 (Konark Commerce & Industries Ltd. & Ors. Vs. SEBI) as the lead
case.
3. The main thirst of the arguments of Shri Farook Razak, learned
senior counsel, who appeared on behalf of the appellants, is that the
appellants never received copy of the show cause notices in question and
that they came to know about the hearing scheduled on December 23, 2013
only on the next day i.e. December 24, 2013. Accordingly, all the
appellants barring, three appellants, sent their replies to the learned
adjudicating officer. The said replies are stated to have been received by
the respondent on December 26, 2013. Thereafter, the impugned order
came to be passed without affording any opportunity of personal hearing by
the learned adjudicating officer as contemplated in Section 4 of the 8
Securities and Exchange Board of India (Procedure for Holding Inquiry and
Imposing Penalties by Adjudicating Officer) Rules, 1995. Therefore, the
impugned order dated December 31, 2013 is vitiated for want of adherence
to the principles of natural justice and provisions of the said Adjudication
Rules.
4. Per contra, Shri Shyam Mehta, learned senior counsel who appeared
on behalf of the respondent, has vehemently urged that effective steps were
taken by the respondent to serve show cause notices on the appellants but
they chose not to accept the notice. They even ignored the newspaper
advertisements in this regard. After hearing both the learned senior counsel
for both the parties at length and after perusing pleadings and impugned
order, we note that Appeal No. 57 of 2014, which was decided on June 16,
2014 by this Tribunal, whereby the same ex-parte impugned order dated
December 31, 2013 was quashed and set aside qua one Shri Harish Sureka
and the matter was remanded to the respondent to decide it afresh after
affording a reasonable opportunity of being heard to the appellants
including an opportunity of preferred a detailed reply to the show cause
notices in question. The said appeal was preferred by Shri Harish Sureka,
whose name appears at serial no. 22, internal page no. 18 of the impugned
order (running page no. 65 of the Appeal No. 31 of 2015).
5. On a query putforth by this Tribunal to the learned senior counsel,
Shri Shyam Mehta, as to whether fresh order has been passed in case of
said Harish Sureka or not, Shri Mehta on instruction informed us that due to
transfer of the adjudicating officer in the case of Shri Harish Sureka, no
final order could be passed till date and the issue is pending before the
respondent. In the circumstances, although appellants are guilty of not
responding to the notices issued from time to time, in our opinion, since 9
SEBI is yet to pass fresh order in case of Shri Harish Sureka as directed by
this Tribunal, it would be just and proper to set aside the order impugned in
all these appeals and direct SEBI to pass fresh order after hearing the
appellants and Shri Harish Sureka, subject to payment of costs by the
appellants to SEBI.
6. Appellants who are guilty of not responding to the notices issued
from time to time, are also guilty of filing a cryptic and monotonous reply
without dealing with the issue raised in the show cause notice. In these
circumstances, the impugned order is set aside subject to payment of costs
of ` 10,000/- to be paid by each of the appellants individually to SEBI
within two weeks from today. Subject to payment of above costs,
appellants are permitted to file detailed reply to the show cause notice and
serve the same to SEBI within a period of one month from today. SEBI
shall endeavor to dispose of the matters by passing fresh order preferably
within a period of six months from today.
7. Ordered accordingly. All these appeals stand allowed as directed
hereinabove.
Sd/-
Justice J. P. Devadhar Presiding Officer
Sd/-
Jog Singh Member 15.12.2015 Prepared & Compared by PTM
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